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HomeMy WebLinkAboutItem -20W.S. 03Memorandum U/prkSess,0n item No. 3 'City of Lakeville Planning Department To: Planning Commission From: Daryl Morey, Planning Director Date: March 14, 2014 Subject: March 20, 2014 Planning Commission Work Session Brewpub/Taproom Discussion Due to increased interest in the Twin Cities metro area in brewpubs, taprooms, micro - breweries and the like, Community and Economic Development and Planning Department staff have initiated a review of City ordinances pertaining to these types of uses. The interest in brewpubs and taprooms is largely the result of state legislation approved in 2011 commonly known as the Surly Bill. This bill allows breweries to sell pints of beer for consumption on the premises in taprooms, instead of being shipped out for consumption off the premises as was the case prior to passage of the Surly BilI. Brewpubs and taprooms combine a manufacturing type of use (the brewing of beer) with a retail use (the sale of the beer for consumption on the premises, with or without food). Like many other area cities, staff has determined that our ordinance does not adequately address the allowance of this type of use. For background purposes, I have attached a memo recently prepared by Shakopee's planning staff concerning an amendment to the ordinances to allow brewpub and taproom uses. Staff is requesting direction from the Planning Commission as to whether or not the City of Lakeville should pursue an amendment to our Zoning Ordinance to allow brewpubs, taprooms, micro -breweries, etc. Planning Department staff and planning consultant Daniel Licht of TPC will be present at the work session to help facilitate discussion on this topic. -rent Agenda item AI -794 City Council - Regular Session Meeting Date: FROM: 12/03/2013 Kyle Sobota, nttp:!iagenda.ci.snaKopee.mn.us/pnnt_ag—memo.cim!seq=! y4&rev_nu. General Business Subject Zoning Text Amendment: Breweries, Brewpubs, Taprooms, Tasting Rooms, Distilleries, and Wineries -Ord. No. 877 (B) Action Sought Approval of the proposed zoning text amendment regarding breweries, brewpubs, taprooms, tasting rooms, distilleries, and wineries. Background Recently several production breweries, taprooms, wineries, and micro -distilleries have been proposed or have become operational around the state of Minnesota. At this time in the City of Shakopee, the Light Industrial and Heavy Industrial Zones are the only areas that breweries, wineries, and distillery facilities would be permitted under the ordinance definition of manufacturing or processing operations. Currently city staff considers a brewpub as a similar use to a restaurant. Recently, City of Shakopee staff has had conversations with two different groups considering locating production breweries and taprooms in the City of Shakopee. The City of Shakopee had also previously submitted a proposal to Surly regarding different available development sites prior to their selection of a site in Minneapolis. While the Industrial zoning districts are the preferred location for large scale operations; industrial areas do not fit the conventions for small scale operations that rely on visibility and conventional retail, pedestrian, or tourist traffic that has become popular for these types of businesses around Minnesota and other states. In many cases the smaller operations function similarly to bars and restaurants. Staff believes that these types of businesses, in most cases upon review by the Board of Adjustment could be located within the standard commercial districts of Shakopee. Due to the increase in the interest, staff is initiating a proposed text amendment to review the potential allowance of smaller scale operations as Conditional Uses in Commercial zoning districts (Highway Business (B-1), Central Business District (B-3), Community Commercial (CC), and Neighborhood Commercial (NC), and Major Recreation (MR)). Staff is also including provisions to allow larger operations as permitted uses in Light Industry (I-1) and Heavy Industry (I-2) zones, with taprooms or tasting rooms as a conditional use, since it is viewed as more of a retail use. Retail uses are currently allowed by Conditional Use Permit in City Code. In 2011, Governor Dayton signed the Omnibus Liquor Bill, commonly known as the "Surly Bill", which allows breweries to sell pints of beer at the brewery in areas known as taprooms. Prior to the law, brewpubs were already permitted to sell pints of beer for consumption on premises because brewpubs serve food, of 5 U712014 1:22 PM "rint Agenda Item http://agenda.ci.shakopee. mn.us/print_ag_memo.cfm?seq=794&rbv_nu. and operate similar to restaurants, but breweries were not permitted. State Statute allows breweries that produce under 3,500 barrels to sell sealed 750 mL bottles and sealed 64 oz containers, commonly known as "growlers" of beer for consumption off -premises. A purpose for the proposed text amendment is a way to clarify the different manufacturing levels in the City Code, as well as include definitions of common terms. Below for review are State Statutes and definitions for the different types of businesses related to wine, beer, and spirits. Staff recommends adding selected definitions to the City Code as part of the text amendment. The current pertinent definitions from MN State Statute are listed below. Distilled Spirits: Ethyl Alcohol, hydrated oxide of ethyl, spirits of wine, whiskey, rum, brandy, gin, or other distilled spirits, including all dilutions and mixtures thereof, for nonindustrial use. Farm Winery: A winery operated by the owner of a Minnesota farm and producing table, sparkling, or fortified wines from grapes, grape juice, other fruit bases, or honey with a majority of the ingredients grown or produced in Minnesota. Fortified Wine: wine to which brandy, or neutral grape spirits, has been added during or after fermentation resulting in a beverage containing not less than one-half of one percent nor more than 24 percent alcohol by volume for nonindustrial use. Malt liquor: any beer, ale, or other beverage made from malt by fermentation and containing not less than one-half of one percent alcohol by volume. 3.2 percent malt liquor: malt liquor containing not less than one-half of one percent alcohol by volume nor more than 3.2 percent alcohol by weight. Micro -distillery: a distillery operated within the state of Minnesota producing premium, distilled spirits in total quantity not to exceed 40,000 proof gallons in a calendar year. Proof gallon: one liquid gallon of distilled spirits that is 50% alcohol at 60 degrees Fahrenheit. Small Brewer License: A brewer licensed under subdivision 6, clause (c), (i), or 0), may be issued a license by a municipality for off -sale of malt liquor at its licensed premises that has been produced and packaged by the brewer. The license must be approved by the commissioner. The amount of malt liquor sold at off -sale may not exceed 500 barrels annually. Off -sale of malt liquor shall be limited to the legal hours for off -sale at exclusive liquor stores in the jurisdiction in which the brewer is located, and the malt liquor sold off -sale must be removed from the premises before the applicable off -sale closing time at exclusive liquor stores. The malt liquor shall be packed in 64 -ounce containers commonly known as "growlers" or in 750 milliliter bottles. The containers or bottles shall bear a twist -type closure, cork, stopper, or plug. At the time of the sale, a paper or plastic adhesive band, strip, or sleeve shall be applied to the container or bottle and extended over the top of the twist -type closure, cork, stopper, or plug forming a seal that must be broken upon opening of the container or bottle. The adhesive band, strip, or sleeve shall bear the name and address of the brewer. The containers or bottles shall be identified as malt liquor, contain >. of 5 1/7/2014 1:22 Ph Tint Agenda Item http://agenda.ci.shakopee.mn.us/print_ag_memo.cfm?seq=794&rev_nu.. the name of the malt liquor, bear the name and address of the brewer selling the malt liquor, and shall be considered intoxicating liquor unless the alcoholic content is labeled as otherwise in accordance with the provisions of Minnesota Rules, part 7515.1100. (b) A brewer may only have one license under this subdivision. (c) A municipality may not issue a license under this subdivision to a brewer if the brewer seeking the license, or any person having an economic interest in the brewer seeking the license or exercising control over the brewer seeking the license, is a brewer that brews more than 20,000 barrels of its own brands of malt liquor annually or a winery that produces more than 250,000 gallons of wine annually. (d) The municipality shall impose a licensing fee on a brewer holding a license under this subdivision, subject to limitations applicable to license fees under section 340A.408, subdivision 3, paragraph (a). Table or sparkling wine: a beverage made without rectification or fortification and containing not more than 25% alcohol by volume, made by the fermentation of grapes, grape juice, other fruits, or honey. Wine: the product made from the normal alcoholic fermentation of grapes, including still wine, sparkling ,and carbonated wine, wine made from condensed grape must, wine made from other agricultural products than sound, ripe grapes, imitation wine, compounds sold as wine, vermouth, cider, perry and sake, in each instance containing not less than one-half of one percent nor more than 24 percent alcohol by volume for nonindustrial use. Wine does not include distilled spirits as defined in subdivision 9. State of Minnesota Limits: At this time Minnesota Statute does not permit the on or off -premises sale of distilled spirits at a micro - distillery. State Statute permits the sampling of up to individual 15 mL samples, and no more than a total of 45 mL, or approximately 1.52 oz of samples per person in one day. If State Statute were to be amended to allow sales by micro -distilleries, it is staff s position that micro -distilleries be permitted for on or off -premises sales of product, provided they receive a Liquor License from the City Clerk's Office. It should be noted that the State licensing fee for micro -distilleries has been reduced from $30,000 to $1,000. It is likely that there will be greater interest in micro -distilleries. State statute limits breweries to off -premises sales of 750 mL bottles and 64 oz containers at breweries to 500 barrels per year. Brewpubs are limited to total production of 3,500 barrels per year. Farm Wineries are limited to sales of 50,000 gallons per year. Farm Wineries are permitted to produce up to 5,000 gallons of distilled spirits from MN grown grapes, grape juice, or honey per year, which is considered part of the 50,000 gallon limit. Proposed Production Limitations: Since the proposed text amendment is for commercial zoning districts, city staff proposes limits to the production for these types of facilities in the commercial districts that are similar to existing limits currently noted in various State Statutes: Brewpub: current State Statute. Small Brewery: 20,000 barrels per year. Farm Winery: 50,000 gallons per year. Micro -distillery: 40,000 proof gallons per year. of 5 1/7/2014 1:22 PM Print Agenda Item http://agenda.ci.shakopee.mn. us/print_ag_memo.cfm?seq=794&rtv_nu. Brewpubs are noted as current State Statute, due to recent proposals in legislation that may raise the production cap on brewpubs. If State Statute were to be revised, staff prefers that the ordinance not require an amendment if State Statute were to be modified. Staff is also proposing the addition of breweries (regardless of size), farm wineries (regardless of size), distilleries (regardless of size), and to the Light Industry (I-1) and Heavy Industry (I-2) as permitted uses, because of their similarity to manufacturing and processing operations, which is already permitted, taprooms would be added as a conditional use in the Industrial zones because of their retail nature. Staff believes the proposed text amendment would allow for popular destination type businesses to be located in the City, as well as clarify definitions for the future. Planning Commission Recommendation: The proposed text amendment was heard by the Planning Commission at the November 7th meeting and received a unanimous positive recommendation. Staff has further reviewed the language and has made changes to the language since the Planning Commission's review. One change is in relation to the operation of a Small Brewery, Winery, or Micro - Distillery in the Central Business, B-3 zone. Staff believes it is important for a retail component to exist in the downtown, and has changed the language to require that a taproom or tasting room be part of the operation of a small brewery, farm winery, or micro -distillery in the Central Business District Zone and some of the other retail zones. Staff has also added the Major Recreation Zone and Business Park zone to the districts where these types of businesses would be permitted, since a large amount of the vacant available land that may be attractive to these uses is in these two zoning districts. Staff has also removed the requirement for a conditional use permit for brewpubs in the commercial zones, since a brewpub would have been previously permitted as a similar use to a restaurant, which is consistent with other cities regulations. The production for a brewpub is limited by statute, so staff would not anticipate potential issues that would require review by the Board of Adjustment. Although state statute does not directly mention tasting rooms for wineries and distilleries as it does for taprooms, staff believes it is important to clarify and have standards for these areas. Staff has also drafted conditions for the City Council's review for Parking standards, and Conditional Use Permit standard sections in City Code Chapters 11.87 and 11.88. The conditions are in the attached language document and relate to disposal of waste products, production reporting, and outdoor seating areas. The parking standards proposed for these uses match standards already in code relating to bars and restaurants, or manufacturing operations. The standard for Class II Restaurants, which are restaurants that serve alcohol is 1 space per 3 seats + plus 1 space per 50 square feet for areas that people are typically standing, such as a dance floor, areas near a stage, or in the vicinity of a bar area, or areas where there are tables and no seats. The same standard used for Class H Restaurants is proposed for Brewpubs, Taprooms, and Tasting Rooms. The parking standard proposed for breweries, wineries, and distilleries is 1 space per 500 square feet, or 1 of 5 1/7/2014 1:22 PM Print Agenda Item http://agenda.ci.shakopee. mn.us/print_ag_memo.cfm?seq=794&rev_nu... per employee on the largest shift, whichever is larger. This standard is consistent with the standards for manufacturing facilities. If the production operation has a tasting room or taproom component, the additional parking requirements for those uses would apply. Recommendation Staff recommends approval of Ordinance No. 877, an ordinance amending several sections of Chapter 11 (Zoning). Budget Impact There is no immediate budget impact as a result of this ordinance, however it may encourage the construction of a new facility in Shakopee or encourage the use of a currently vacant space, which would result in an increase in the tax base. Relationship to Vision This text amendment relates to City Goal B in that it allows for the development of potential destination type businesses, which is in line with Shakopee's marketing as an entertainment and tourist destination. The craft brewing, distilling, and winemaking industries have grown significantly in recent history. The proposed text amendment allows for Shakopee to be part of a growing industry and to be ready to attract new businesses that are similar to existing businesses and can be operated without interfering with surrounding land uses, whether residential or commercial. Staff have already been contacted by other cities and counties researching regulations for these types of businesses. Requested Action Make a motion to approve Ordinance No. 877, an ordinance amending the zoning code relating to breweries, brewpubs, taprooms, tasting rooms, wineries, and distilleries and move its adoption. Attachments Ordinance No. 877 of 5 1/7/2014 1:22 PM