Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

Mario Lee/6034

RECOMMENDATION

CITY MANAGER'S COMMENTS

COUNCIL POLICY

See Appendix A for details on the following actions taken by Council:

On January 14, 1999, Council identified a number of issues that they wanted the Provincial Government to consider in its review of liquor license regulations.

Following the release of the review, on April 13, 1999, Council endorsed a number of recommendations from the Provincial Consultant's Liquor Review, specified a number of recommendations which it did not endorse, and requested clarification and additional information of some other issues. Council also reaffirmed its position on a number of issues not raised in the Consultant's report.

PURPOSE AND SUMMARY

The purpose of this report is to identify five critical issues that have not been adequately addressed by the Province in its recent proposed changes to Liquor Regulations, and to recommend that Council inform the Provincial Government of its remaining concerns.

Some of the concerns which staff believe the City needs to address are:

The report also deals with concerns related to Bill 80, the Liquor Statutes Amendment Act, presently in the Legislative Assembly of British Columbia.

BACKGROUND AND DISCUSSION

Chronology

Historically, Vancouver City Council has been on record as demanding changes to the liquor licensing regulations in order to make them less bureaucratic and more enforceable. Stakeholders from within the industry have also been requesting changes to accommodate growth and simplify the licensing process.

In November 1998, the Provincial Government initiated a review of liquor license regulations "to reduce red tape and boost business and tourism in the province".

On January 14, 1999, Council responded with recommendations for consideration by the review (see Appendix A). The Province's consultant, Jo Surich, completed his review at the end of January after further consultation with the industry. A summary of the recommendations of the review was released on March 25, 1999.

On April 13, 1999, Council approved the submission of a brief, highlighting consensus and concerns arising from the Provincial Review of Liquor License Regulations, to be presented to the Provincial Government (see Appendix A).

On June 3, 1999, the Provincial Government accepted the recommendations proposed by the consultant on the Review of Liquor Regulations in B.C.

On June 14, 1999, the Minister of Finance introduced Bill 80, Liquor Statutes Amendment Act, 1999, in the Legislative Assembly. On the same day, the Minister appointed a panel of 12 individuals to advise government on implementing new liquor laws and regulations, including two representatives from UBCM.

The Liquor Control & Licensing Branch (LCLB), from the Ministry of the Attorney General, will also engage stakeholders (including municipalities) in the formation of Working Groups to deal with the implementation of the regulations.

Bill 80 (Liquor Statutes Amendment Act, 1999)

Bill 80 raises a number of issues about local government input concerning liquor licenses.

Under the existing legislative scheme, the General Manger of the Liquor Control & Licensing Branch has discretion to require an applicant for any class of liquor license to obtain a resolution from the municipal council that local residents favour granting the license. In

practice, the General Manager has sought Council input in relation to all applications for new liquor licenses and for amendments to existing licenses, except in relation to Restaurant-Class 1 licenses. Almost invariably, if Council does not endorse an application, the license is not granted.

The proposed amendments deal with local government input in much greater detail than the existing legislation. Under Bill 80, with respect to new license applications and amendments or renewals of existing licenses, the Provincial Government has the power to prescribe the class or categories of licenses about which, and the circumstances in which, local government will be allowed to make comments or recommendations. The Provincial Government may also prescribe the criteria that a local government must take into account before making comments or recommendations and the circumstances in which the local government may canvass views of area residents. With respect to new license applications, Bill 80 provides that a license must not be issued if a local government makes that recommendation; however, the General Manager has the power, in limited circumstances, to "override" a recommendation by local government that a license not be issued. With respect to amendments or renewals of existing licenses, the General Manager need only take into account the comments of local government when making his or her decision.

Bill 80 deals expressly with moratorium on license applications. Under the proposed legislation, a local government may create a moratorium on applications with respect to classes of licenses prescribed by the Provincial Government. A moratorium is limited to a one-year period and may only be renewed for further periods of one year if the local government holds a public hearing and is satisfied that a majority of area residents are in favour of extending the moratorium. A moratorium will not apply to completed applications received by the General Manager before the effective date of the moratorium.

Bill 80 deals in considerable detail with local government consultation in relation to liquor licenses. However, because the proposed legislation gives the Provincial Government the power to prescribe the classes of licenses about which, and the circumstances in which, local government may make comments and recommendations about liquor licenses, it is impossible to evaluate the implications of Bill 80 in relation to local government input without knowing what Regulations the Province will enact under the legislation. Accordingly, it is recommended that Council seek assurances that concerns about local government input relating to liquor licenses be addressed by the creation of appropriate Regulations, prior to the time Bill 80 come into force.

I. EXPANSION OF SEATING CAPACITY AND NEIGHBOURHOOD IMPACTS

Vancouver already has a large number of liquor licensed seats, as shown below:

Data supplied by the Liquor Control and Licensing Branch.

Not included in the statistics: BC Place (10,000 seats), PNE Coliseum (14,440 seats), the Queen Elizabeth Concert Hall, the Orpheum Theatre, the Commodore Ballroom (900 seats) and Class A lounges on Motor Vessels. Not included in the figures: 585 pubs indoor license seats and 180 pubs patio seats currently in the approval process. Also not included, figures from Class E licenses.

The revenue potential for the Provincial Government through expansion of liquor sales is very significant, as the chart on Appendix C illustrates, the provincial taxation revenue potential in Vancouver, arising from seats expansion could be as much as $8 million annually (Appendix C). It should be noted however, that some establishments are already operating beyond the liquor license capacity.

The following concerns related to expansion of seats have not been adequately addressed by the Province:

1. The ability of existing bars, pubs and cabarets to increase their capacities to building occupancy limits, with limited or no local government input.

This recommendation will eliminate the moratoriums in place on existing establishments for the Gastown, Downtown Eastside and the Downtown Granville South areas and hinder the City's attempt to develop Community Planning initiatives. The `limits' being proposed by the consultant, as noted in the stakeholder's agreement, are: "capacity increases to the lesser of the building occupancy limit or the current liquor capacity plus fifty percent (50%)". A change of this magnitude will have an enormous negative impact on city resources (especially police resources) but there will also be social costs and neighbourhood impacts, particularly in the moratorium areas.

There are at least two problems with how the increases in existing establishments are to be calculated. The first is that a building or tenant space occupancy is calculated in at least two different ways (Fire Marshall and Health and Building Bylaws capacities), with potential different outcomes.

The second problem is that a recent change in the B.C. Building Code and B.C. Fire Code has deleted the occupant load category "Licensed Beverage Establishments". This means that the occupant load of a licensed space is now reviewed as if it were an assembly use only, without any additional safety factor in recognition of the fact that alcohol is being consumed on the premises. Apparently this change should not affect ground floor uses but will have an effect on second floor liquor license uses. A quick example of the potential impact of this recommendation would be to apply the above mentioned formula to the 44 existing cabarets in operation at this time in the City. The result would be the creation of, approximately, an additional 1,888 seats with no municipal input. This is the equivalent of having over five full size (350 seats each) cabarets open up in the city over night. The largest increases would be in the areas of Gastown and the Downtown South Granville.

Appendix B clearly indicates the potential impact of the proposed policy on seating expansion in some specific neighbourhoods. Assuming these samples were representative of the entire city, then the potential "overnight" expansion of all existing Class A, C, D and F licenses is approximately 9,200 new seats (Appendix B).

Present capacities for bars, pubs and cabarets were approved with City and local neighbourhood input. Parking requirements of existing establishments may not change because they are based on floor space ratios rather than the number of licensed seats.

Another very real concern raised by the new proposals is the increase in staff time needed to assess or implement changes.

In order to determine the work involved and the accuracy of existing Fire Marshall capacity certificates, Fire Inspectors visited two sites. The Fire Prevention Inspectors were asked to `speculate' if through the addition or simple modification of exits the premises would be able to increase their fire capacity. However, the Fire Inspectors did not comment on the possibility of structural alterations, as this would be outside their area of expertise. Each of these inspections took approximately 4 hours to conduct.

If this recommendation to expand existing establishments is approved, and depending upon the implementation process it may require a significant amount of staff time would be needed to conduct a detailed analysis of all 248 Class A, C, D and F licenses in the City of Vancouver. There are a number of old establishments in the city that do not appear to have a registered fire capacity.

The consultant's rationale:

The consultants report indicates that industry stakeholders would like to see the recognition of an already common practice in bars and pubs of over-crowding to the point of the building capacity. Since this is not a desirable situation from an enforcement perspective, the consultant is therefore recommending the establishment of a single capacity standard based upon building occupancy loads. It should be noted however, that many licensed establishments will still be under fire capacities, even with the 50% increase. Furthermore, fire capacities could change over time (due to building redesign for example).

According to the consultant, from the perspective of industry stakeholders, this recommendation is one quid pro quo for bars in return for the recommendation to legitimize and control the current practice of limited drinking without food in restaurants. Consequently, they object to a blanket requirement that these increases be subject to local government approval. The consultant also recognizes that local governments are saying that increases in capacities should require neighbourhood approval.

The consultant also indicates that this discrepancy could be resolved through mediation. A process that would involve each individual case in dispute and that could result in tremendous allocation of staff time and potential neighbourhood disruption. It appears that the General Manager of the LCLB could eventually decide the final outcome, and it is not clear whether neighbourhood input will be considered as a significant factor

2. The provision for designated drinking seats in restaurants.

Indicated below are initial figures of the potential impact this recommendation may have on the City.

Restaurants with Holding Bars; The proposed changes could result in an immediate increase of approximately 3912 straight drinking seats spread throughout the city. Staff recognizes that in some cases these seats have been operating as straight drinking seats already. However, the existing regulations still required food service, eventually, in these seats.

Restaurants without Holding Bars; There are 840 existing liquor licensed restaurants that do not have any holding bar facilities at present with a total of 81,526 seats. If 10 percent of these seats can be used for straight drinking seats, which would be approximately 8,000 seats or if each license was able to maximize their straight drinking seats at 20 seats per license, that would be approximately 16,800 seats.

However, further analysis of the potential increase of straight drinking seats in the restaurant industry, using the figures in the preceding table and the table in Appendix B3 has resulted in an estimated potential conversion of approximately 14,100 restaurant seats to straight drinking seats in the City of Vancouver, assuming that the sample area used is representative of the city as a whole. It should also be noted that the Consultant has recommended that many of these seats be movable to patio seating areas, which could have a higher impact in residential areas. Staff recommend that the size and location of patio seating be subject to local government approval.

II. SOCIAL COSTS AND THE LACK OF RESOURCES

1. Increased availability of alcohol in a province which has longstanding deficiencies in treatment/support resources, for people who are currently affected by alcohol abuse is not a desired public policy, particularly without the expansion of treatment and prevention programs.

The consultant's recommendations would allow existing establishments to increase seats to building capacity, and would increase off-sale capacity and designated drinking seats in restaurants. Given the inadequacy of existing alcohol treatment resources, increases in availability are a major concern. As noted in the liquor review background information: " The consumption of alcohol brings with it significant social and health costs for the society as a whole." These costs are well defined and include excess health care costs, reduced labour productivity, law enforcement expenditures, social welfare costs, fire losses and traffic accidents.

In a comparative national study from the Canadian Centre of Substance Abuse using 1992 data, B.C. had the highest per-capita illicit drug-related costs in Canada. But British Columbia's total costs for alcohol are 4.5 times higher than those for illicit drugs, amounting to $943 million. The law enforcement costs alone were $142.9 million for alcohol and $56.3 million for illicit drugs. On a per capita basis (over 15 years of age), in 1992, alcohol abuse cost $272.

Adjusted for 1999 dollars, the annual cost of alcohol abuse for Vancouver's population would be about $132 million (442,000 people 15 and over@per capita $300).

The City's Background Paper on Drug Treatment Needs in Vancouver (July 1998) recommended the immediate addition of detox beds, recovery beds, counselling and job training programs, alcohol and drug-free long term housing, prevention programs, and a Lower Mainland strategy for alcohol and drug-related services. To date, none of these additional resources to meet existing needs has been secured.

According to the Chief Medical Officer from the Vancouver/Richmond Health Board, Dr. F.J. Blatherwick, in a letter dated April 9, 1999, "Expanding liquor seats cannot be done until this province puts some money into treatment resources... Our addiction knowledge tell us that the more available one makes a product, the more problem people one has to deal with."

Health and social costs are identified in the consultant's report, but there are no recommendations on how to deal with them.

III. COST OF DEVOLVING LICENSING PROCESS INCLUDING STAFF

The new licensing process together with the extension of liquor seats and longer hours of operation, as proposed by the consultant's report, will impose further demands into staff time and resources from at least six City Departments, namely: Permits and Licenses, Police, Fire, Law, Planning, and Environmental Health. Other departments like, Social Planning, City Clerk and Housing Centre may also be required to allocate time and resources.

The actual dimension of the added demands on time and resources could be evaluated once the new regulations start being implemented. At this point, we are identifying this as an issue that Council would have to deal with at a future date.

IV. FUTURE IMPACTS INCLUDING ADVANTAGE GIVEN TO CURRENT OWNERS/LICENSE HOLDERS AND EFFECTS OF BUILDING EXPANSION
More in depth analysis of future impacts will only be possible once the actual Regulations are outlined and implemented.

The industry, primarily the operators, have complained that the existing liquor licensing system is archaic and outdated. City Council and staff have also voiced the need to change the existing licensing system with particular respect to the need for increased enforcement and a graduated license system. The changes being put forward may address a number of the city's concerns but the question is at what cost. The incentives used to broker the stakeholder agreement (seat expansion and drinking seats are the two foremost) are so heavily weighted in the existing operators favour that they may eliminate the positive aspects of some of the other changes (flexibility to transfer/move licenses).

Also, municipalities, like Vancouver, which have a high concentration of existing licenses may be forced to place strict limitations on all new liquor license applications at a municipal level, further compounding some of the unrealistic recommendations at the provincial level, like only permitting the new operator to build to their liquor license capacity. On the surface this seems like a logical solution to problem of fire capacities exceeding liquor capacities. The problem is that it does not appear enforceable and in any event who would enforce this regulation? What about establishments that want to have a larger games area or make improvements to the building `down the road' that would result in increased safety and fire capacity? Would the regulations allow it? An equally large number of questions could be asked of many of the other recommendations, particularly the addition of drinking seats to restaurants.

The only conceivable result of many of the proposed changes is to further entrench the viability and profitability of the existing licensees at very little expense to themselves while placing severe limitations on any new operator entering the market. In all probability, there will be in 5 to 10 years a renewed call for the Provincial Government of the day to change the archaic and restrictive liquor laws that are stifling opportunities for new entrepreneurs from entering the liquor establishments business.

V. EFFECT ON SROs

Another important issue to deal with in the future, relate to Single Room Occupancy (SRO's). The consultant acknowledges different views in relationship to the links (or lack thereof) between liquor licenses in SRO Hotels and the responsibility of owners to maintain

those rooms. Recognizing that this dilemma may only be resolved through the development of a housing strategy for the Downtown Eastside, and in order to allow time for such a task, the consultant's report indicated that: "The Liquor Control and Licensing Act provide discretion to the General Manager to enable grandparenting, by regulation, so that the status quo can be maintained for any aspect of the current regulations where this is deemed to be in the overall public interest."

It is uncertain what this recommendation means. It is important to the City that the SRO stock maintained until alternative housing for low-income people can be provided. A housing strategy is important, but it should be recognized that replacement housing is costly. Funding for low-income housing is primarily senior government responsibility. As there are approximately 2000 rooms in the City and 3000 in the Province, which are in buildings with liquor licenses, it may be decades before public and other funding is available to provide alternative housing. The City seeks assurances that the current proposed changes to the liquor regulations will not, intentionally or otherwise, create additional low-income housing problems.

CONCLUSION

The City of Vancouver continues to be concerned with issues related to expansion of liquor license seats without appropriate municipal input, potential impacts to neighbourhoods, the lack of appropriate treatment programs for those with alcohol problems, the potential for increased demands on staff time and resources, and effect on low-income housing. The City is also concerned with some aspects of Bill 80, the Liquor Statutes Amendment Act.

- - - - -

COUNCIL POLICY

On January 14, 1999, Council approved general directions for consideration in the review of Provincial liquor license regulations. Some of the items included in this directive were:

· Increased regulation of high potency alcohol products (e.g., rice cooking wine and ginseng brandy).

· Greater flexibility in the transfer and conversion of all license categories.

· Feasibility of a later closing time for cabarets, without liquor service.

· Coordination of provincial licensing with City of Vancouver business license suspensions/closures.

· Requiring the availability of hotel rooms as a condition of a hotel's pub/beer parlour license.

· No changes to the licensing regulations of restaurants, until improved enforcement procedures are in place.

· Taxation revenues generated by liquor sales be used to monitor and enforce liquor regulations and for treatment and social services related to liquor abuse.

B. THAT Council endorse in principle the following recommendations of the Provincial Consultant's Liquor Review report:

C. THAT Council support in principle the following recommendations subject to further discussion and clarification with Liquor Control and Licensing Branch (LCLB):

D. THAT Council does not endorse the following recommendations as contained in the consultant's report as the recommendations are contrary to existing Council policy:

E. THAT Council does not endorse the following recommendations as contained in the consultant's report:

F. THAT Council request clarification and additional information from the consultant or the Liquor Control and Licensing Branch on the following recommendations:

G. THAT Council reaffirm its position with respect to Council policy on the following issues that were not specifically addressed in the consultant's report:

H. THAT the City request the Province ensure that regulations governing the showing of adult oriented entertainment on televisions in drinking establishments be included within municipal authorities.

I. THAT the City request the Province dedicate alcohol related revenues towards the full costs associated with alcohol abuses ie: such as policing, regulating, education, treatment, prevention, recovery, support resources and social and health services.

J. THAT the City request the Province return the Alcohol and Drug aspect of the Ministry of Children and Families to the more appropriate Ministries of Health and Human Resources.

GASTOWN AREA SAMPLE

Club

Address

Fire
Capacity

Liquor
Capacity

Consultant's Proposed Seating
Capacity Increase:*
50% of L.L Fire Capacity

Club Sonar Cabaret

66 Water Street

520

299

150

221

50 Bourbon Street
(Hildon hotel)

50 West Cordova

275

150

75

125

Club 23 **
(Old Limelight Cab.)

23 West Cordova

261

261

131

-

Fluid Lounge Cabaret

7 Alexander Street

210

194

97

16

Blarney Cabaret

214-216 Carrall Street

232

198

99

34

Club 212

212 Carrall Street

204

150

75

54

Purple Onion Cabaret **

21 Water Street

306

312

156

-

Lamplighter Pub
(Orr Hotel)

210 Abbott Street

218

125

63

93

Aztec Cabaret **

364 Water Street

198

198

99

-

Pony's Cabaret **

315 Carrall Street

Unavail.

125

63

-

 

TOTALS

2424

2012

1008

54

Potential total seating capacity increase based on the lessor of the 2
Columns

392 (20% increase)

DOWNTOWN GRANVILLE SOUTH AREA

Club

Address

Fire
Capacity

Liquor
Capacity

Consultant's Proposed Seating
Capacity Increase:*
50% of L.L Fire Capacity

Khizanah Ent.

1161 Granville Street

260

240

120

20

The Gate **

1176 Granville Street

225

225

113

-

It's A Secret Pub **

1221 Granville Street

325

325

163

-

The Yale

1300 Granville Street

267

225

113

42

The Cecil

1336 Granville Street

239

237

119

2

Luv-A-Fair

1275 Seymour Street

356

192

96

164

Richards on Richards Cabaret

1036 Richards Street

436

349

175

87

The Palladium (Old Graceland Cabaret)

1250 Richards Street

524

225

113

299

Wet Bar Cabaret
(Mar's Restaurant and & Club)

1320 Richards Street

466

350

175

116

Bar None Cabaret **

1222 Hamilton Street

234

234

117

-

Yaletown Brew Pub

1108 Hamilton Street

85

85

33

10

 

TOTALS

3417

2687

1711

740

Potential total seating capacity increase based on the lessor of the 2 columns

486 (18% increase)

* Bold denotes figure used to calculate the # of straight drinking seats recomm. per the consultant's guidelines.

2800 to 3300 Blocks of WEST BROADWAY SAMPLE AREA

Club

Address

Liquor
Seating
Capacity

Licensed
Patio
Seating
Capacity

10% of Liquor
License Seats/
20 seat
maximum*

Seating
Capacity of Existing
Holding Bar*

Ted's Place Rest

2893 W. Broadway

56

  

6/6

6

Great Wall Mongolian Rest.

2897 W. Broadway (approx. 50 seats)

not lic.

      

Mark TapHouse

2486 Bayswater

159

  

16/16

29

Blenz

2953 W Broadway

not lic.

      

Sushi Sushi

2965 W. Broadway

26

  

3/3

n/a

Paradiso Rest.

3005 W. Broadway

133

24

13

8

Calhoun's Rest.

3035 W. Broadway

160

20

16

n/a

Tropika on Broadway

3105 W. Broadway

64

  

6

n/a

Moomba Restaurant

3116 W. Broadway

173

10

17

35

Fringe Cafe

3124 W. Broadway

35

    

n/a

Nemeto Cafe

3132 W. Broadway

not lic.

      

Culpepper's

3135 W. Broadway

218

16

22/20

26

Elwood's

3145 W. Broadway (converting to Rest.)

50

6

5/5

n/a

Friction Tapas Bar

3162 W. Broadway

was 50

     

Ouzeri

3189 W. Broadway

45

26

8/8

12

Olympia Pizza

3205 W. Broadway

42

30

8/8

8

Andale's Rest.

3211 W. Broadway

74

12

7/7

n/a

La Mascotte

3236 W. Broadway

50

  

5/5

n/a

Kitsilano Billiards / Restaurant

3255 W. Broadway

20

  

2/2

n/a

McDonald's

3310 W. Broadway

not lic.

      

Lou's Grill & Bistro

3357 W. Broadway

40

10

4/4

10

 

TOTALS

1345

154

136

134

Total number of straight drinking seats recomm. per the consultant's guidelines.

183

* Bold denotes figure used to calculate the # of straight drinking seats recomm. per the consultant's guidelines.

2. Estimated Tax revenue per licensed seat was calculated by dividing the Estimated Taxation revenue by the Total Number of Licensed seats for the category ($23,551,149/49,298 seats = $ 478/seat).

3. The Estimated Tax revenue per licensed seat for the change of restaurant seats to straight drinking seats is calculated by first dividing the Estimated Tax revenue by the Total Number of Licensed seats for Class B Restaurants ($23,107,828/103,792 seats = $ 222/seat). The proposed straight drinking seats in restaurants should generate taxation revenue equal to the revenue generated by bar/pub seats. However, unlike the creation of new seats for Class A, C, & D licenses, the proposal to create straight drinking seats in restaurants is in reality a conversion of existing seats that already have an inherent tax generating value $222 (as determined above). Therefore, it is the difference between the tax revenue generated by a bar seat ($478/seat) minus the tax revenue generated by a basic restaurant seat ($222/seat) that determines the tax revenue potential of these converted drinking seats ($478/seat - $222/seat = $256/seat).

* * * * *

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