Council Members Waive $90K in Fees for Bars and Restaurants, But Some Want More Control

East Lansing’s City Council has voted unanimously to eliminate fees charged to bars and restaurants for the coming fiscal year, a move that will cost the City’s budget about $90,000 while helping many local businesses struggling to stay alive during the public health emergency caused by COVID-19.

But the discussion of the topic at Council’s April 30 meeting indicates that some City leaders are interested in figuring out if local laws or even the City Charter could be amended to allow City officials to shut down bars in the event of things like post-game riots and public health emergencies.

Fees vary by location, size, and use.

The temporarily fee elimination will help restaurants and bars in East Lansing that are normally charged annual fees by the City, with bills sent out in late spring for the coming fiscal year (July 1 – June 30).

The fees are based on the number of occupants the restaurant or bar is licensed to hold. The per-occupant fees go up as the number of possible occupants rise. Businesses in the “Central Business District” downtown pay twice those outside downtown, and an entertainment license doubles the cost.

By way of example, if fees were not being waived for the next year, a bar up on the north side of town with a legal occupancy limit of 50 people would pay $50 per year, or $1/person. An entertainment license for such an establishment – as required to have a live performer – would cost another $50 per year.

By comparison, a downtown bar that holds 500 people would pay $4,000 per year, or $8/person. Holding an entertainment license would double that fee, to $8,000 per year.

City Manager says these fees help pay for bar-related policing.

At the April 30 meeting, City Manager George Lahanas told Council that differential fees are justified because, he said, larger establishments in East Lansing use more public resources per customer. He noted that one ELPD officer spends about half his time on alcohol enforcement issues, resulting in $30,000 – $40,000 per year in direct costs of downtown policing.

“The law enforcement needs are considerably different” with the big bars versus small restaurants, Lahanas told Council. He recommended that, in light of the pandemic shutting down restaurant and bar service, Council pass a one-year reduction of fees of up to $2,000 per establishment.

The Downtown Development Authority (DDA) unanimously supported a fee reduction, as did the Responsible Hospitality Council (RHC), a local trade group of downtown bars. City Clerk Jennifer Shuster told Council a reduction of up to $2,000 per establishment would mean a loss to the City of about $48,000 in expected revenue and that about 124 businesses would benefit.

Under the proposed plan of eliminating up to $2,000 in fees per business, all but four businesses would have had their fees zeroed-out. The four left to pay about $40,000 in total to the City were named at the meeting as being Harper’s, Dublin Square, Reno’s East, and Buffalo Wild Wings.

According to data about East Lansing liquor licenses provided by City staff to Council, Harper’s is by far the biggest bar in East Lansing, with a permissible occupancy of 950 people, over twice the next two largest, which are Rick’s (downtown) with 353 people allowed, and Reno’s East (on Abbot Road) at 352 allowed.

Harper’s pays the most – about $19,000 per year in fees to the City of East Lansing.

The owners of Harpers challenged the staff-recommended approach

At the electronically-held meeting of Council, Pat Riley and Trish Riley, who own Harper’s and P.T. O’Malley’s, both spoke during the public comment period to reiterate what they told Council in a letter: an across-the-board fee reduction of $2,000 was, in their opinion, unfair. They sought instead a percentage-based fee reduction, if not a complete elimination of the fees.

Pat Riley, who also currently serves as the RHC Chair, told Council at the April 30 meeting that he had looked at what the sixteen largest Michigan cities charge and that East Lansing’s fees are way out of line – far above others’ fees.

According to Riley, ten of the sixteen largest cities “have no license fees whatsoever” and “The remaining six charge from $35 to $1,347. This is a significant difference from the current range of $50 to $19,000” in East Lansing.

Riley suggested that instead of using this fee approach that raises about $90,000 from bars and restaurants per year, East Lansing charge every business of every type $100 per year – an approach Riley says would raise $254,000 per year and would allow the City to easily contact all businesses during emergencies, because the City would obtain all contact info via the annual licensing.

Council members all support the fee reduction

In her support of the fee reduction, Mayor Ruth Beier said that asking businesses to pay for activities they aren’t currently allowed to even undertake “seems just patently unfair.” She said her goal was “keeping businesses in town in business.”

But Council member Jessy Gregg questioned the City staff’s idea of effectively giving more relief to smaller local businesses than medium-sized ones through a one-size-fits-all fee reduction plan of up to $2,000 per business.

As an owner of a downtown fabric store, Gregg observed that, compared to small businesses like hers, medium-sized businesses like Harper’s have higher overhead and maintenance costs, which can be harder to meet during the shut-down. Larger businesses also face higher restart costs.

City Manager Lahanas responded by saying that City staff thought it would be “disproportionate” to give a percentage-based fee discount since it would mean some businesses would obtain relief in the hundreds of dollars while others would obtain it in the tens-of-thousands range.

Lahanas named this as an “equity” issue and said that, with a percentage discount, some businesses would get a “huge incentive or benefit” while others would get little.

But Gregg pushed for complete elimination of the fees for this year, a move supported by Council member Mark Meadows in his motion on the subject.

Meadows said the City should move funds “from the rainy day fund” into the City’s General Fund to make up for the loss during the period at issue (July 2020 through June 2021). Meadows also said that Council could later take up the suggestion from the Rileys about reforming the entire fee structure.

More regulation coming?

Council voted unanimously in favor of zeroing out these fees for the next fiscal year, but Beier noted in a subsequent discussion about liquor licenses that she was unhappy with the City’s inability to shut down the bars “when the pandemic hit” in March. She said she was concerned then about thousands of students “putting themselves and others at risk” by partying at bars and at off-campus housing.

“I was freaking out that we were going to become a hub of the virus,” she said. Consequently, at the April 30 meeting of Council, Beier instructed City Attorney Tom Yeadon to “be thinking” about how to amend the City’s Charter or laws so that “when this happens again,” Council could act and not have to wait for the county health department or state officials to act.

Meadows, a former mayor, referred to the city’s “history of sports-related riots” and said he would like to see a way for the City to be able to close down bars and restaurants when trouble is brewing. He supported the idea of Yeadon looking into ordinance or charter changes to give Council more authority.

For her part, Council member Lisa Babcock said that she believed the City could take more action with liquor license issues. She did not mention the Special Use Permit (SUP) process the City already uses to regulate alcohol-selling businesses, and said she would like to see a new board or commission created to address concerns about liquor-license holders in East Lansing.

But Gregg raised a flag of caution, saying, “We already have a lot of barriers to people doing business in East Lansing.” She said she was “leery of adding another stumbling block” and said she wanted to understand more before any action adding more layers of regulation.

Beier responded that whatever is proposed by the City Manager and City Attorney, “we might not do at all.”

Mayor Pro Tem Aaron Stephens pointed out that MSU’s Celebrations Committee is supposed to deal with some of these issues. That large committee, which spans MSU and the City, is designed to “anticipate, plan for and communicate about events that might involve a celebratory atmosphere,” but in fact, the group hasn’t been meeting of late.

Stephens also said he shared the concerns raised by Gregg about over-regulation, and noted that the RHC had also asked for additional measures to be taken, including a moratorium on eviction of commercial tenants and continuation of free parking downtown for thirty days after businesses are allowed to start having customers inside again.

These issues may be taken up at future meetings. For now, businesses that want to have restaurant and entertainment licenses through June 2021 will still have to file for annual renewal.

According to the City, “While these license fees have been eliminated, businesses that maintain business and/or entertainment licenses are still required to submit a renewal application. The East Lansing City Clerk’s office is preparing to mail renewal applications to businesses in early May and applications must be submitted to the City Clerk’s office, 410 Abbot Road, by June 30.”

Disclosure: The Responsible Hospitality Council (RHC) has provided financial support to East Lansing Info.

Correction (May 11, 3:30 p.m.): This article originally reported occupancy numbers for Harper’s, Dublin Square, and Reno’s that added their outdoor seating to the indoor number allowed. These bars must in fact limit their total occupancy to what is allowable indoors. This error has been corrected, and the occupancy level for Rick’s has been added. (See the data from the City here.)