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HomeMy WebLinkAboutPUBLIC HEARING - 2017-05-17 CITY OF LIVONIA PUBLIC HEARING Minutes of Meeting Held on Wednesday, May 17, 2017 ______________________________________________________________________ A Public Hearing of the Council of the City of Livonia was held at the City Hall Auditorium on Wednesday, May 17, 2017. MEMBERS PRESENT: Kathleen E. McIntyre, President Brandon M. Kritzman, Vice President Jim Jolly Brian Meakin Cathy K. White MEMBERS ABSENT: Scott Bahr Maureen Miller Brosnan OTHERS PRESENT: Mark Taormina, Director of Planning Eric S. Goldstein, Assistant City Attorney Bonnie J. Murphy, CER-2300, Certified Electronic Recorder The Public Hearing was called to order at 7:00 p.m. with President Kathleen McIntyre presiding. The Public Hearing is relative to an appeal of the denial of the Planning Commission regarding Petition 2017-03-02-05 submitted by 7-Eleven, Inc. and Fazal & Khurram Corporation, requesting waiver use approval to utilize an SDM liquor license (sale of packaged beer and wine) in connection with the operations of a convenience store (7-Eleven) and gas station (Mobil) located on the southeast corner of Eight Mile and Mddlebelt Roads (29321 Eight Mile) in the Northwest ¼ of Section 1. The City Clerk has mailed a notice to the Petitioner and those persons in the area affected by the proposed changes, and all other requirements of Ordinance No. 543, the Zoning Ordinance, have been fulfilled. The public hearing is now open for comments. There were four people in the audience. Please state clearly your name and address before making your comments. McIntyre: Mr. Taormina, could you give us some background, please. Taormina: The Petitioners in this case own and operate a 7-Eleven convenience store and a Mobil gas station that is located on the southeast corner of Eight Mile and Middlebelt Roads. The property in question is about 1.25 acres in size, it’s 230 feet of frontage along Eight Mile Road and 225 feet of frontage on Middlebelt Road. The zoning is C-2, General Business, 2 where SDM liquor licenses are permitted but subject to waiver use approval under Section 11.03(r) of the Zoning Ordinance. So the Zoning Ordinance says that there are special requirements that they apply to these types of licenses. SDM licenses are designated Specialty Designated Distributor Licenses, they’re allowed to sell beer and wine products on the premises. The ordinance stipulates that any proposed SDM license cannot be located within 500 feet of an existing SDM licensed business. The staff looked at the closest SDM licensed business from this location, the closest is with the Cantoro Italian Market which is located about ½ mile to the south which is further than the 500 feet stipulated under the zoning ordinance. The other special requirement that applies is Section 11.03(r)(2) which specifies that the SDM licensed establishment cannot be closer than 400 feet from any church or school building. There is a church directly across the street in Farmington Hills at the corner, this distance, however, is measured from building to building and from everything we can tell the distance between the two buildings is about 500 feet, so that provision is complied with as well. And then looking at the closest church, or the next closest church within the City of Livonia, that would be Clarenceville Methodist Church which is about 680 feet to the south. As far as schools are concerned, Clarenceville Middle School is approximately 1500 feet to the south. The Planning Commission did review this item at their Public Hearing on th April 11 and had denied the petition and is the reason for the appeal this evening. The reasons for that denial are identified in the letter that should be a part of your packet and with that, Madam Chair, any questions that you might have. McIntyre: Thank you. Would anyone like to question the Petitioner at this time? Ormond: Good evening. McIntyre: Good evening. Ormond: My name is Steve Ormond, I’m from the Clark Hill law firm, we represent 7-Eleven Corporation and we also represent Fazal & Khurram Corporation which is the franchisee for the store. With him today are Brian Hopper with 7-Eleven and the manager of the store, Mr. Rahal Agnihotri. We submitted a fairly substantial letter almost to the point of brief and I’m almost apologetic for having to subject to Council so much legal stuff, but basically the bottom line is as we explained in the letter, the City, I think, is in a very good position here because the City has not outright barred alcohol sales which under state law could do potentially. The City has decided to regulate and in this case with beer and wine the City has decided to establish some standards so that they can regulate and understand what their obligations are. This is one of those cases. There 3 is no doubt what the standards are, Mr. Taormina went through them and those standards are met. The Planning Commission’s resolution denying the application of the Petitioner did not cite that there were any of the – correctly cite, I should say, any of the applicable standards. And as I explain in the letter, there is no basis to conclude anything other than this store meets the requirements. Now, by way of further background, this is a more recent development that gasoline stores could be permitted to carry beer and wine. There was under previous law which was changed in January of this year, a general requirement that if you were a gas store operation if you wanted to carry beer and wine you had to have an inventory of a quarter million dollars and you had to maintain that inventory. And most of the smaller convenience stores including most of the 7-Elevens in the City, would not be able to comply with that inventory requirement. So if you were a gas store, you would not be able to sell beer and wine, however your larger scale retail operations were permitted to carry beer and wine. So the legislature, I think, recognized the unfairness of this when it changed the law effective January 1 of this year and allowed existing gasoline stores to apply for beer and wine licenses. The legislature did that by removing the inventory requirement and kind of in exchange the regulatory committee agreed and the legislation provides that they can now sell beer and wine licenses. That has not been the case until this year. So, in this case as far as I know, this store is the only gas store that has applied in the City, as far we know that’s the case. What we’re really asking for is simply that the Council’s recognition that this particular convenience store should be allowed to operate as most other convenience stores in the City operate. To the extent that the concern is over the sales of gasoline with beer and wine, the legislature has specifically addressed that and is allowing it and the City of Livonia as I’m aware has not made any zoning changes or updates since that legislation. So, I think it’s a simple case, I realize that the zoning requirements under Section 11 are referred to as waivers, but it’s an unfortunate word in this case because we’re not asking for anything to be waived. This is not a case where we’re changing the use of a property in any way, we’re not changing the nature of the operation in any way, there is simply nothing about this that is anything other than putting this store in the same footing as all others. And the only other possible ordinances that could apply would be in Section 19 which is sort of the general requirements, applying the general zoning requirements and they deal implicitly with the physical appearance, the use of the property. There is one provision that talks about whether the use proposed would be in conformity with the existing uses in the area 4 and as you can see from the Planning Commission’s resolution, this language was picked up sort of, not completely, and concluded that it would be in conformity with the existing uses in the area but I just have to ask, how can that possibly be when the changes that would be brought into play bringing beer and wine into this store would simply be the addition of a few additional inventory items on a list of inventory of approximately 1500 skus or so , there might be 50 additional category items or skus as they say in the industry, s-k-e-w. Meakin: S-k-u. Ormond: S-k-u, sorry. Well, it’s really not set forth in the zoning ordinance, per se, I think it might be helpful if the Council heard a little bit from these gentlemen. I first ask that Brian come to speak to the question of whether or the character of the use would be changed in any significant way and also make himself available for any questions on that store. So if it’s allowable, I’d like to invite Brian up to talk. McIntyre: And if you’d just provide your name. Hopper: Good evening. It’s Brian Hopper, my address is 805 Stephenson Highway, Troy, Michigan. So as far as changing use of the business, there’s going to be no change in the use of the business, it’s still going to be operated like a 7-Eleven convenience store. It will still be operated the same way as the stores down the street. And as far as look and feel of the building from the outside, there will be no change as far as our standards go, there will be no additional signage calling out beer, wine, no promotional signs on the front doors. The inside of the store, the only changes would be two of the cooler doors, we were hoping to have beer and wine in those two doors and possibly a warm beer display in possibly one of the end caps. Those doors will be secure, and the locks have already been installed. What questions do you guys have for me? Jolly: Madam President. McIntyre: Councilmember Jolly. Jolly: Other than the fact that your name is Brian Hopper, who are you and what’s your position to the point you’re speaking on it? Hopper: I apologize. It’s Brian Hopper and I’m with 7-Eleven. My title is field consultant so I represent 7-Eleven Corporate and I work with our franchisees, their business, any issues they may have, help them better serve their customers. 5 Jolly: Out of these establishments that you represent, what percentage has beer and wine sales? Hopper: I have eleven stores now, I have a couple in Livonia and a few in surrounding communities. I have two gas stations, one has a conditional license, this one we’re talking about we’re working on the license, everyone else has a beer and wine license and then I have two stores that also have a liquor license as well. Jolly: Where are the gas stations that have those? Hopper: The other gas station that has the preliminary license is in Madison Heights. Jolly: Thank you. White: Madam Chair. McIntyre: Councilmember White. White: Could you tell me what is your estimate of your percentage of sales at this store attributable to beer and wine as opposed to other items? Hopper: In dollars, so, I looked at the store down the street, it’s just north of Five Mile on Middlebelt, so just a few miiles south, it’s a little bit smaller volume store so they do just under $2,000 a day and their beer and wine sales are around $200 a day. White: Thank you. Kritzman: Madam Chair. McIntyre: Anyone else have any questions? Vice President Kritzman. Kritzman: Well, Madam Chair, I guess the follow-up question I would ask to Councilwoman White’s question is do you foresee a similar number for this store? We’re talking about the 7-eleven at Five Mile and Middlebelt, correct? Hopper: Yes. I would assume it would be similar but I think that would be after some time and I’m not sure that we would even be able to get to that level. For example at the Five and Middlebelt store he’s got a fairly large beer display compared to what they could possibly have at this store. At Five and Middlebelt I think he has four cooler doors which are larger by about 30 or 40 percent per door than this store at Eight Mile and Middlebelt and 6 then he also has I believe six to 12 feet of warm beer displays where it would be a third of that at the Eight Mile and Middlebelt store. Kritzman: Thank you. McIntyre: Would anyone else in the audience like to speak? You’re welcome to make a comment. Ormond: Thank you. You know, let’s face it one of the issues with any kind of alcohol sales is compliance with the laws, primarily issues of underage sales in like situations. We don’t have a record at this store, obviously because they’re not licensed yet but they do sell tobacco products and I thought I would ask Rahul to give a description what they do in order to assure compliance in the tobacco realm and then explain what he plans for the store if beer and wine is permitted. Agnihotri: Rahul Agnihotri, and I’m the store manager and I live in Livonia, 34255 Levan Court, Livonia, Michigan. We check all ID’s, so every employee goes through a training program before they start working on the register and they’re aware of the seriousness of selling tobacco products. And the state has secret shoppers that comes into 7-Eleven that is making sure we are checking the IDs for everyone under 35. So we do whatever we can to make sure that we don’t sell to an underage person. Thank you. If you have any questions you can ask me. McIntyre: Thank you. Mr. Meakin. Meakin: Sir, What percentage of sales do you expect to be in beer and wine? Agnihotri: Like he said, it’s going to be approximately the same kind, but we have only two doors in the store for beer and wine so it might like 200, $250 per day. Meakin: I think that’s considerable considering that’s what the Five and Middlebelt store does with four or five doors and an outside display with wine and warm beer? Agnihotri: I’m not sure, you know, it might be like $150, $200. Meakin: So it brings me back to the point is it really worth putting beer and wine in a small convenience store like that? Agnihotri: Yeah, I believe so because for the smaller business, it’s unfair because they allow bigger business to have liquor license but now since they passed the law now it’s allowed for smaller businesses to have liquor license as well so that’s why we’re requesting 7 Meakin: Where is the liquor license coming from? Agnihotri: Liquor license? Meakin: Yes, beer and wine, your SDM, where is it coming from? Agnihotri: From the State. Meakin: What location did it come from? Agnihotri: You mean the liquor license? Meakin: Correct. Agnihotri: I’m sorry, I can’t tell you. Meakin: Maybe your Counsel has an idea on that. Ormond: Yes, it’s not a transfer situation, it’s a new license. Meakin: I’ll direct that back to Mr. Taormina, I thought we were at our limit. Taormina: Well, this is a little confusing but maybe Mr. Ormond can speak to this with a little more clarity but SDMs historically have been nonquota licenses and at the time the statute was amended I believe they remained nonquota for a period, and in fact this Petitioner, I believe, fell under that nonquota provision. But after there was a grace period and they’ve now established a quota for SDM licenses based on I believe a ratio of one license per 1,000 in population. So, Mr. Ormond, is that your understanding of how the statute that operates? So there is a quota in place today. Prior to the statutory amendments there was no quota on SDM licenses, they were considered a nonquota license so the MLCC would issue those licenses based on compliance under all of the rules and regulations, etc. But we’re below that currently, that threshold of SDM, of the current quota of limits, we’re still below that. Meakin: That number, it would be about 96 SDMs in the City then, so on every corner then? Taormina: Yeah, just about every establishment that carries an SDD license also has an SDM license. So we have many SDM and SDD licensed establishments and that quota is set at about 34 and I believe we currently have 33 that are active, one in escrow. And then add on top of that all of the SDM licensed establishments that are strictly SDM licenses and that, I 8 believe, is upwards of 60 or 70 but I’d have to check the numbers to find out exactly what those are and if you’d prefer, I can get those to you. Ormond: It’s a good question and first of all it’s easy to get confused, at least I have to think carefully about it because there’s a distinction obviously between liquor and beer and wine sales, first of all, and then second, Mr. Taormina did accurately describe what’s happened and there was a grandfathered window opened up in January where the existing gas stores who wanted to apply could apply for a three month period and they would be grandfathered and not subjected to the new quota. That’s what we have in this particular case. That period is gone so all new applications by gas stores for SDM licenses will be bound by a quota and then there is of course the broader implication of an SDM quota which we didn’t have one before. And also, just one comment, the question about the beer sales, it’s the beer and wine is kind of the low profit part of the alcohol equation compared to liquor sales. And I’ve often heard this, I’ve heard this from other liquor stores, 7-Eleven stores, that one of the reasons you want beer and wine is because it does help develop traffic for the other items the store sells, it’s part of making it a convenient stop for someone who is looking to pick up a bag of chips and a six pack. So if you can’t get the six pack, maybe they won’t buy the chips, that kind of thing. Meakin: But the gas is a loss leader for the company? Ormond: I’m not prepared to say loss leader. Meakin: Not many pennies on it? Ormond: I think you’re right, From what I’ve heard, I’m understanding two pennies. Meakin: I believe the Planning Commission did a thorough job going over this petition and I look at the intent of the law, we have a church which is directly across the street which might be technically 500 feet as opposed to 400 but it’s still across the street and there’s another one that’s south of there at 600 feet from the petitioner. I believe as Mr. Taormina mentioned earlier, we have 34 licenses already placed throughout the City, I think we’re well-served in SDM licenses we have them strategically placed throughout the City, so I don’t believe we need one in this location. So I’m going to offer an approving resolution of the denial. McIntyre: All right. So we have an approving resolution of the Planning Commission’s denial. Council, anything else? 9 Kritzman: Madam Chair, just a quick point I’d like to offer as part of an explanation because I’ll be supporting that as well. Some of the comments we heard from, the Petitioner, manager of several locations, we’re consistently trying to put smaller businesses on an equal footing and I think we have been very careful in Livonia to curate a culture and environment where those beer, wine, liquor are all controlled in a very limited sort of way and I’ve never been one to support putting any of this in a gas station. Gas stations obviously have evolved over time based on what they are providing to the public but I don’t think this is a necessary step where it will provide value to the community and create a profitable business for yourself. We also have been consistent in not allowing larger stores to do these sorts of things as well and that is in an effort to continue to fight for the small business community that we do have here in Livonia. So in my mind I think we should continue down that road. Thank you. McIntyre: Thank you. Mr. Jolly. Jolly: Thank you, Madam President. Although I understand the positions stated from my colleagues up here, I don’t necessarily know based on the argument given by Counsel if this is a similar situation in considering the law. Specifically when Mr. Meakin refers to the spirit of the law, I think the statutory interpretation dictates the legislature means what it says when they laid out those distances. So I’m uncertain as of now but I will study this and see how it differs from the issue that we had six or seven months ago when we told Kroger that they could not sell liquor in their store and this could be a very different scenario and I want to make sure we’re in compliance with the law and I will do my due diligence to find out if we area. McIntyre: Anyone else? Anyone in the audience wish to address Council? Mr. Ormond, you’re welcome to. Ormond: If I may, the distance requirements, the 500 foot distance requirement between other licensed facilities, licensed stores, is I think the City’s effort to deal with the over concentration issue, that’s the only way I could see, I can’t see how else it can be interpreted and so I just do want to make a point as I did in my appeal paper, that I think that to the extent over concentration is an issue, it’s addressed by the separation requirement with which we comply. So I did want to tie it together, I’ve never seen an explanation for a distance requirement other than related to over concentration maybe a little bit to the idea of protecting competition. Thank you. McIntyre: Thank you. Mr. Taormina. Taormina: Madam Chair, I’m not sure, did you mention which meeting? 10 McIntyre: I was just going to do that. Thank you for making sure I covered that. The th regular meeting is the meeting of June 5 and that’s at 7:00 p.m. here in the Auditorium and we need to have the Petitioner or your representative if th you would like to have presence for that on Monday June 5. All right. Thank you very much. And we will close the Public Hearing. As there were no further questions or comments, the Public Hearing was declared closed at 7:32 p.m. SUSAN M. NASH, CITY CLERK