Call to Order
Chairperson Bob Cramer called the meeting to order at 1:30 PM with a quorum present.
Minutes of Previous Meeting (Available on the website)
Chairperson Cramer asked for discussion of the September 26, 2002 Minutes. There was no discussion.
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Motion: |
Commissioner Dick Stoffer moved the Minutes of September 26, 2002 stand approved as submitted. Commissioner Gayle Collins seconded the motion, and it passed by unanimous vote. |
Dram Shop Administrative Rule
Judy Seib reported a public hearing was held September 10th. Because parts of the dram shop administrative rule were not clear to the insurance industry, the division is now receiving comments on how to rewrite the language to be less confusing. Once the changes are made, the rule will be sent to John Lundquist and Angela Burke Boston from the Insurance Division. The final rule will be e-mailed to Commissioners and a telephone meeting will be scheduled to pass the rule. Ms. Seib pointed out that not all rule making procedures are such a lengthy process; however, due to the controversial aspects of this rule the process is taking longer.
Tobacco Enforcement
Gary Marker reported the division currently has 217 partners signed with 3 more partners expected to sign prior to the end of the week. Compliance checks have begun. Each retailer will be checked at least once with all non-compliant retailers being checked a second time. The division will also be conducting SYNAR checks. As of November 26, 2002 the compliance rate was 93.13%. This represents an improvement over last year for the same time period when the compliance rate was 88%.
Nicole Gehl explained the Retail Chain Tobacco Compliance chart in the commission booklet noting that the tobacco outlet stores have the best compliance rate and independent retailers in smaller communities tend to have higher compliance rates. Although compliance of tobacco laws improved overall from FY01 to FY02, some of the individual retailers' compliance rates nose-dived in FY 02 according to Ms. Gehl. Kwik Shop has challenged the division on constitutional grounds in District Court in Des Moines, Linn and Pottawattamie counties.
Commissioner Cramer commented businesses are upset about cases where both the clerk and the business are cited; however, the clerk is exonerated and the business is still charged. Mr. Walding said the division believes all three parties - the clerk, the retailer and the youth - all need to be cited if there is a violation. Mr. Marker stated that the contract with the partners' states that the partner will cite or the division would not pay for the compliance check; however, there is no control over the county attorneys if they decide to dismiss the citation. Mr. Marker responded there is one particular county where the county attorney dismisses all first time citations.
John Lundquist commented it is not unusual in alcohol cases to have a circumstance where the clerk, for some reason or other, is not cited or convicted; however, the division administers administrative sanctions against the license. Many counties will not write the citation to the clerk and the case goes directly to administrative proceedings.
Iowa City TIPS Training
Money received from a National Highway Traffic Safety Grant was used to buy the field investigators wireless recording devices for use in enforcement. The devices are made available to local law enforcement to do alcohol and tobacco compliance checks according to Lynn Walding.
Nichole Gehl reported that the balance of the money would be used to offer training to licensed establishments. Polk County was originally chosen for the training; however, the focus has been shifted to Johnson County. The division will offer TIPS training free of charge to approximately 150 licensees on a first-come first-served basis. Staff, city officials and the county attorney are exploring the possibility of reducing penalties for those who have participated in the training if a violation occurs at an establishment within two years of taking the training.
Mr. Walding explained the reasons for changing the training from Polk County to Johnson County: (1) aggressive enforcement activity is currently taking place in Johnson County; (2) two or three bars in the Iowa City area are on the verge of loosing their liquor license through revocation; and (3) there is a baseline to operate on. Phil Wedgwood, Nicole Gehl and the field investigators will conduct the TIPS training sessions. Hopefully, the training will make a difference through incentives. Licensees who go through the training, get cited even though they followed the TIPS procedures, will not be assessed a penalty. Mr. Walding is also contacting Pat White, Johnson county attorney, asking him to agree to no convictions on those who took the TIPS training. It is a specific way to avoid punishing the retailer who has provided training for the clerks but still has a clerk who makes the sale. If the training works in Johnson County, there is potential for using it elsewhere.
Mr. Walding recently met with Bob Reynolds from the Pacific Institute of Research in an effort to obtain more federal funding.
Counsel’s Report
Iowa City has taken a very proactive approach to liquor enforcement in the community according to John Lundquist. As part of their enforcement efforts, the Iowa City Police Department was in a restaurant in the downtown Iowa City Sheraton on three different occasions when sales to minors occurred. Criminal convictions were obtained in each of those three cases. The Iowa Code provides for mandatory sanctions against a licensee who sells to minors and there are convictions arising from that misconduct. The division has attempted to impose those sanctions against the hotel. The problem that arose in this case is that the entire establishment is covered by the license. Meeting rooms for weddings and private parties that have been booked well in advance would have been affected by this sanction. The hotel has appealed and the division is in the process of working out a settlement in which the restaurant where the violations occurred will be shut down. Additionally, the rest of the hotel, with very limited exceptions to minimize the effect on private parties booked in advance, will be shut down. Mr. Lundquist stated he has a signed settlement agreement that addresses the service issue and incorporates training for servers. The agreement also provides for an accounting of any profits made from alcohol sales at the private parties. The profits will be forfeited to the community for alcohol enforcement efforts. If this hotel has one more sale, its license will be revoked and they will not be able to sell alcohol on the premises for one year pursuant to statute.
There is a popular bar in Ames campus town that has been sitting empty for a year due to revocation of the license. The building will not be eligible for licensure until April 2003.
Commissioner Collins stated that Vitos and the Union Bar in Iowa City are notorious for serving to underage drinkers. Vitos is currently appealing a 14-day suspension for after hours violations and there are also a couple of underage violations pending according to Lundquist. Several other establishments in Iowa City have been cited by law enforcement. Lynn Walding stated that bar owners are given some consideration in the dates they serve their suspensions with the exception of college towns where bars are not allowed to serve the suspension during the summer months or the winter break unless the violation occurred during that timeframe.
During the fiscal year ending June 30, 2001, the division collected $86,635 in civil penalties. In fiscal year 2002 the civil penalties almost doubled at $162,875. Of that amount, $60,000 was collected from the case in Sioux City where a death occurred at a riverboat casino. This fiscal year, from July 1 through November 6, the division has collected $38,760 of which the majority collected is from first time sales to minors violations at $500 per violation. Judy Seib added that an additional $20,000 in civil penalties would be collected for sales to minors violations by the middle of January. The money goes to the General Fund. In the past, the largest number of violations occurred from illegal gambling because that's where enforcement efforts were focused. This year with the DPS efforts and a greater awareness by local law enforcement, the larger number of violations is sales to minors.
Financial Report
Total revenue year-to-date for fiscal year 2003 is $52,264,537, an increase of $4,696,252 compared to the same period last year. Total expenses year-to-date are $29,664,393 compared to $26,832,651 last year. Revenue over expenses has increased 9%. An additional 5.9% has been transferred to the General Fund thus far this fiscal year according to Jim Kuhlman. Liquor sales in dollars and gallons have continued to increase in recent years. Beer sales, including malternatives, have been good which has contributed to increased beer taxes thus far this fiscal year.
Sales Report
Sales were up $2.5 million in October due to the holiday merchandise being shipped in October. Last year 2/3 of the merchandise was shipped in October with the remaining 1/3 shipped in November. Consequently, November sales were down approximately $2 million. The net increase for the two-month period is approximately $500,000. Sales were up 4.74% in dollars year to date through November.
Product Buyout
The Division has been a little more aggressive this year concentrating more on purchasing products that have a higher rate of return and a higher volume of sales. Year to date the division has purchased an additional 6,225 cases with a return rate of percent equal to last year. The total investment year-to-date is $3.8 million. The dollar profit is $338,759.13.
Cleaning Contract
When the janitorial contract for the facility expired November 30, 2002, the Department of General Services issued a Request for Proposal (RFP) for a new janitorial contract. Eight vendors attended the mandatory vendor's conference with six vendors submitting bids on the facility. The winning bid was awarded to FBG Service Corporation at a monthly cost of $1270. The previous vendor, Sedcom, Inc., provided the cleaning services for the Division from December 1, 1995 until the expiration of the current contract. Sedcom, Inc. was paid a monthly rate of $1750 to clean approximately 25,000 square feet of office space and 2000 square feet of office warehouse space. The new contract will result in an annual savings of $5760.
In addition to the cleaning contract, the trash hauling and building security contracts were recently renegotiated. The division will realize annual savings of approximately $1,000 on the renegotiated trash-hauling contract. The building security contract resulted in approximately $2500 annual savings.
In response to a question by Commissioner Collins, Mr. Kuhlman stated there is no state stipulation regarding the use or nonuse of union and nonunion employees. Independent contract people rather than union shops do most of the contract work for the Division.
Commissioner Hunter inquired about the process of publicizing the bid. Mr. Kuhlman responded that the General Services Department maintains a master vendor list of services and any time a contract is bid, General Services mails a bid packet to the vendors on the list as well as printing the invitation to bid in the official publications.
Program Elimination Commission Update
The overall goal of the Program Elimination Commission (PEC) is to reduce state spending by 2% with certain items specifically identified for review. By statute the PEC is required to look at the liquor wholesale distribution system and decide whether it can be eliminated. On October 7th, Lynn Walding and Jim Kuhlman presented the Division's study that concluded, if the wholesale distribution system were privatized, liquor fees to consumers would increase or revenue to the state of Iowa would be reduced. The State Auditor's review supported the Division's study. Most of the PEC members understood that privatizing the system would be counter-productive to their goal. Although the report has not yet been issued, it appears that the PEC will not recommend privatizing the liquor wholesale distribution system.
The PEC was charged with trying to identify $100 million in savings; however, it appears that it will be difficult for the commission to identify more than $20 million in savings. Overall, the PEC is finding that state government has already been cut substantially over the past two years.
Coffee with the Administrator
An overview of items discussed at the "Coffee with the Administrator" meetings was mailed to the Class E licensees and is included as part of the commission packet.
Approximately two/thirds of the Class E licensees currently use electronic funds transfers (EFT) to pay for liquor purchases. The Division is considering mandating the use of EFT in the near future.
Iowa Liquor Quarterly
The purpose of the Iowa Liquor Quarterly is two-fold: (1) The Division will have a free first-class publication distributed to the licensees providing a vehicle for the Division to correspond with licensees. One recent letter to all licensees cost the Division $1500 to mail. (2) The publication will let bar owners know what products are available in warehouse inventory.
Mr. Walding unveiled the proposed cover for the first issue due out in February. The magazine will be distributed free of charge to all bars and Class E's in the state of Iowa. According to Marty Deaton, the Request for Proposal (RFP) was sent out the first of October with only one company submitting a bid. Davis Denny Company from Alabama will be producing 5,000 quarterly magazines for distribution to all Class E's, bars, clubs, hotels, etc. The quarterly magazines will list products carried by the Division but will not include pricing. A smaller version of the quarterly book with prices listed will be produced monthly beginning in March. The publication will be distributed via truck mail to only Class E's. Davis Denny Company will also produce the Division's Annual Report. There will be no cost to the State of Iowa for the printing of these publications. The vendor will make revenue from advertising that appears in the Iowa Liquor Quarterly and the monthly publications.
Licensees like the idea of the quarterly magazine and have agreed to make the publication available to other licensees through their retail outlets.
ABD e-News
Linda Cox is searching key words specific to the industry on the Internet for news articles to be incorporated into a new service called ABD e-News. Articles will be downloaded and sent via e-mail to the Class E retailers and other interested parties.
Digital Images
Phil Wedgwood is working with industry members to get digital images of the top 100 products sold in Iowa. The goal is to put this information on the web page so it can be downloaded to see images of the top products in the marketplace. Another goal is to link them to the images on the Division's web page so that each product can be pulled up as an image. One potential use for the images would be easy access to camera-ready art for retailer advertising.
Lynn Walding took a sample of Phil's work to an NABCA Board of Directors meeting and NABCA is considering it for all the other control jurisdictions as well as NABCA's web page.
Mr. Wedgwood is to have the digital images ready for a January 3rd meeting in Washington, D.C. Mr. Walding will meet with representatives from the various companies to get their input on the final product. The goal is to have the images posted on the web page February 1st.
Top 100
Class E's asked for data on the top 100 at the "Coffee with the Administrator" meetings. That data is now available on the Internet and will be updated monthly. The top 10 products account for 33% of sales and the top 100 products account for 82% of the sales.
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Marty Deaton will add the position rank for the previous year to the report for comparison purposes. The new report will show rank increase. |
White Paper Revisited
Class E's asked for data on the top 100 at the "Coffee with the Administrator" meetings. That data is now available on the Internet and will be updated monthly. The top 10 products account for 33% of sales and the top 100 products account for 82% of the sales.
Lynn Walding was recently asked to speak at a meeting of substance abuse people organized by the Iowa Department of Public Health regarding several issues, one of which was the White Paper. The group was very supportive and overall the White Paper was well received.
Mr. Walding recapped what has happened thus far with regard to the White Paper.
- It has been distributed to the Governor's Office and all 150 legislators (50 of whom have been replaced)
- The communities of Urbandale, Clive, West Des Moines and Des Moines have either adopted or are considering adopting ordinances regarding drink specials
- The Des Moines Register has published an article about drink specials
- The President of the Senate, Senator Kramer, has commented she is supportive of the White Paper; however she is not convinced legislators will address it this session due to economic issues.
Commissioner Cramer commented he has received several calls and talked with legislators and other people about the White Paper. He was adamant about not letting the issue die. He suggested the commissioners call a news conference and ask the Governor and the Legislature what they intend to do with the White Paper.
Lynn Walding suggested the following:
- He will contact the Iowa League of Cities to see if they have taken a position on the White Paper and if they anticipate pursuing the matter further.
- The White Paper is on his list of items to discuss further with the Governor's Office at an upcoming meeting.
- Contact Senator Kramer again or speak with others in a leadership position regarding the Commission's recommendations to the legislature.
- If support can be generated, consider having a press conference.
- Encourage health and substance abuse people to attend and have a voice at the Iowa Alcoholic Beverages Commission meetings.
Commissioner Collins would like to see cause and effect results from communities who have adopted ordinances banning liquor buffets.
Other Business
Potential Tax Increases - Lynn Walding reported that the Distilled Spirits Council of the United States (DISCUS) is concerned about potential tax increases in 43 jurisdictions. Due to Iowa's 50% markup, Mr. Walding does not anticipate that Iowa will be one of those jurisdictions. He distributed a copy of the visual concept Shelly Winscott is working on for the web page depicting the breakdown of an average bottle of liquor.
Mr. Walding commented he does not anticipate a tax increase on liquor, wine or beer this legislative session; however he does anticipate debate on a tobacco tax increase.
Press Releases or Public Notices - In response to a question from Commissioner Collins about disseminating information to local periodicals, Lynn Walding commented that year-end press releases on sales figures are sent to all newspapers throughout the state.
Cab Rides, Breathalyzer Tests and Charts - Commissioner Collins asked if the Division recommended disseminating information about bars that offered breathalyzer tests and/or provided free transportation and pick-up to patrons if that would be misconstrued as promoting drinking. Mr. Walding replied that health groups would probably argue it sends a dual message - don't drive drunk but go ahead and get drunk. He also pointed out it is illegal to serve someone to the point of intoxication.
Commissioner Cramer commented that once someone finds himself or herself in a situation where they need assistance and no assistance is available, trouble starts. Chairman Cramer supports the proactive stance that an individual licensee holder is trying to do everything he can to support the clientele of his business should a circumstance occur. Making the assumption that they are doing everything else correctly, Commissioner Cramer would not fault the establishment because the individual is still the responsible party.
Mr. Walding pointed out that health advocates dislike the Division's web page chart with gender, weight and consumption. While the Division viewed the chart as responsibly informing the public, health advocates saw it as irresponsibly teaching people to drink up to that level. Health advocates also dislike breathalyzer tests because it is not a pure test.
Industry members generally favor cab rides and designated drivers. Due to the many variables involved with breathalyzers and charts, industry does not view those as favorably according to Sheila Douglas from the Iowa Wholesale Beer Distributors Association.
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Commissioner Dick Stoffer moved the Minutes of September 26, 2002 stand approved as submitted. Commissioner Gayle Collins seconded the motion, and it passed by unanimous vote. |
Meetings
The next meeting will be held in the Iowa Alcoholic Beverages Division boardroom on February 25, 2003 at 1:30 PM.
Adjournment
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Motion: |
Mary Hunter moved the meeting adjourn. Shirley Daggett seconded the motion and motion carried unanimously. |
The meeting adjourned at 2:55 PM.
GAYLE COLLINS, Secretary |
