ADMINISTRATION REPORT

Date: June 14th, 2002
Author/Local: G. Gusdal & A. Straka/604-871-6461 & 604-8716427

RTS No. 2692

CC File No. 2610

P&E: June 27, 2002

TO:	Standing Committee on Planning and Environment
FROM:	Chief License Inspector
SUBJECT:	New Provincial Liquor Licensing Reforms & Anticipated Staffing Requirements

RECOMMENDATION

A. THAT this report be provided to Council as an update on the Provincial Liquor Licensing Reforms adopted on March 15, 2002 and their potential impacts on the City's liquor licensing policies; and

B. THAT Council approve the creation of two one-year temporary full-time positions of a Planner and Planning Assistant III to address liquor licensing policy issues arising from the Provincial liquor reforms. The cost of these positions is $145,125 (approximately $70,000 in 2002) and will be funded from revenue generated from increased business license fees for liquor license establishments and will be subject to a formal classification review by the General Manager of Human Resources.

FURTHER THAT Staff report back in one year on the status of both positions.

GENERAL MANAGER'S COMMENTS

The General Manager of Community Services recommends approval of the above-noted recommendations.

COUNCIL POLICY

Presently, Council relies upon liquor license policies in the West End, the Central Business District and the policy moratorium areas of the Downtown Eastside and Gastown to guide its decision making on applications in these areas. Liquor-related applications in other areas of the City are assessed on a case-by-case basis using established Council practices as follows:

1. Applications that may typically be approved based solely on the results of neighbourhood notification include: small hotel lounges or pubs; amendments to an existing liquor license and some types of new liquor license establishments in areas of the City where there are little or no residential uses in close proximity.

2. A public meeting will normally be recommended for all new liquor licenses in close proximity to residential uses, new liquor licensed facilities that may have a negative impact on City resources or adjacent businesses and major amendments to existing liquor licenses in the same scenarios. (This includes, but is not limited to, the following: Class "A" Hotel Lounge/Pub, Class "A" Lounge (private/social club), Restaurant Class 2 - "B-2" Dining Lounge, Class "C" Cabaret, Class "D" Neighbourhood Pub, Class "F" Marine Pub and applications to change hours of operation or increase seating capacity of the aforementioned liquor license categories.)

3. The successful completion of a telephone survey in accordance with City guidelines may be required with any liquor license application if significant neighbourhood issues are identified.

4. All new establishments are subject to a time-limited development permit, a Good Neighbour Agreement and possibly a legal operating agreement. Amendments to existing liquor licenses are typically subject to a legal operating agreement.

In addition, the establishment of new positions requires Council approval.

PURPOSE

The purpose of this report is to provide Council with an update on the recent changes to Provincial Liquor Licensing regulations and their potential impacts on the City's liquor licensing policies and to seek approval for the creation of two one-year temporary staffing positions to address liquor licensing policy issues arising from the new Provincial liquor strategy.

BACKGROUND

On March 15, 2002, the Provincial government approved significant changes to existing liquor regulations to improve public safety, consumer choice and customer service. The proposed changes include streamlining licensing categories for liquor-serving establishments to two and providing local government with the opportunity for input into hours of operation, seating capacity, entertainment and type of licensing for new and/or existing liquor license venues, allowing the sale of hard liquor in cold beer and wine stores and lifting the current cap on the number of such businesses and amending rural agency store provisions to increase liquor retail choice in small communities.

DISCUSSION

The proposed Provincial liquor licensing reforms, as explained in documentation from the Liquor Control & Licensing Branch, are as follows:

1. Number of License Classes

The number of license classes has been reduced from nine (with 19 sub-categories) to the following two:

(a) "Liquor Primary" (with "Clubs" sub-category) includes bars, pubs, clubs and other venues where the main business is selling liquor. Any business that is primarily in the hospitality, entertainment or beverage business and that is not prohibited by regulations, such as youth-focussed video arcades, is eligible to apply for a liquor license. Clubs, as the only sub-category, retain both their special privileges and restrictions.

(b) "Food Primary" includes venues like restaurants, dining rooms and cafes, where food service is the main business and liquor can only be served with food. Convenience venues such as take-out, fast food, street vendors and most food courts, along with youth-oriented restaurants, will not be eligible for a liquor license.

Under the "Food Primary" license category, local governments will now have input into late night hours and shall continue to have input into the types of entertainment involving public participation activities like dining and dancing. Under the "Liquor Primary" license category, local governments will be required to comment on capacity restrictions, hours of operation, entertainment, type of facility and late night liquor service hours. Venue size will be determined by local building codes.

Potential Municipal Impacts:

· May add a great deal of flexibility for staff and the business community to adapt to the public need and specific "niche" target markets.
· Could result in a large flood of new requests or changes to existing licenses.
· Will require changes to the land use definitions, regulations and guidelines in the Zoning & Development and License By-Laws.
· May require new or amended policy for various areas of the City.

2. Establishment of Moratorium

Prior to the Provincial liquor reforms, moratoriums were based on Council policy and were not recognized at the Province level. The Province has now provided local government with the authority to impose one-year moratoriums on all new licenses to address over-licensing that arises in particular areas when local economies and demographics change.

Potential Municipal Impact:

· The proposed Provincial moratorium policy would require extensive staff and public input, additional policy work and an ongoing renewal process.

3. Hours of Operation

Presently, all liquor licensed establishments must cease liquor service at 2 am. Under the new Provincial regulations, licensees under the Liquor Primary license category will be able to apply for hours of liquor service at any time between 9 am and 4 am with no set maximum hours of liquor service. Patrons will be required to leave the establishment 30 to 60 minutes after liquor service ends.

Licensees under the Food Primary license category will be permitted the same hours of operation for liquor service (9am to 4am). In addition, restaurants may remain open beyond 4 am without liquor service. That is, food and non-alcohol beverage service can operate 24 hours, provided the business does not lie within the Business Premises Regulation of Hours By-law area.

Council will now be able to determine hours of operation for all new Liquor Primary and Food Primary venues. Council support will also be required for existing venues that wish to stay open later than 2 am.

Potential Municipal Impacts:

· Applications will be considered on a case-by-case basis but area policies must be developed to ensure consistency for application review.
· There will be shifting and manpower implications for Police and ERS (Fire & Ambulance).
· Policies will have to consider neighbourhood impacts (both residential and business)
· May impact zoning/land use issues for restaurants throughout the City.
· May reduce the demand for illegal "After-hours" clubs typically operating in unsafe buildings.

4. Participation in Approval Process

In the past, Council was required to provide comment/input on all liquor licensing applications with the exception of Class 1 Restaurants. City Council will now be permitted to decline in providing comment/input for certain categories of liquor licensing applications or for the entire process.

Potential Municipal Impact:

· By choosing to decline in providing input, the City will lose a certain degree of control. However, this may enable the City to redistribute its limited resources to areas of higher priority.

5. Limits on Licensed Seating Capacity

The Province will no longer regulate maximum patron capacities for liquor license categories. Licensed capacity for liquor establishments will be determined on a case-by-case basis by the Province with input from local government and/or local building/fire codes. Community need and support for the requested capacity must be demonstrated by the individual applicants.

Potential Municipal Impacts:

· May require a complete revamping of the present municipal liquor license application process.
· Policies for capacity will be required.
· Definitions in the Zoning and Development and License By-Laws must be reviewed and changed to reflect the new Provincial Liquor License structure.
· May provide a greater variety of entertainment establishments within the City and allow operators and the City to better address public needs.

6. Dual Licensing

Historically, liquor license establishments have not been permitted to operate under more than one license category. The new liquor regulations may allow Liquor Primary and Food Primary venues to apply for dual licensing with local government support and approval from the Province. Dual licensing would allow businesses to shift from food primary to liquor primary, or vice versa, in response to specific neighbourhood needs. Dual licensing is intended to enhance the hospitality sector and allow for more efficient use of licensed facilities.

Potential Municipal Impacts:

· The new dual licensing system would require policy development along with new definitions in various City By-laws.
· May have a significant impact on the Land Use definitions of restaurants and where they are permitted (could result in a significant change from existing practices).
· Would likely result in a significant increase in the entertainment options within the City.
· May result in increased negative impacts in residential areas.

7. Requirement for Other Facilities and Elimination of Other Regulations and Policies

Requirements for certain types of license holder to have accompanying non-licensed facilities, such as hotel rooms, will be removed. This will provide both Liquor Primary and Food Primary venues with greater flexibility and the opportunity to apply to relocate or transfer licenses.

Existing hotels may apply for redevelopment of a site while retaining the existing "Class A" liquor license as a Lounge/Pub type use.

Potential Municipal Impacts:

· The development of additional policies and regulations will be required.
· This may jeopardize a number of SRO Hotels in the Downtown Eastside.
· It may facilitate the transfer of licenses out of areas of over-concentration or areas of significant concern.

8. Cold Beer and Wine Stores

Effective April 2, 2002, cold beer and wine stores are now able to sell spirits and apply to increase their maximum floor space from 1,000 to 2,000 square feet (90 to 180 square meters) to provide room to accommodate new products and additional stock.

Cabinet has also given approval for the future lifting of the moratorium on new applications for cold beer and wine stores. At present, there are 290 cold beer and wine stores, and no new applications have been permitted since 1992, despite growth in population, customer demand and new tourism opportunities. The Province feels this is necessary as few communities currently have seven-day-a-week access to a full selection of beverage alcohol.

The Province is also streamlining the liquor distribution branch's selection process for rural agency stores by eliminating distance restrictions that prevent stores being located within 20 kilometres of another liquor retail outlet, including liquor distribution branch stores, cold beer and wine stores, or other rural agency stores. This rule has penalized smaller communities and tourist destination towns.

Rural agency stores will be allowed in two major categories: rural communities larger than 300 and tourism destination resorts like ski hills.

Only existing "Liquor Primary" establishments will be able to apply for cold beer and wine store approval.

Potential Municipal Impacts:

· Development permit applications seeking expansion may be submitted by existing cold beer & wine stores.
· Staff anticipate that the number of applications from existing "Liquor Primary" establishments applying for cold beer and wine store approval could be significant.

9. Implementation

The Provincial liquor license regulations are expected to be finalized by early summer with implementation at the end of the year. Existing establishments will be reclassified to Food Primary or Liquor Primary. Changes to existing operating hours or capacity will involve an application process and local government input. Other changes, such as restaurants being able to serve any type of liquor will be automatic when regulations come into force.

Potential Municipal Impacts:

· As the administrative procedural mechanisms required to implement the Provincial Liquor License changes at the municipal level have yet to be developed and finalized, the exact nature of the impacts that these changes will have on City liquor license policies is yet to be determined. A complete listing of all the potential impacts at this point in time would be purely speculative. However, staff have included some of the more obvious possibilities.
· Staff believe there is insufficient time within the Provincial government implementation schedule to adequately prepare the City, as well as other local governments, for all the proposed changes to the liquor regulations. Zoning by-law changes in particular require a significant amount of time and must adhere to a very regimented process.

PROPOSED NEW STAFFING POSITIONS

As a result of the changes in Provincial liquor regulations, the City will be receiving a greater number of applications from licensed liquor establishments requesting changes to their operating structure. The number of applications is expected to increase even more as the liquor licensing reforms continue to evolve. The nature of the requests will include, but are not limited to, seating capacity increases and license reclassification. As a result, some of the City's out-dated liquor licensing policies need to be revisited to bring them in line with the Province's liquor reform strategy. Furthermore, in some cases, new liquor licensing policies and corresponding evaluation criteria/standards must be developed as a basis for application review.

Currently, the Licenses & Inspections Department has two positions, a License Co-ordinator and Liquor Licensing Assistant, responsible for handling all issues and concerns pertaining to licensed liquor establishments, secondhand dealers/pawnbrokers, late night dance events and problem premises. For this reason, staff believe that the most appropriate response to the expected liquor licensing work load is the creation of two one-year temporary positions of a Planner and Planning Assistant III. As the liquor license processing scheme continues to unfold, the need for ongoing additional staff resources will be subject to a review and report back to Council in one year's time.

The responsibilities proposed for the two new positions are as follows:

Planner

· projects related to liquor licensing issues which involve research, technical aspects of survey analysis, formulation of recommendations and preparation and presentation of reports to Committees of Council or civic boards;
· reviewing, analysing and redeveloping liquor licensing policies;
· processing applications on liquor-related issues (ie. capacity increases; DFO's, etc.) and making recommendations on approval or rejection to the Chief License Inspector;
· assisting superiors in making presentations to City Council
· attending Committees of Council and other civic and outside meetings to make presentations and answer questions related to liquor licensing issues;
· handling internal/external inquiries and complaints surrounding liquor licensing;
· supervising a limited number of planning assistants; and
· providing additional assistance as required.

Planning Assistant III

· undertaking statistical surveys and analyses, report design and reproduction, and skilled graphical presentation work;
· assisting with the preparation, processing and formatting of reports on matters related to liquor licensing;
· undertaking research, collection, compilation and analysis of data on liquor licensing issues;
· preparing art work to illustrate survey and statistical information;
· performing related technical planning work as required;
· preparing public participation processes and analysing public feedback;
· ordering materials, maintaining files and records and taking minutes from meetings with other departments on liquor licensing issues; and
· supervising one or more subordinates as required.

FINANCIAL IMPLICATIONS

On December 4, 2001, Council approved a number of fee-related license amendments to License By-law No. 4450, including changing the application of license fees for liquor establishments on a $4.00 per seat basis (with a maximum of $2,000) rather than as a flat rate per year. The affected license categories include Cabaret, Dining Lounge/Room, Lounge, Marine Public House, Neighbourhood Public House and Public House. The recommended $4.00 per seat license fee brings the fees closer in line with those of other Lower Mainland municipalities and is expected to generate additional revenue to recover costs.

The previous flat fee structure generated approximately $398,000 in business license fee revenue for liquor license establishments. A comparison of license fee revenues for liquor establishments between January 1 to April 30 for Years 2001 and 2002 shows an increase of approximately $197,000. It is anticipated that in the Year 2002, the $4.00 per seat business license fee for liquor license establishments will generate an increase in revenue ofapproximately $240,000. These numbers were derived from the figures provided in Appendix A.

As mentioned in the most recent report to Council concerning Year 2002 business license fees, a certain portion of the additional $240,000 in revenue would be needed fund some of the changes required as a result of the Provincial Liquor Review and additional staffing is one of these requirements. Funding for the two proposed one-year temporary positions of a Planner and Planning Assistant III will come from increased business license fees. Detailed costing for the new positions is presented in the following table.

Costs Attributed to New Planner I and Planning Assistant III Positions

Salary + Fringe	Planner I	Planning Assistant III	Combined Total
Annual Salary	$ 56,558	$ 42,332	$ 98,890
Benefits	$ 10,746	$ 8,043	$ 18,789
Training	$ 500	$ 500	$1,000
One-time set-up costs	$ 9,116	$ 9,116	$ 18,232
Overhead	$ 4,107	$ 4,107	$ 8214
Total per position	$ 81,027	$ 64,098	$ 145,125

CONCLUSION

The recent Provincial liquor license reforms have been proposed to improve public safety, consumer choice and customer service. Some of the more obvious impacts these changes will have on the City's liquor license policies have been discussed in the report, however the exact nature of the impacts can only be determined once the administrative procedural mechanisms required to implement the Provincial changes at the municipal level have been developed and finalized. To address the expected increased workload resulting from the new Provincial regulations/reforms, staff recommend the creation of two one-year temporary positions of a Planner and Planning Assistant III. As the liquor license processing scheme continues to unfold, the need for ongoing additional staff resources will be subject to a review and report back to Council in one year's time.

* * * * *

APPENDIX A
Revenue Increase due to Revised Business License Fee Structure

	Year 2000	% of Year	Year 2001	% of Year	Year 2002	$ Increase
Revenue January -April	$303,085	82%	$332,304	83%	$529,626	$197,322
Revenue January -December	$369,241	100%	$398,054	100%	$645,885 **	$247,831

** Assumption based on the past 2 years experience of approx 82/83% of Liquor Licensing Revenue collected by April 30. Using 2002 data and prorating it at 83% would provide us with a forecast of approx $645,885 for fiscal 2002.

Gross Increase of $247,831.

Since licensing fees were increased by 2% on January 1, 2002, we need to factor the 2% fee increase out of the Gross Revenue Increase. Therefore, with no changes to business license fee structure, the City would have expected to collect approx $406,015 all other factors remaining the same.

Net increase due to change in business license fee structure is $239,869.

This is the increase in revenue that the funding for the new positions should identify to offset the increase in the budget.

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