IN RE: O Halloran Properties, LLC d/b/a The 9 th Hole th Avenue Grinnell, Iowa DOCKET NO. A DIA NO.

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1 Terry E. Branstad Governor of Iowa Kim Reynolds Lieutenant Governor Stephen Larson Administrator IN RE: O Halloran Properties, LLC d/b/a The 9 th Hole th Avenue Grinnell, Iowa Liquor License No. LC DOCKET NO. A DIA NO. 12ABD004 ADMINISTRATOR S FINAL ORDER NOW, on this 31 st day of October 2012, this matter comes before the Administrator of the Alcoholic Beverages Division (ABD) on the Notice of Appeal filed by O Halloran Properties LLC, d/b/a The 9 th Hole (Licensee). Upon consideration of the information provided by the parties, the findings of fact, conclusions of law and other information, the Administrator has affirmed the Administrative Law Judge (ALJ) order dated June 29, PROCEDURAL HISTORY On March 5, 2012, the City of Grinnell (City) approved the application for renewal of the class C liquor license, LC-36058, filed by the Licensee, but denied the Licensee s renewal application for the Outdoor Service Area. On March 20, 2012, the Licensee appealed the denial of the Outdoor Service Area to the ABD. A hearing on the above-captioned matter was held pursuant to the provisions of Iowa Code chapters 17A and 123 on June 25, The hearing was held by the ABD s administrator s designee, Administrative Law Judge (ALJ) Margaret LaMarche of the Department of Inspections and Appeals by telephone. Attorney William J. Sueppel represented the City and Attorney John C. Wagner represented the Licensee. The ALJ issued a Proposed Decision affirming the City s denial of the Licensee s Outdoor Service Area on June 29, The ALJ concluded the City had reason to deny the renewal application for the Licensee s Outdoor Service Area for repeated noise complaints. The Licensee appealed the Proposed Decision on July 24, 2012, to the Administrator within the required time period. In an Order dated July 30, 2012, the Administrator granted the Licensee s request for review and established a schedule for the parties to file objections or exceptions and present briefs in support 1

2 of their respective positions. The objections or exceptions and briefs of the appealing party were due on or before August 29, 2012, and responsive briefs were due on or before September 28, The record reflects that all briefs were timely filed by the parties. BASIS FOR THE APPEAL The basis for the Licensee s appeal is that the ALJ erred by concluding the City s exercise of discretion in denying the renewal of the outdoor service area was not irrational, arbitrary or capricious. The Licensee asserts that they were never in violation of the noise or nuisance ordinance, the City never provided written justification for the Outdoor Service Area denial, and that the Licensee did take measures to reduce the noise and nuisance complaints. The Licensee questions whether the noise complaints were justified and whether council members disapproving sentiment caused an arbitrary decision. FINDINGS OF FACT 1. In 2007, sole owner Jerry Michael O Halloran purchased a property that is zoned commercial, located at th Avenue, Grinnell. The property is located along a state highway with truck traffic. Mr. O Halloran renovated the building on the property into a bar. In the past the building had been a state-run liquor store. 2. On April 8, 2008, O Halloran Properties, LLC, d/b/a The 9 th Hole, was issued liquor license LC Shortly thereafter, the Licensee was approved for an outdoor service area. The outdoor service area is a concrete patio, defined by flowering planters and accessible from two doors on the west side of the building. The outdoor service area has two outside speakers that play music from the jukebox. The closest residence is approximately 20 to 25 feet from the south side of the outdoor service area patio. 3. On December 30, 2011, Grinnell Police Chief Jody L. Matherly spoke to Mr. O Halloran by telephone about the number of calls for service coming from the Licensee and furthermore sent a letter and documentation to Mr. O Halloran detailing the Licensee s calls for service since 2008 and comparing them to similar establishments in Grinnell. 4. A calls for service log sent to Mr. O Halloran by the Grinnell Police Department on December 30, 2011, showed the following: Calls for Service (total): th Hole: 35 9 th Hole: 18 9 th Hole: 40 9 th Hole: 39 Rabbits: 8 Rabbits: 9 Rabbits: 13 Rabbits: 16 Eagles: 4 Eagles: 9 Eagles: 5 Eagles: 11 Gametime: 3 Gametime: 1 Gametime: 2 Gametime: 6 2

3 Noise Calls for Service: th Hole: 14 9 th Hole: 6 9 th Hole: 12 9 th Hole: 17 Rabbits: 0 Rabbits: 0 Rabbits: 0 Rabbits: 0 Eagles: 0 Eagles: 0 Eagles: 0 Eagles: 0 Gametime: 1 Gametime: 0 Gametime: 0 Gametime: 0 Disturbance Calls for Service: th Hole: 4 9 th Hole: 5 9 th Hole: 12 9 th Hole: 8 Rabbits: 2 Rabbits: 3 Rabbits: 5 Rabbits: 5 Eagles: 0 Eagles: 1 Eagles: 1 Eagles: 5 Gametime: 0 Gametime: 0 Gametime: 0 Gametime: 1 5. The calls by caller logs sent to Mr. O Halloran by the Grinnell Police Department on December 30, 2011, listed calls made by the Rupe and Jacoby families from January 1, 2008, to November 30, 2011, complaining about The 9 th Hole. The Rupe residence made a total of 39 complaints and the Jacoby residence made a total of 19 complaints during this time period. 6. Additional logs sent to Mr. O Halloran by the Grinnell Police Department on December 30, 2011, identified additional citizens who had called the police to complain about the Licensee. 7. The City has a noise control ordinance (Chapter 53) which requires the decibel level to be no more than 65 in a commercial neighborhood, without a noise permit. In a residential neighborhood the decibel level cannot be more than 60 decibels between 7:00 a.m and midnight, and no more than 55 decibels between midnight and 7:00 a.m, without a noise permit. The Licensee has never been charged with a noise control violation. 8. The City has a public peace ordinance (Chapter 40) which under disorderly conduct restricts any person from making loud and raucous noise in the vicinity of any residence or public building which causes unreasonable distress to the occupants. The Licensee was charged one time with disorderly conduct, but the charge was dismissed by the magistrate. 9. On February 6, 2012, the Grinnell Public Safety Committee met and discussed the Licensee s nuisance and noise issues. Mr. O Halloran was present at this meeting. Suggestions were given to Mr. O Halloran to reduce the nuisance and noise issues which included getting staff state training, hiring a bouncer, fencing the outdoor service area, removing alcohol sales in the outdoor service area and only allowing smoking on the patio. Mr. O Halloran did not implement any of these suggestions. 10. On February 20, 2012, the Grinnell Public Safety Committee held a meeting and discussed further the Licensee s nuisance and noise issues. Mr. O Halloran was present at the meeting. Citizens spoke to the committee about their complaints with the Licensee which included, yelling, cursing, noise, foot traffic, and trash coming from the Licensee, things being thrown on vehicles, and the carrying of alcohol away from the Licensee s premises. The committee 3

4 recommended the Licensee construct a fence around the patio, restrict people from drinking alcohol on the patio, receive staff training, hire a bouncer or security, increase owner presence, and turn the speakers off to the patio. Mr. O Halloran did not implement any of these suggestions. 11. On March 5, 2012, the Grinnell Public Safety Committee met and reviewed the Licensee s nuisance and noise issues. Mr. O Halloran was present at the meeting. The committee made a decision to recommend to the City Council that the Outdoor Service Area be denied and explained the reason for the denial. On March 5, 2012, the City Council received the recommendation from the Grinnell Public Safety Committee and denied the renewal of the Licensee s Outdoor Service Area. Mr. O Halloran was present at the meeting. CONCLUSIONS OF LAW Iowa Code (2) states that the local authority shall either approve or disapprove the issuance of a liquor control license, retail wine permit, or retail beer permit; shall endorse its approval or disapproval on the application; and shall forward the application with the necessary fee and bond, if required, to the division. Under Iowa Code (7) an applicant for a liquor control license may appeal from the local authority s disapproval of an application for a license to the administrator. In the appeal the applicant is given the opportunity to demonstrate that the applicant complies with all of the requirements for holding the license. Iowa Code 123.3(25) defines licensed premises or premises to mean all rooms, enclosures, contiguous areas, or places susceptible of precise description satisfactory to the administrator where alcoholic beverages, wine, or beer is sold or consumed under authority of a liquor control license, wine permit, or beer permit. A single licensed premises may consist of multiple rooms, enclosures, areas or places if they are wholly within the confines of a single building or contiguous grounds. 185 Iowa Administrative Code 4.13 further details outdoor service areas and licensing requirements (123) Outdoor service. Any licensee or permittee having an outdoor, contiguous, discernible area on the same property on which their licensed establishment is located may serve the type of alcoholic liquor or beer permitted by the license or permit in the outdoor area. After a licensee or permittee satisfies the requirements of this rule, they may serve and sell beer or liquor in both their indoor licensed establishment and in their outdoor area at the same time because an outdoor area is merely an extension of their licensed premise and is not a transfer of their license. A licensee or permittee, prior to serving in the outdoor area, must file with this division: 1. A new diagram showing the discernible outdoor area. 2. A letter from licensee or permittee telling what dates the outdoor area will be used. 4

5 3. A letter from local authority approving the outdoor area. 4. A letter from the insurance and bonding companies acknowledging that the outdoor area is covered by the dramshop insurance policy and the bond. Iowa Code 123.3(26) defines local authority to mean the city council of any incorporated city in this state, or the county board of supervisors of any county in this state, which is empowered by this chapter to approve or deny applications for retail beer or wine permits and liquor control licenses; empowered to recommend that such permits or licenses be granted and issued by the division; and empowered to take other actions reserved to them by this chapter. BASIS FOR DECISION What is in question in this particular case is whether the City abused its discretion when denying the Licensee s application for renewal of the Outdoor Service Area. The Licensee first argues that they could only speculate the reason for their outdoor service area denial because they never received a written justification for the denial. However, the Administrator does not find this argument persuasive. Neither Iowa Code chapter 123 nor 185 Iowa Administrative Code requires a written justification for a denial of an outdoor service area. According to the record, the Licensee was notified about the number of calls for service, including noise and nuisance complaints, among others, on December 30, 2011, during a telephone conversation with the Grinnell Chief of Police. Additionally, the Chief sent a letter on December 30, 2011, to the Licensee which summarized the telephone conversation, detailed the calls for service, and put the Licensee on notice to develop a plan to reduce the unacceptable level of calls for service. Moreover, the Licensee was present at the February 6, 2012, February 20, 2012, and March 5, 2012, Grinnell Public Safety Committee Meetings and City council meetings where there were extensive discussions about the types of complaints coming from the Licensee, including nuisance and noise complaints. Additionally, the Licensee was present when the Public Safety Committee recommended the outdoor service area denial to the city council and when the city council denied the renewal of the outdoor service area. The Licensee surely knew the justification for the denial after all of the in-person, telephone, and written correspondence with the City. Additionally, in the Licensee s Notice of Appeal, the Licensee acknowledges the types of complaints the City used for denying the renewal of the outdoor service area. The Licensee next argues that they were never found to be violating the noise or nuisance ordinances and that the denial of the outdoor service area by the City was unjustifiable. The Licensee may not have been charged and convicted of any noise or nuisance ordinance, but the high level of calls for service when compared to other establishments was not acceptable to the City. Although complaints primarily came from two residences, there were other people complaining about the Licensee. Additionally, testimony was provided that on occasion officers in the vicinity of the Licensee were surprised that they had not received noise complaints about the Licensee. The Licensee also questions comments allegedly made by council members about not wanting the Licensee s business in the City, arguing that this caused the City council to make an 5

6 arbitrary decision. This argument is without merit. Based on the record, hearing testimony, and evidence reviewed by the Administrator, the local authority based their decision on justified complaints. The City attempted to assist the Licensee in reducing the repeated calls for service. Recommendations to reduce complaints were provided to the Licensee at the Grinnell Public Safety Committee meetings. These recommendations included fencing in the outdoor service area, removing alcohol consumption in the outdoor service area, using the patio for smoking only, hiring a bouncer or security, training staff, increasing owner presence particularly in the evenings, and turning the speakers to the patio off. The Licensee did testify about measures he had taken in the past to minimize complaints like providing TIPS training to employees, hiring patio security, and providing owner presence during the day. However, the Licensee explained that none of them had an effect on reducing complaints in the past, alluding that there was no reason to implement these measures again. The Licensee testified about many measures that were currently in practice, although none of which were initiated after meetings with the Grinnell Public Safety Committee or City council. These actions included setting the jukebox to not exceed 60 decibels, having employees periodically check the patio for trash, placing two trash receptacles on the patio, installing a fence on the south side of the premises, and limiting live music/karaoke. However, it is obvious, based on the calls for service records, that the implementation of these actions was not enough to reduce the calls for service coming from the Licensee and further action by the Licensee was required. On a review of the record, hearing testimony, and evidence by the Administrator, none of the suggestions proposed to the Licensee by the City were implemented after the February 6, 2012, Public Safety Committee Meeting and prior to the outdoor service area denial by the City council. With the Licensee reportedly receiving 50 percent of revenue from sales in the outdoor service area, it is alarming to the Administrator that the Licensee did not implement any of the recommendations or actively develop a plan to minimize the calls for service. The Licensee s apparent unwillingness to implement preventative measures was unacceptable to the City. The Licensee was given ample time to execute changes to reduce complaints, but the Licensee failed to do so. The decision taken by the City to deny the renewal of the outdoor service area was undoubtedly a reasonable and conscientious action. Therefore, the ALJ accurately concluded the City s decision to deny the renewal of the outdoor service area was not irrational, arbitrary, or capricious. ORDER Based on the information provided by the parties, the Administrator hereby ADOPTS the Findings of Fact, Conclusions of Law, and the Decision and Order proposed by the ALJ. IT IS THEREFORE ORDERED that the decision of the City to deny the renewal application for the Outdoor Service Area associated with liquor license LC-36058, filed by O Halloran Properties LLC, d/b/a The 9 th Hole, th Avenue, Grinnell, Iowa, is hereby AFFIRMED. 6

7 The parties are hereby notified that pursuant to Iowa Code 17A.19, this Order constitutes final agency action for the purpose of Iowa Code chapters 17A and 123. This Order becomes final unless a party to the hearing files a Petition for Judicial Review with the Iowa District Court within 30 days from the date of this Order. Moreover, the parties are notified that pursuant to Iowa Code 17A.19(5), the filing of a petition for judicial review does not automatically stay execution or enforcement of the ABD s action. The ABD may grant a stay on appropriate terms or other temporary remedies during the pendency of judicial review. If the ABD refuses to grant the stay or other temporary remedies, the court may grant the relief. The Outdoor Service Area associated with liquor license LC will expire effective 12:00 A.M. on November 30, Liquor, wine, and beer may not be sold, served, consumed or given away by any person in or on the Outdoor Service Area after the expiration of the Outdoor Service Area, unless a stay or other temporary remedies are granted by the ABD. If the ABD refuses to grant a stay or other temporary remedies, the court may grant the relief. DATED this 31 st day of October 2012, in Ankeny, Iowa. IOWA ALCOHOLIC BEVERAGES DIVISION STEPHEN LARSON Administrator 7

8 Copies to: Margaret LaMarche Administrative Law Judge Department of Inspections & Appeals 3 rd Floor, Wallace State Office Building Des Moines, Iowa John Lundquist Assistant Attorney General Iowa Department of Justice Hoover State Office Building Des Moines, Iowa Lt. Randall Jones ISP, District # th Avenue S.W. Cedar Rapids, Iowa Police Chief Dennis Reilly Grinnell Police Department th Avenue Grinnell, Iowa William J. Sueppel Attorney at Law 122 S. Linn Street Iowa City, Iowa City Clerk City Hall th Avenue Grinnell, Iowa Steve Bogle Iowa Lottery 2323 Grand Avenue Des Moines, Iowa Steven Mandernach Social Gaming Unit Lucas State Office Building Des Moines, Iowa Karen Freund Deputy Administrator of Regulation Iowa Alcoholic Beverages Division 1918 SE Hulsizer Rd Ankeny, Iowa John C. Wagner Attorney at Law th Avenue PO Box 262 Amana, Iowa