Alcohol License Density Ordinance (ALDO) 2013 Madison Central BID PRELIMINARY REPORT on City Staff Team Recommendations

July 1, 2013 BACKGROUND I. What is ALDO? The Alcohol License Density Ordinance was instituted in 2007 as a response to concerns about downtown safety and alcohol-related crime and disorder. It seeks to maintain or gradually reduce the number and capacity of certain types of alcohol beverage licenses, i.e., primarily liquor stores and taverns (50% or more alcohol sales) in the density area. The liquor license options still available were primarily restaurant (less than 50% alcohol sales), hotel, or grocery store. The density area is the isthmus from lake to lake and from Park/Regent/Proudfit to Blair St. In 2011, the ALDO was renewed with changes and a sunset of August 1, 2013: Allowed establishments operating as entertainment venues to locate within the ALDO area. Up to 70% gross annual revenue from alcohol Only 7 of these types of licenses available. (To date, no business has applied.) Increased the time for property owners to replace tenants with same type of license (i.e., grandfathering a tavern in that location) from 1 to 2 years. Possibility of capacity increases with physical changes. Common Council adopted companion resolution which directed staff to develop both an alcohol license management and business development plan for downtown. II. ALDO Annual Review (2012) presented to BID Board: http://www.visitdowntownmadison.com/uploads/media/ALDOreview2013.pdf III. BID Board Position In 2007 and 2011, the BID Board opposed ALDO. BID Board June 2011 position paper. While the BID Board supported several goals of the Alcohol License Density Plan (to decrease the incidence of alcohol-related problems, and to foster a healthy business mix), the BID Board disagreed that ALDO was/is effective in achieving these goals. The BID Board maintained that data do not show a direct link between ALDO and safety, or between an establishments alcohol revenue percentage and whether it is safe and well-managed. Data show a link between problem establishments and crime and disorder, but ALDO does not provide additional tools to address problem establishments. While ALDO was intended to manage business mix, it is not a business or economic development strategy. ALDO also prevented innovative entertainment businesses from wanting to locate downtown. When ALDO was renewed in 2011, the BID Board supported the holistic approach in the companion resolution which directed staff from a variety of departments including Economic Development to develop both an alcohol license management and business development plan for downtown. IV. Current Status At the June 18 Council Meeting, city staff introduced recommendations for downtown alcohol license management and business development, plus a resolution that a) extends ALDO in the short term through the end of 2013; and b) directs staff to present all changes in time to have final Council action prior to the end of the year. BID is a referral committees along with ALRC (lead), Board of Health, Plan Commission, Public Safety Review Committee, and the Economic Development Committee. BID Preliminary Report July 1, 2013 Page 1

PRELIMINARY REPORT ON CITY STAFF RECOMMENDATIONS BID Staff/Executive Committee NOTE: This is a preliminary report with initial thoughts, questions, explanation and analysis, intended to facilitate discussion and analysis by the BID Board, the public, and policy makers. It is not the final report or recommendations of the BID Board. I. Executive Summary: The BID Executive Committee thanks city staff for their thorough, thoughtful work and many good recommendations on downtown alcohol license management and business development. We support the holistic approach to downtown business mix which combines alcohol licensing, business development and safety initiatives. In particular, the BID Executive Committee is pleased to see emphasis on: Enforcement process for problem licensed establishments. Support for the City of Madison Safety Initiative. Allowing/encouraging more diversity of entertainment businesses. Simplifying and streamlining licensing procedures. Business development recommendations grounded in the foundations of retail district success: Clean, Safe, Convenient, with a strong customer base of downtown residents and workers. Business development recommendations (faade improvement grant expansion, guide for businesses) which provide tangible, practical support for businesses and retail in particular.

The BID Executive Committee see the following as main concerns, areas of focus for discussion: Vision: The recommendations would benefit from an explicit vision or set of goals for central downtown, perhaps drawing upon existing approved community visions such as the Downtown Plan, State Street Strategic Plan, and BID Board Retail Strategy/vision for central downtown. Alcohol Licensing Definitions: Large number of categories creates potential for complexity and confusion. State Street Overlay District (SSOD): Needs careful consideration. Understanding that there will likely be a defined district with special regulation downtown, there are questions on size and focus (should it be focused more specifically only on problem areas?). Lack of sunset. As currently written, there is no sunset for the State Street Overlay District (and no requirement for periodic evaluation). Lack of grandfathering or time period after which a licensed business in the SSOD closes that a property owner could secure a tenant with the same license type. This would negatively impact owners of taverns, etc., within the SSOD who have a longtime investment in their business and plan to sell their business (e.g., to finance retirement). Combined lack of sunset and lack of grandfathering would mean that there could never be a new or different type of tavern, cocktail lounge or nightclub in the SSOD area (without ordinance change). Downtowns should be able to evolve along with the users and community, and this includes new and different licensed establishments. Page 2

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II. Comments on Specific City Staff Recommendations NOTE: In the city staff document, recommendations are grouped as: Section I: Ordinances and Budgetary Items Section II: Policies and Programs This preliminary report groups the staff recommendations as follows: A) B) C) D) Overall Safety Alcohol Licensing Business Development

The report includes some clarifications/explanation of the recommendations, with BID comments/questions in blue.

A) OVERALL i. The recommendations suggest an underlying vision on the part of city staff: State St. Retail district. Support/restore retail Reduce/eliminate businesses that are only/primarily alcohol or alcohol+DJs. Capitol Square area: Entertainment/dining district. Allow all entertainment/retail options. In general, city staff recommendations seem to support: Clean, Safe, Convenient More & diverse entertainment offerings. Special focus on fostering a live music scene. Day & Night shopping district with retail open longer hours in the evening. Streetscape: reduced business signage; no sandwich boards; standard-format wayfinding signs on the corners. ii. The recommendations would benefit from an explicit vision or set of goals, perhaps drawing upon: State Street Strategic Plan (1999) The vitality of the Street depends upon it providing a broad and expanded array of retail goods, services, entertainment, and cultural activities. Downtown Plan (2012) Downtown Core Recommendations Objective 4.1: . . . A mix of office, employment, retail, government, residential, cultural, entertainment, and other uses should be pursued to retain the areas vibrancy, including beyond normal business hours. BID Preliminary Report July 1, 2013 Page 3

State Street Recommendations Objective 4.2: Maintain and enhance the State Street district as Madisons premier shopping, dining, entertainment and cultural destination, with . . . a vibrant, diverse and dynamic mix of uses.

BID Board Retail Strategy/vision for central downtown (2013) Dynamic and evolving as retail, uses and users evolve. A distinctive experience destination, offering a unique mix of shopping, dining, entertainment, hospitality, arts and culture. Offers a standard of excellence for customer experience in: o Safety o Cleanliness and maintenance of public spaces o Convenience o Access (parking, transportation) Offers a standard of excellence for the business experience in: o Permitting and licensing (city) o Information/communication on policies, regulations and services (city) o Marketing (BID) o Downtown environment (city and BID)

B) SAFETY p. 9: Increase funding of the City of Madison Safety Initiative. BID supported the Downtown Safety Initiative as essential to a successful downtown business environment (Clean, Safe, Convenient).

C) ALCOHOL LICENSING pp. 3-4: Adopt new, revised definitions of types of alcohol licenses city-wide. Proposed change city-wide: Twenty-Five (25) categories of alcohol licenses, grouped as Restaurant, Entertainment, Taverns, Retail, plus Exceptional Circumstances. Defined by factors such as maximum % alcohol sales, hours, kitchen, # seats, dance floor, etc. -The new categories only apply to new licenses; current businesses may stay within original license definitions, but this only applies if businesses do not make changes significant enough to need a new license (and sale of business usually means the new owners need to get a new license). -Categories/conditions on city license will focus on either percentage OR closing time. Restaurant concepts that close earlier than bar time would not have alcohol % specified as a city license condition; restaurants that want to stay open until bar time must meet the definition of restaurant (alcohol sales 50% or under). -Retail stores such as grocery stores may stay open past 9pm, but must stop alcohol sales at 9pm. -The Combination entertainment license is for hybrid concepts; the Exceptional Circumstances is for anything that is not covered by other categories and has 50% or less alcohol sales. -Certain uses are not allowed or conditional in the State St. Overlay District (see separate section below).

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NOTE: BID did advocate for more holistic definitions of entertainment and restaurant that were based on more than just alcohol percentage. City staff acknowledge that with current ALDO we miss the ability to attract new, exciting types of businesses. Questions: o Are these based on definitions from other cities? If so, which, and how are they working? o What about Madisons current theater license, how do the new definitions compare? o Will minor changes to business concept require ordinance changes? For example, what if a movie theater doesnt show films on a Monday but wants to host business or community events? Having so many categories/specifics in an ordinance could be complex to administer and limit business flexibility (if minor changes to business operations require ordinance changes, new business concepts could require ordinance changes). Would broader/more open- ended categories work better?

p. 5. Improve and simplify the liquor license point system Addresses how the city identifies and deals with problem establishments, plus adds carrots (i.e., credit for participation in responsible service training), an approach for which BID has advocated.

pp. 6-7: Create a State Street Overlay District (SSOD) to restrict certain types of alcohol beverage licenses. The overlay district would define permitted, conditional, and prohibited use within the area. By conditional, this means the business would need to go before Plan Commission to be granted Condition Use plus go before ALRC to get an alcohol license. Within the overlay district, the following types of establishments would not be allowed: Taverns, Night Clubs, Cocktail Lounges, Full Service (i.e., Liquor Stores), Convenience Stores selling any sort of liquor, and Gift Shops selling liquor or beer. Conditional use applications could be made for Live Performance, Arcade, Billiard Hall, Comedy Club, Bowling Center, Sporting Center, Wine/Beer Bar, Grocery Store, and Exceptional Circumstances. Permitted uses include a Brew Pub restaurant, Coffee Bar and other restaurants. Under retail, a Fromagination or Vom Fass-type store that sells alcohol as part of the mix but is under 50% alcohol sales could apply for Exceptional Circumstances conditional use within the SSOD but if they are above 50% alcohol sales would not be permitted in the SSOD. Stores that sell only wine (carry out) would apply for a Class A Liquor licenses with the conditions that they sell only wine. Thus, a wine shop would be treated either as Full Service liquor store (not allowed in the SSOD), a Gift Shop (up to 70% liquor and not allowed in the SSOD), or have to meet the definition of Exceptional Circumstances and sell 50% or below alcohol to locate in the SSOD. The recommendations make the specially-regulated area smaller (ALDO area, in blue on the map, is replaced by the State Street Overlay District or SSOD, in red on the map). Aims to replace a bluntforce object where a scalpel is necessary. BID had advocated making the ALDO area smaller to focus just on the areas with the most alcohol-related crime & disorder. However, the SSOD still extends beyond State St. proper and beyond the areas consistently cited as most problematic with high density of establishments/crowds: 500 block State, Frances/Gilman, 500-600 University.

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Question: Could restricted (tavern, cocktail lounge, nightclub) establishments move from one location to another within the SSOD? Lack of sunset. As currently written, there is no sunset for the State Street Overlay District (and no requirement for periodic evaluation). The recommendations aim to encourage more diversity of entertainment options that can sell more than 50% alcohol (so removes the 70% alcohol sales cap on entertainment) and allows conditional use of more types of licenses and entertainment than currently allowed by ALDO. BID had advocated for more flexibility and options for entertainment. No grandfathering or time period after which a licensed business closes that a property owner could secure a tenant with the same license type. Thus, if a tavern closes in the SSOD, there could never be another tavern in that location (unless the ordinance is changed). In the case of a tavern owner who has a long term investment in their tavern business within the SSOD (and plans to sell the business to finance retirement), the business buyer could not get a tavern license. Do we really want to prohibit forever any tavern, night club or cocktail lounge in this area from establishing or reinventing itself, or being sold to new owners? What about a wine or wine/craft beer store concept? Seems this could not establish anywhere in the State St. area unless it has 50% alcohol sales or under. Do we really want to prohibit this use from State St. (e.g., from 100 block State retail development?).

p. 10. Improve quality assurance, responsiveness, and enforcement agility for alcohol beverage licensing. Devote a staff position to liquor licensing and enforcement monitoring. p. 12. Improve enforcement process and reporting of violations to ALRC. BID has advocated for better enforcement with problem establishments vs. ALDO . p. 13. Change current licensing fees and policy. The part about reserve licenses and increasing the fee needs clarification. Rather than require a full business plan which by definition includes proprietary information, BID has advocated requesting a standardized-format business plan outlining the operations of the business: business concept, hours of operation, offerings including food, drink, entertainment, and security plan. Any required financial reporting should be limited to percentages of revenues, rather than dollar amount of revenues (which is confidential business information).

P. 14: Simplify entertainment licensing. An entertainment license is required to offer live, amplified entertainment including a DJ. This recommendation is to simplify current two-tier entertainment license into one license that applies to all capacities and has ability for 18+ option. Businesses with capacity of 49 and below used to be exempt from having to get an entertainment license if they wanted to offer live entertainment but would no longer be exempt under this proposal. BID generally supports simplifying/streamlining licensing. Page 6

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D) BUSINESS DEVELOPMENT The BID Executive Committee is very encouraged by the business development recommendations, which are grounded in the foundations of retail district success: Clean, Safe, Convenient, with a strong customer base of downtown residents and workers, and a standard of excellence for customer and business experience. We recommend focusing on essentials and building upon existing programs and services (before starting new programs), and identifying funding sources for initiatives. Recommended Priorities (in no particular order): Expand the faade improvement grant program to include retail build-out. Improve wayfinding signage on major routes into and through downtown, including better trailblazing signage to lead visitors to major attractions and parking. Parking: Continue to evaluate/improve supply (especially of short-term parking near retail) and customer experience, with special focus on improving the special event parking system to provide short-term parking options for non-event parkers (in combination with improved wayfinding signage to help people find the parking). Increase funding for Mall Maintenance and set service benchmarks. Updated handbook for businesses: city policies, permitting, regulations, and services. Continue to improve process and customer service for business permitting and licensing. Fund pedestrian count study baseline plus updates at intervals. Potential public BID partnership opportunity. Implement the recommendations of the Downtown Plan to enable increased density of the downtown customer base: downtown residents and workers.

p. 8: Expand the faade improvement grant program to include interior build out of retail spaces; consider funding all faade grants with Tax Incremental Financing (TIF). BID has advocated for this as part of the BID Retail Strategy.

p. 11: Create a city-funded wayfinding program. A city-developed program downtown that would place signs on every block or half-block directing people to various businesses in the immediate area. BID has advocated for prioritizing the downtown customer experience as part of a strategy to support downtown retail (Clean, Safe, Convenient, Accessible). While BID supports ensuring visitors can find businesses, BID instead recommends: o Prioritize wayfinding signage on major routes into and through downtown, including better trailblazing signage to lead visitors to major attractions and parking. o Reform the sign ordinances. Shift focus from reducing signage to allowing more options for creative, attractive, affordable and effective signage that helps people find businesses in a pedestrian or mixed vehicle/bike/pedestrian environment (i.e., State St. and Capitol Square).

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p. 11: Increase funding for Mall Maintenance. BID has advocated for prioritizing the downtown customer experience as part of a strategy to support downtown retail (Clean, Safe, Convenient, Accessible). Question: Where would the increased funding come from? Any funding increase should be accompanies by service benchmarks (i.e., with this much more funding, here are the services/standards to be delivered.)

p. 14: Entertainment taskforce creation. This is intended to help merge/coordinate the work of the Madison Arts Commission Hip-Hop Subcommittee and ALRC work on how to get more 18+ entertainment options, to focus more broadly on how to support music scene, diversify entertainment offerings. It is essential that entertainment business owners/operators be involved in any task force or committee, so that work is grounded in business and market realities.

P. 15: City-sponsored late night retail event during summer nights. IN BRIEF: To support/encourage retail businesses being open later at night. BID would welcome additional support for existing retail events such as the summer evening Dane Buy Local Solstice Stroll, Downtown Holiday Open House, or Maxwell Street Days. Business events work best when they highlight for customers what is there and available on a consistent basis. For long-term success for expansion of retail evening hours, customers need to know that critical mass of businesses will be open, and businesses need to know that there will be critical mass of evening customers. Some retailers already have later hours in the summer or on certain days of the week when business warrants, and have experimented with later hours but found there are not customers then. Alternate option Pedestrian Count Study: City support for a pedestrian count project, which can help generate data on foot traffic at key days and times of the year, to help businesses understand when there is critical mass of customers (and to market downtown as a location for new businesses). A Ped Count study could be done soon to establish a baseline, and with a followup after a number of key residential developments have come on line, to help downtown businesses understand changing foot traffic patterns.

p. 16: Create new incentives for entertainment venues. It is essential that entertainment business owners/operators be involved in any task force or committee, so that incentives are grounded in business and market realities. Perhaps this can be focused on incentives for 18+ entertainment options, if financial feasibility is cited as a barrier for these options.

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p. 16: Proactively encourage the location of a [first-run] downtown movie theater. The lack of a movie theater is clearly a gap in downtown/near east side entertainment offerings, and would be an exciting addition to downtown. Market realities should be understood and theater and real estate professionals consulted about needs and potential incentives. The typical first run theater is a very large floorplate multiplex with lots of parking, i.e., 170,000 SF, 14 screens, 1,000+ parking spaces. In some larger urban centers there are newer theaters of about 40,000 SF/8 screens, some of which show a mix of first-run and specialty films. To be a viable business, any downtown movie theater would need to draw from a far larger area than downtown, and would thus need a significant parking especially on weekends and evenings, i.e., at the same times special events often fill up city parking garages. What might be a more viable concept for downtown is the combination movie theaterrestaurant-bar-event space (e.g., Studio Movie Grille), however, even the smaller of these need 20,000-40,000 SF plus parking (20,000 SF floorplate may be possible if multiple floors areutilized), or possibly a smaller-scale (8,000-10,000 SF) combined screening room-bar-caf as seen in some larger urban centers (e.g., Williamsburg, http://nyti.ms/16Ah9Cg). p. 16: Continue to promote the citys music scene. What forms of promotion would the city undertake that is not already being done by private venues and businesses? How would this be funded? How would it lead to business development?

p. 16: Allow pop-up retail in vacant storefronts. Its our understanding that pop-up retail is already allowed, as private property owners can enter into short-term leases if they wish. There has already been pop-up retail downtown. While pop-ups sound exciting, to be successful and generate return on investment (long term tenancy, marketing benefits) they need to be managed in programs that require staff and funding. For Madison Central BID to produce a month-long holiday pop-up program, I estimate needing at minimum an additional FTE staff person July through January plus cash budget of $25,000. This is not in the BID budget. Successful holiday pop-up programs (e.g., Portland) are competitive (businesses apply), and involve grants of $1,000+ to each business, compensation to property owners, a storehouse of business furniture and props, professional consultations for merchandising, plus staff time to review applications, liaise with business and property owners, and execute a marketing program. The smallest pop-up program I am aware of is run by the South Bend BID, which has 4 FTE plus Ambassadors, annual budget $750,000 (roughly 2x the staff and budget of Madison Central BID). Staff overseeing their pop-up launch worked on it late August onward; 50-60 hrs/wk total commitment one month prior. The largest is in Dallas, with $8,825,155 in grant money available, with most of that ($8.3 million) coming from the City Center TIF. It should be evaluated whether a pop-up program is the best use of resources to support downtown retail, or if infrastructure initiatives (funding for retail build-outs, creating a handbook for small businesses, improving wayfinding signage into and through downtown, pedestrian count study) are better priorities.

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P. 17: Update web-based downtown business guide IN BRIEF: This means a Guide to Opening and Doing Business in Madison. BID has advocated/offered to collaborate on a handbook for businesses with information about city policies, permitting, regulations, and services. NOTE: Should have printed product available as well as online; many small businesses/owners are not computer-based like office workers.

P. 17: Various parking recommendations BID has advocated for convenient, good-value public parking focused on customer experience, and for the special event parking system to provide short-term parking options for non-event parkers (in combination with improved wayfinding signage to help people find the parking).

P. 17: Continue to improve development review and permitting downtown. BID has advocated for process and customer service improvement for small business permitting and licensing. Specific BID recommendations can be found here.

p. 17: Increase permanent downtown residents by increasing residential units. BID has advocated for land use policies which can increase the residential customer base, key to sustaining downtown retail businesses. This involves implementing recommendations of the Downtown Plan and Zoning Code rewrite.

p. 17: Support a proactive downtown business retention effort. See the BID Retail Strategy.

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