OAH 2-6010-20557-6

STATE OF MINNESOTA
OFFICE OF ADMINISTRATIVE HEARINGS

FOR THE MINNEAPOLIS CITY COUNCIL

In the Matter of the On-Sale Liquor FINDINGS OF FACT,

License, Class A, with Sunday Sales CONCLUSIONS OF LAW
held by Midwest Latino Entertainment & AND RECOMMENDATION
Talent, Inc.

The above-entitled matter came on for hearing before Administrative Law Judge
Raymond R. Krause on January 25-26, 2010, and January 28-29, 2010, at the Office of
Administrative Hearings in St. Paul, Minnesota. The hearing record remained open for
the submission of posthearing briefs and one posthearing exhibit. The hearing record
closed on February 16, 2010, with the receipt of the final brief.

Joel M. Fussy, Minneapolis Assistant City Attorney, 350 South Fifth Street,
Suite 210, Minneapolis, Minnesota, 55415, appeared on behalf of the Division of
Licenses and Consumer Services of the City of Minneapolis (City License Division).
Boris Parker, Parker & Wenner, P.A., 220 South Sixth Street, 1700 U.S. Bank Plaza,
Minneapolis, Minnesota, 55402-3707, appeared on behalf of Midwest Latino
Entertainment & Talent, Inc. and Maya Lopez-Santamaria d/b/a El Nuevo Rodeo.

STATEMENT OF THE ISSUE

The issue presented in this case is whether good cause exists for the City of
Minneapolis to revoke the On-Sale Class A Liquor License with Sunday Sales held by
Midwest Latino Entertainment & Talent, Inc. and Maya Lopez-Santamaria for the
establishment doing business as El Nuevo Rodeo located at 2709 East Lake Street in
Minneapolis, Minnesota. The ALJ finds insufficient cause to revoke the license but finds
sufficient cause for a lesser sanction.

Based upon all the proceedings herein, the Administrative Law Judge makes the
following:

FINDINGS OF FACT

Background

1. Midwest Latino Entertainment & Talent, Inc. and Maya Lopez-Santamaria

operate El Nuevo Rodeo (ENR), at 2709 Lake Street East, Minneapolis, Minnesota.
ENR sells alcohol under a Class A On-Sale Liquor License with Sunday Sales issued by
the City of Minneapolis (City).1

2. ENR is an entertainment venue operated in conjunction with a restaurant

located in the City’s Third Police Precinct. ENR is located in a commercially-zoned
Community Activity Center District (designated C3A). The business operates in the
Oddfellows Building, adjacent to two other establishments that serve alcohol. The area
surrounding ENR is zoned for industrial, commercial, and residential uses. ENR is
located four blocks east of Hiawatha Avenue and a commuter light rail transit station.
The immediate area on East Lake Street is predominantly zoned commercial. East
Lake Street has significant volumes of vehicle and pedestrian traffic. The immediate
neighborhood has many Latino-oriented restaurants and businesses. These
businesses, including ENR, are of great importance to the Latino community.2

3. ENR is located in the Longfellow neighborhood (Longfellow) in

Minneapolis. Longfellow has a significant problem with crime in the area, including
reports of “shots fired,” meaning the sound of gunfire is heard within the neighborhood.
On average, gunfire is reported every week in Longfellow. Almost all of the gunshots in
Longfellow are identified as occurring on the west side of Hiawatha Avenue, at least
four blocks from ENR.3 There has been an increase in the numbers of businesses
along Lake Street, particularly in the immediate vicinity of ENR, since 2003. Overall,
criminal activity in Longfellow, while still significant, is reduced from the levels
experienced in 2003.4

ENR’s Initial Licensure

4. In 2003, Maya Lopez-Santamaria discussed with Hamoudi Sabri, the

owner of the Oddfellows Building, the possibility of opening a restaurant. Mr. Sabri was
developing the Oddfellows Building and he was seeking a tenant to replace the recently
closed Vanandy’s Nightclub, which had been the prior tenant in the space he was
seeking to fill. At that time the City was discussing the possibility of creating an
entertainment district at 28th and Lake to increase business activity and address the
current economic blight affecting that neighborhood. The building was dilapidated and
there was active prostitution going on in the immediate area. The area was considered
a “bad part of town.”5

5. On June 1, 2003, ENR applied for a Zoning Addendum for Beverage

Alcohol License in Minneapolis to operate as a restaurant and nightclub with live
entertainment in the City with a Class A Liquor License with Sunday Sales. The Zoning
Addendum specifically approves the uses of the premises as consistent with the zoning
classification of the property. Gross square footage of the premises is identified as

1
Ex. P318.
2
Testimony of Ricardo Cervantes; Test. of Antonio Gaytan; Test. of Maya Lopez-Santamaria; Test. of
Alejandro Rojas; Test. of Joyce Wisdom; Minneapolis Code of Ordinances § 520.160.
3
Ex. R66A.
4
Test. of R. Cervantes; Test. of Gary Schiff.
5
Test. of M. Lopez-Santamaria.

2
16,000 square feet. Net square footage for seating areas on the second floor (main
floor) is listed as 5,220 square feet.6

6. As part of its application for licensure, ENR submitted its Business Plan,
describing in overall terms how the proposed business was intended to be run and
setting out the manner in which restaurant operations, liquor sales, entertainment, and
security would be handled. Included in the Business Plan was a comparison of ENR’s
proposed operation with other businesses in the same general area of operations. One
of those businesses was the recently closed Vanandy’s Nightclub, regarding which the
Business Plan stated:

Vanandy’s Night Club

Vanandy’s Nightclub, previously located at the same address as El Nuevo

Rodeo and La Quebradita Restaurant, was closed in January 2003 due to
code infringements and questionable business practices. For the
purposes of market research, it is our primary business research tool
because El Nuevo Rodeo and La Quebradita Restaurant is virtually taking
over this pre-existing business and its market niche while consciously
raising the bar for its customers in virtually every aspect of the business.
For the sake of research, let us consider this past establishment’s
business at the same location.

Positive market attributes:

Vanandy’s nightclub opened in approximately 1999. They were the first

inner city Mexican nightclub/dance hall and provided a very coveted
service for this market. They had a beer license, a stage, dance floor and
a lights and sound system for live and recorded music. Vanandy’s was
such a popular nocturnal destination that from the day that it opened until
its closing date, Vanandy’s was always full; it is no secret in the Mexican
business community that Vanandy’s was a highly lucrative business,
creating great wealth for the owners. Despite its rustic and un-cared for
decor, Vanandy’s was the envy of all local Mexican music promoters
because of the revenues it brought in. Vanandy’s was open three nights a
week, Friday-Sunday and closed during the week. MLET’s own field
research done in the year 2000 indicates that at 10:00 pm on various
occasions, the door was closed to patrons due to a full house, with only a
local band playing. Food was never functionally served at Vanandy’s,
which only had a beer and wine license.

Negative attributes:

Perhaps the biggest stigma that remains regarding Vanandy’s is the lack
of professionalism of the Management of the business, which the owners
conducted remotely from Chicago. Their apparent lack of standard
6
Ex. R2.

3
 business and sound accounting practices, and their disregard for the
City’s Licensing and code regulations left much to be desired from these
Mexican entrepreneurs from Chicago. There was also an apparent lack of
investment back into the business, allowing it to remain run-down and un-
kept, despite the profits made by the owners. Vanandy’s as a business
was considered a poor neighbor, leaving trash strewn about from the night
before in front of neighboring businesses and parking lots. The goal of El
Nuevo Rodeo and La Quebradita Restaurant is to fill this market niche
with a new and improved and greatly expanded product, only this time
using sound business practices with a fully professional operation and
management team, which will become a model Latino-run establishment
and a source of pride in Latino Business community. Despite the downfall
of the Vanandy’s operation, they served as an ideal market study for El
Nuevo Rodeo and La Quebradita Restaurant and an unwavering
testimony to the success that such an establishment will have at this
location in this micro-market. 7

7. Review of the ENR license application was conducted by the Minneapolis

Police Department License Inspection Division (Division). The Division report noted that
ENR will be operated as a restaurant with hours from 10:00 a.m. to 2:00 a.m. The
report also included the following:

PREMISES:

The licensed premise consists of 18,000 net square feet of street level and
second floor areas in the Oddfellows building located at 2709 and 2709
1/2 East Lake St. The ground floor area will be primarily used as a
restaurant. This restaurant will have a seating capacity of 77 persons at
tables and chairs and a bar seating 12 persons. The second floor portion
of the premises, which is connected to the ground floor by a stairway and
dedicated elevator, is divided into two areas. The first area has additional
restaurant seating for 64 persons at tables and chairs. Separated from
this area by a low wall is a bar/dance area with a disc jockey booth. An
oval-shaped bar with seating for 23 persons is also present. The second
portion of the second floor area has a bar with seating for 17 persons and
seating for 160 persons at tables and chairs. A stage and dance floor will
be present. The total seating capacity is 573 persons.

***

CLASS A ENTERTAINMENT:

The applicant has applied for a Class A license and, although the
establishment will not be located within the Adult Entertainment District,
has completed has completed [sic] the Class A License Addendum

7
Ex. R1 at 15.

4
 wherein the applicant acknowledges that the license is subject to
suspension, revocation or denial of renewal if adult entertainment were to
be presented.

The applicant intends to present disc jockeys, local, national and

international Mexican bands and stage shows. Additionally, the
establishment will be available for wedding celebrations, baptisms,
Mexican festivals such as Cinqo de Mayo.

MISCELLANEOUS ORDINANCE REQUIREMENTS:

Zoning: The Minneapolis Zoning Administrator has certified that this

establishment is located in a C-2 zoning district, which is a lawful district
for the intended use.

Customer Parking: The off street parking requirement for this restaurant is
established by the Minneapolis Zoning Code. The Minneapolis Zoning
Administrator has certified that this establishment is exempt from off street
zoning requirements. The applicant will furnish a valet service to the US
Bank parking lot located at 2800 East Lake Street. The applicant’s
Landlord, Lake 27, LLC has entered into a licensing agreement with US
Bank for patrons to use this 70-space parking lot. The agreement has
been registered with the zoning office.

***

Must Be a Restaurant

Because this establishment will be located within 500 feet of a residentially

zoned area, it is required to operate as a restaurant and gross annual
sales of alcoholic beverages may not exceed 40% of gross annual sales
of all food and beverages.8

8. On June 20, 2003 the City’s Zoning Office Representative, Stephen Poor,
approved the Zoning Addendum for Beverage Alcohol License Applicants in
Minneapolis to operate as a restaurant and club in the City with a Class A Liquor
License with Sunday Sales on June 20, 2003.9 The only restriction on the license was
that there be no adult-oriented entertainment. The application was approved by the
Minneapolis City Council. ENR first began operations in June of 2003 when it obtained
the Class A On-Sale Liquor License with Sunday Sales.10

9. During the application process, ENR, through Ms. Lopez-Santamaria,

extensively discussed with the City Licensing Division how ENR was anticipating to
operate. The presence of entertainment, including the likelihood of large attendance

8
Ex. R4.
9
Ex. R2.
10
Ex. P318.

5
during special events, the use of the premises for a cultural center, and the proposed
uses for educational purposes was disclosed to Inspector Zeigler. At no time did any
City official indicate that the intended uses of the premises were in any way inconsistent
with the business licensing that was being applied for, and was granted by the City.
The name of the business at the time it was initially licensed by the City was El Nuevo
Rodeo Nightclub and La Quebradita Restaurant.11

ENR’s Business Operations

10. There are two entrances at ENR. When a cover charge is required, lines
of patrons form at the entrances. Upon entry, patrons are not seated at tables. Patrons
choose whether to sit or stand. There are two floors with seating on each. The upper
floor (main floor) has a bar area, a stage, and two areas designated as dance floors.
The lower floor contains seating for a maximum of 94, with a counter area and kitchen.
ENR’s main floor plan showed seating around two bars, and along the walls and in the
area between the two dance floors. In total, the floor plan showed 353 seats.12

11. While ENR is a for-profit business, it has engaged in extensive

community-based educational and cultural activities. Meetings, fundraisers, and
educational seminars have been conducted on the premises to benefit nonprofit
organizations in the community. These activities use the stage and dance areas of the
main floor for functions much closer to those of a community center than a restaurant.13

12. Alejandro Rojas is ENR’s Executive Chef. He has worked for ENR for
three years. Mr. Rojas described ENR’s food operations as preparing and serving food
every day, sometimes until early hours of the following morning. On some occasions
Mr. Rojas has served food at ENR as late as 4:00 a.m.14

13. ENR’s entertainment director and promoter, Antonio Gaytan, has been
employed there for six years. Mr. Gaytan noted that, in contrast to ENR’s operations at
other times, on weekend nights most of the patrons are there to view the live
entertainment. When live music is being performed, ENR uses a digital decibel monitor
to check noise levels within the building and from a point 50 feet outside the building.15

14. ENR has approximately 50 employees. About one thousand musicians

and performers have been employed giving performances as part of ENR’s events.
Approximately 20 suppliers of food for ENR’s restaurant operations have significant
sales to ENR.16

15. On normal business days, the main floor is not set up or used for
entertainment or restaurant seating until the evening hours.17 When open, patrons are
11
Test. of M. Lopez-Santamaria.
12
Test. of Julie Casey; Ex. P57.1-P57.2.
13
Test. of M. Lopez-Santamaria.
14
Test of A. Rojas.
15
Test of A. Gaytan; Test. of M. Lopez-Santamaria.
16
Test. of M. Lopez-Santamaria.
17
Test. of J. Casey; Ex. P57.1-P57.2.

6
seated at tables on the main floor by waitstaff, provided menus, encouraged to order
food, and orders for food and drink are taken. Patrons seated at tables have their food
and drink orders delivered by waitstaff. When no more seating is available, patrons
gravitate to the bar areas to await seating or dance in the areas in front of the stage.18

16. Any business seeking to make a substantial change in how that business
is operated must file a new business plan. The City License Division’s practice is for the
new business plan to be filed and approval of that substantial change be obtained.19

17. On April 16, 2009, ENR had temporary bars available for use on the
20
premises. ENR’s business plan does not make any reference to the use of temporary
bars.21

Methods of Enforcement

18. The City License Division uses four different levels of enforcement to
compel adherence to ordinances and statutes, or to sanction offending licensees.
These enforcement methods are advisory notices, violation notices, administrative
citations, and settlement conferences. Generally speaking, these methods are
comprised of the following:

A. Advisory notices are sent to a license holder when the City License
Division believes that a city ordinance may have been violated by the
licensee. The purpose of this notice is to inform and warn the licensee in
order to prevent further possible violations of city ordinances. No fines are
associated with advisory notices.

B. Violation Notices are sent to a license holder when the City License
Division believes that a city ordinance may have been violated by the
licensee. The purpose of this notice is to strongly urge, inform and warn
the licensee in order to prevent further possible violations of city
ordinances. Fines may be present with violation notices.

C. Administrative Citations are sent to a license holder when the City License
Division believes that a city ordinance may have been violated by the
licensee. The purpose of this notice is to penalize the licensee for alleged
violations of city ordinances. Fines are present with administrative
citations. Administrative citations may be paid, or be contested by a
written request for Hearing. When fines are paid they are an admission of
the violation.

D. Settlement Conferences are scheduled between the licensee and the City
License Division. The purpose of these Settlement Conferences is to

18
Test. of M. Lopez-Santamaria.
19
Test. of R. Cervantes.
20
Test. of J. Casey; Exs. P311 and P317.
21
Ex. R1.

7
 bring the licensee into compliance with City and State Ordinances,
Statutes, and Codes. The licensee does not have to agree to any of the
recommendations from the City License Division, but the licensee is
compelled to do so to avoid further adverse action by the City License
Division. Furthermore, the stipulations in the Settlement Conference must
be accepted and approved by the City’s Mayor and the City Council.22

Overview of Police Reports and Criminal Activity

19. Over the 29 months between April 13, 2007, and November 26, 2009,
there were 35 incidents that resulted in the generation of police reports that were linked
to activity occurring on or near to ENR premises. The incidents reported were
connected, to a greater or lesser degree, to ENR or their patrons. Further analysis of
the reports reveals that:

A. 27 of the reported incidents occurred at times coincident with ENR

Saturday or Sunday night venues.

B. 33 of the reported incidents occurred after midnight, and 13 of

those incidents occurred after 2:00 a.m.

C. At least 26 of the thirty-five incidents were handled by off-duty

police officers employed by ENR to improve security.

D. The incidents included: three minor consumptions of alcohol, four

violations of curfew, eight disorderly conducts, three obstructing the
legal processes, six possession of narcotics, ten fifth-degree
assaults, and three second-degree assaults with a dangerous
weapon.23

License Enforcement Issues

20. In 2006, several problems were identified with the manner in which ENR
was being operated. To address compliance issues, the City License Division initiated
settlement negotiations with ENR and conducted a licensing settlement conference on
December 11, 2006. The City License Division sought to impose conditions on ENR’s
Class A On-Sale Liquor License with Sunday Sales. The City License Division
recommended and ENR agreed to the following license conditions:

A. ENR would submit to the City License Division within 30 days an

independent accountant’s detailing of ENR’s liquor/food ratios for a period
of twelve months.

22
Test. of R. Cervantes; Test. of J. Casey; Test. of Michele Olds.
23
Exs. P60-P69, P78-P122, P143-P267, P275-P281, P309-P310.

8
 B. ENR would be penalized $9,400.00 for violation of Minnesota Code
1001.2 and 1003.1 Fire Exceeding Legal Occupancy, of which $5,400 was
stayed and $4,000.00 must be paid.

C. ENR would continue “to follow the business plan and premise drawing that
was submitted with the original liquor license application on June 16, 2003
with slight modifications submitted within 30 days of signing this
agreement in order to reflect the number of seats/tables currently
available.”

D. ENR would discontinue snipe advertising.

E. ENR would be penalized $100.00 per day to the City, totaling $3,100.00,
for violating the Valet License requirement, with the fine being stayed,
provided that there are no same or similar violation(s).

F. ENR would stop advertising and operating as a nightclub.24

21. ENR has shown that its sales are in compliance with requirement in the
Minneapolis Code of Ordinances (MCO) for restaurant liquor licenses that 60 percent of
its revenue be derived from the sale of food and no more than 40 percent of its revenue
from sale of alcoholic beverages (the 60/40 rule).25

22. From August to October, 2007, City Inspector Olds visited ENR on six
different evenings and two afternoons. Inspector Olds concluded that ENR was
operating as a nightclub and not a restaurant. Her conclusion was based on the
number of people drinking compared to the number of people eating, patrons not
ordering full meals in the period after 10:00 p.m., and the number of seats available
during ENR’s late night hours of operation. Inspector Olds observed that ENR was
following the seating plan approved by the City License Division when she inspected the
business premises. Inspector OIds maintained that the City License Division should
revoke ENR’s liquor license since “zoning does not allow it” [ENR operating as a
nightclub]. These considerations were the basis of the City License Division’s issuance
of an administrative citation on August 22, 2007 for a violation of Minneapolis business
license management ordinance 259.250 for operating as a nightclub. The stated basis
for the citation was due to ENR having a lack of seating.26 ENR paid the fine that was
imposed through the administrative citation.

23. On October 12, 2007, Inspector Olds issued an administrative citation to

ENR for a violation of MCO § 259.250 for advertising as a nightclub. ENR’s owner
explained that the advertising text arose from a typographical error, which, upon receipt
of the citation error, was corrected.27

24
Exs. P11-P12.
25
Ex. R7; Test. of J. Casey; Test. of Griselle Bermudez.
26
Exs. P47.1, P49-P55; Test. of M. Olds.
27
Exs. P47.1, P56; Test. of M. Olds; Test. of M. Lopez-Santamaria.

9
 24. On April 28, 2008, a shooting occurred on the corner of 27th and Lake
Street. The Minneapolis Police Department (MPD) investigated and found that there
was no discernable connection between the shooting and ENR. The City License
Division and Minneapolis City Council Member Gary Schiff did not accept the
conclusion of the MPD and continued to investigate whether some connection existed
between the persons involved in the shooting and the patrons of ENR. No evidence of
a connection between the persons involved in the shooting and ENR has been
presented in this proceeding. 28

25. On August 31, 2008, Inspector Casey observed two individuals leave
ENR, each with a can of beer. These individuals remained in the area drinking the beer
and then threw the empty cans of beer onto the ground. Inspector Casey also observed
that the live entertainment did not stop until 2:05 a.m. and that some who were leaving
the establishment were highly intoxicated. She observed one patron urinate on the
street. ENR security witnessed these activities and did not intervene to stop these
nuisance behaviors.29

26. On September 2, 2008, the City License Division issued an administrative

citation for a violation of MCO § 362.20 (f) for allowing liquor to leave the ENR premises
and a violation of MCO § 360.70 for allowing live entertainment past 2:00 a.m. 30

27. On September 8, 2008, the City License Division issued a Violation Notice
to ENR for an alleged violation of Minneapolis liquor ordinances for allowing loitering in
front of ENR.31

2008 Settlement Conference

28. In early September 2008, Ms. Lopez-Santamaria had a meeting with

Inspector Olds and Deputy Director Cervantes. The only issues raised in this meeting
were an instance of an employee drinking beer on the premises after 2:30 a.m., and the
April 28, 2008 shooting. Ms. Lopez-Santamaria was told that there was no connection
between that shooting and ENR. No concerns were raised by the City License Division
about ENR’s methods of operation or any assertion that ENR was a nightclub.32 The
result of this meeting was the Settlement Agreement entered into between ENR and the
City License Division which added to ENR’s license the following conditions:

A. The City will impose a $500.00 sanction due at the time of signing this
agreement.

28
Exs. P123-P143, R12, R14, R17, R19, R23; Test. of R. Cervantes; G. Schiff.
29
Test. of J. Casey.
30
Ex. P41.
31
Exs. P32, P38, P39, P41, P42, P43, P43.1; Test. of J. Casey.
32
Test. of M. Lopez-Santamaria.

10
B. The Licensee shall adjust the security/alcohol service policy to reflect that
no one shall consume alcohol on the premises after 2:30 a.m. and before
8:00 a.m. all days of the week, except Sundays when no consumption is
allowed before 10:00 a.m.

C. The Licensee shall provide a current and approved security/alcohol

service policy to Licensing, due at the time of signing this agreement.

D. The Licensee shall follow the submitted security/alcohol service policy to

Licensing, due at the time of signing this agreement.

E. The Licensee shall employ security personnel at a ratio of one (1) security
guard per fifty (50) patrons and one (1) off-duty Minneapolis Police Officer.
The Licensee shall employ two (2) off-duty Minneapolis Police Officers on
nights when the expected attendance is 700 or more.

F. The Licensee will attend a police training that focuses on learning about
gangs in the City, through Police Licensing, provided by Minneapolis
Police Department personnel by October 1, 2008.

G. The Licensee will remove all patrons under eighteen (18) years of age by
10:00 p.m. every night, unless they are accompanied by a responsible
guardian. The Licensee will have the responsible guardian sign a
responsibility form.

H. One of the security personnel for the Licensee will be stationed in the U.S.
Bank parking lot from 9:00 p.m. to 3:00 a.m. looking for loitering, drinking
in cars, fights, etc. Security must call 911 when crimes are witnessed.

I. ENR currently has sixteen (16) security cameras with digital recorders with
forty-five (45) days retention. Management will purchase and install
twelve (12) more cameras by September 30, 2008. ENR will provide
copies of digital recordings to the Division of Licenses and Consumer
Services or Minneapolis Police if required to assist in a criminal or civil
investigation and subject to receipt of a Subpoena or an Order from a
Court of Law requesting disclosure. The management will provide a map
of where all the cameras are located by September 15, 2008.

J. The Licensee will post a sign at the main entrances of ENR saying that
they ban guns and weapons on their premises.

K. The Licensee will purchase a metal detection wand for scanning patrons
by August 31, 2008. All patrons entering the facility will be wanded before
entering. Patrons with guns, knives and weapons will be denied entry.

L. The Licensee will make sure that patrons leaving the restaurant do not
carry beverage bottles outside of the establishment.

11
 M. The Licensee will have door staff monitor the actual number of patrons
less than twenty-one (21) years of age in the establishment.

N. The Licensee will attend at least one Downtown Bar Meeting or LINC
Meeting in the next two months after signing this agreement. Inspector
will provide dates and time to Licensee. 33

29. Overall, Inspector Olds perceived ENR as being responsive to addressing

concerns raised by the City License Division and making changes in business
procedures to ameliorate those concerns.34 Ms. Lopez-Santamaria believed that the
conditions were excessive, but agreed that ENR would make the changes set out in the
conditions agreed to on September 10, 2008, to be proactive and demonstrate ENR’s
cooperation with the City License Division.35

30. The Licensing Division suggested that ENR might be better suited to the
downtown entertainment district. Ms. Lopez-Santamaria felt she had too much invested
in the current location to make relocation a realistic option.36

31. On September 25, 2008, the City License Division renewed ENR’s
business licenses.37

Post Settlement Conference Violations

32. On September 27, 2008, a patron was arrested for possession of cocaine
in a bathroom of ENR.38 No evidence was submitted suggesting that the individual
obtained the illegal drug at ENR.

33. On September 28, 2008, several patrons were ejected from ENR for
unruly conduct. One of these individuals struck an MPD officer as he was leaving the
area and the individual was arrested.39

34. On October 12, 2008, a patron inside ENR threw a beer bottle during an
altercation.40

35. On October 13, 2008, the driver for the band appearing at ENR was
assaulted by an individual with a crowbar. The assault occurred outside of ENR and no
one identified the attacker as having any connection with ENR.41

33
Exs. P13-P15.
34
Test. of M. Olds.
35
Test. of M. Lopez-Santamaria.
36
Test. of R. Cervantes; Test. of M. Lopez-Santamaria
37
Test. of G. Schiff.
38
Test. of R. Cervantes.
39
Test. of R. Cervantes.
40
Test. of R. Cervantes.
41
Test. of R. Cervantes.

12
 36. In a separate incident on October 13, 2008, a patron was ejected from
ENR for unruly conduct. That patron refused to leave the area and started a fight.42

37. On October 18, 2008 Inspector Casey observed an individual remove a

bottle of beer from ENR. Consequently, ENR was administratively cited on October 20,
2008 for a violation of Minneapolis liquor ordinance 362.20, which occurred on
October 18, 2008 for allowing liquor to leave the ENR premises. 43

38. On October 31, 2008, a patron was ejected from ENR for unruly conduct.
That patron refused to leave the area and he was detained by MPD officers. In running
a status check, the officers discovered that the patron was wanted on an outstanding
warrant and he was arrested.44

39. On November 2, 2008, a patron was ejected from ENR for unruly conduct.
That patron refused to leave the area and started a fight. The patron was arrested by
MPD officers.45

40. On November 14, 2008, a gang-related shooting occurred at the corner of

th
28 and Lake Street. The shooting occurred across the street from ENR and no one
identified any connection between the shooting and ENR.46

41. On November 15, 2008, an assault occurred inside ENR as two security
employees attempted to eject a patron.47

42. At approximately 12:58 p.m., on November 21, 2008, Deputy Director of

Inspections Ricardo Cervantes responded to a request for an update from
Councilmember Schiff regarding ENR. That update was copied to a number of City
officials including Rocco Forte, Director of the City License Division, and stated:

Licensing Staff Met with Police Licensing on Tuesday and 3rd Precinct on
Wednesday, to discuss the Police reports generated on Saturday, 11-15,
review the history of the business, and determine next steps. It was
determined that some the police reports did not clearly connect the activity
to El Nuevo Rodeo. This has been communicated to Inspector Gerold
and Officers involved in the incidents have been directed to submit
supplemental reports providing more detail including the nexus with the
Business. A subpoena will be delivered to Licensee, Maya Santa Maria
for video taken during that morning, a cost estimate of police resources
used that night is under way, a detailed history of violations and a
summary of police activity is being compiled to be used as evidence for
adverse action.

42
Test. of R. Cervantes.
43
Exs. P44, P45, P46; Test. of J. Casey.
44
Test. of R. Cervantes.
45
Test. of R. Cervantes.
46
Test. of R. Cervantes.
47
Test. of R. Cervantes.

13
 After review of El Nuevo webpage, schedule of events, License Inspectors
along with Police will be conducting inspection on nights where large
crowds are expected. On duty and off duty Squads called to this address
have been asked to direct vehicle cameras at this location while on the
scene when available. License Inspector Casey has compiled a list of
licensing ordinances and license conditions that will be distributed at 3rd
Precinct roll call to assist in the documentation of further violations.

When I have received the summarized police reports and license violation
history I will meet with our city attorney to discuss a revocation action.48

43. At approximately 1:44 p.m., on November 21, 2008, Director Forte

provided an update by email on issues that Councilmember Schiff raised, stating in
pertinent part:

El Nuevo Rodeo
At this point, Business Licensing does not see any other option than to
pursue a revocation of El Nuevo Rodeo’s license. We have had the
licensee in on numerous different occasions and have added numerous
conditions to the license, all to no avail. We intend to pull the Licensee in
as soon as possible and ask for the voluntary surrender of the license.
Alternatively, we will ask an Administrative Law Judge to revoke the
license and close the business. 49

44. As of November 28, 2008, the City License Division had drawn no clear
nexus between the operations of ENR and any criminal behavior on November 11
through November 15, 2008. Video recordings from the ENR security cameras were
made available for review by the MPD for investigation of the events over that
timeframe.50 No evidence from those security cameras was cited by the City License
Division in this proceeding as showing any wrongdoing by ENR.

45. During her inspection on November 28, 2008, Inspector Casey observed
that ENR allowed live entertainment past 2:00 a.m. to 2:05 a.m. Consequently, ENR
received a Violation Notice on December 3, 2008 for a complaint of conditions at ENR,
alleging a violation of MCO § 360.70 (f) for allowing live entertainment past 2:00 a.m.51
She also observed and photographed a man consuming a bottle of beer after 2:30 a.m.
at ENR. Inspector Casey issued an administrative citation to ENR on December 4,
2008, for a violation of MCO § 364.85, by allowing the consumption of alcohol on the
premises of ENR between the hours of 2:30 a.m. and 8:00 a.m. 52

48
Ex. R 38.
49
Ex. R 35.
50
Test. of R. Cervantes.
51
Exs. P36, P36.1; Test. of J. Casey.
52
Exs. P36, P36.1; Test. of J. Casey. The City License Division maintains that the observation of
consumption occurred on November 28 and was erroneously attributed to December 3, 2008. City Brief,
at 3.

14
 46. On December 1, 2008 Inspector Casey conducted an inspection of ENR in
the afternoon. She observed and took photographs of construction work that was being
conducted on the main floor. No building permit had been obtained for that work.
Inspector Casey counted the chairs present at that time and arrived at the number
285.53 Inspector Casey did not include the folding chairs that were moved to the
basement to make room for the construction work. The main floor was not in use at the
time the count was made. 54

47. As a result of the November 28, 2008 and December 1, 2008, inspections
the City License Division issued a Violation Notice for a Complaint of Conditions to
ENR. The Violation Notice alleged that: 55

A. ENR violated MCO §§ 362.395 and 362.30 in November, 2008 by

operating as a nightclub within 500 feet of a residentially zoned
area without a Conditional Use Permit.

B. ENR operated as a nightclub is in violation of “On Sale” license

provisions since ENR “was operating beyond a restaurant.”

C. ENR failed to maintain 573 seats as required per the 2003 ENR
business plan; since there were only 285 seats present on the first
and second floors during the December 1, 2008 inspection.

D. ENR had temporary bars, temporary dance floors, and standing

areas (over 2000 square feet) for the purpose of watching live
entertainment, that were not permitted.

E. ENR was required to operate as a restaurant and not a nightclub.

F. ENR needed to submit a new floor plan to the City License Division
that showed the location of 573 seats between the two floors.

48. On December 4, 2008, a Notice of Ordinance/Code Violations from the

Regulatory Services & Emergency Preparedness Construction Code Services Division
was sent to the building owner for violation of MCO §§ 85.20 and 93.20, and the
Minnesota State Building Code (Minn. R. 1300.0120, 1300.0140 and 1300.0150) for
performing construction work without a permit. This Notice was copied to ENR. ENR
obtained the necessary permits after the notice was received.56

49. As of December 2, 2008, the City License Division had not yet assembled
the evidence that would support a conclusion that ENR’s license should be revoked.57

53
Exs. P36, P36.1; Test. of J. Casey.
54
Test. of M. Lopez-Santamaria.
55
Exs. P49-P53, P58, P59, P318, R2-R4; Test. of J. Casey; Test. of M. Olds; Test. of R. Cervantes; Test.
of M. Lopez-Santamaria.
56
Exs. P70.1, P70.2, P71- P76; Test. of J. Casey.
57
Test. of R. Cervantes.

15
 50. On May 3, 2009, a rape was reported as occurring in the driveway of a
Minneapolis resident in the neighborhood approximately one block from ENR. The
subsequent police investigation revealed no link between this criminal behavior and the
actions of ENR.58

51. On May 4, 2009, an incident occurred inside ENR when a patron refused
to comply with ENR security’s direction to surrender his beer (because it was 2:30 a.m.
and no one could be drinking alcoholic beverages). The patron began throwing
punches at ENR security personnel, who handcuffed the patron and removed him from
the premises. In the struggle, the patron bit one security staffer on the elbow and in the
groin area. Before the handcuffs were removed, that security staffer wrote the word
“FAG” on the patron’s forehead using a permanent marker. After the staffer released
the patron, he called the MPD, who investigated. The ENR security staffer admitted his
conduct and attributed it to the patron’s assault.59

52. The owner, Ms. Lopez-Santamaria and head of security, Carmen Moran,
were on the premises during the altercation but not in the area where the staffer’s
misconduct occurred. The particular staffer was newly hired and still on probation.
Ms. Lopez-Santamaria described his employment references as excellent and noted
that the staffer had significant relevant experience, which had influenced the decision to
hire that staffer. Based on his conduct that evening, that staffer was promptly fired from
ENR.60

53. On October 3, 2009, Inspector Casey observed live entertainment that

ended at 2:05 a.m. at ENR. Consequently, ENR received a Violation Notice on
October 7, 2009, for an alleged violation of MCO § 360.370(f) for allowing live
entertainment after 2:00 a.m.61

54. On one occasion in 2008, ENR hosted a “hip-hop night” event. The
attendance was very large and ENR considered the event to be very profitable. The
clientele that were attracted to ENR for that event were characterized as a “tough
crowd.” ENR security staff had difficulty maintaining ENR’s standards due to the nature
of the crowd. ENR concluded that no further events of that nature would be hosted to
avoid a repeat of that evening’s events.62

55. The City License Division described its basis for proceeding with license
revocation against ENR as the conclusion that ENR was operating as a nightclub, and
included the police reports of criminal behavior in the neighborhood. The City License
Division characterized that behavior as the result of ENR operating as a nightclub. The
City License Division noted that lesser sanctions for noncompliance with the liquor

58
Ex. R50; Test. of G. Schiff.
59
Exs. 251-255; Test. of M. Lopez-Santamaria.
60
Test. of M. Lopez-Santamaria.
61
Exs. P268, P269; Test. of J. Casey.
62
Test. of M. Lopez-Santamaria.

16
license provisions of the MCO are appropriate where ENR’s operation is within the
status of a restaurant.63

56. At the time of hearing in this matter, ENR has paid all of the administrative
citations and all of the violation notices that had fines associated with them. The City
has received payment for all violations and citations.64

Community Impact

57. Since 2008, fewer than ten residents and business owners near ENR
have complained to City officials that ENR is causing negative livability issues in their
neighborhood. These complaints have primarily been that patrons leaving ENR after
closing are loud, disorderly, and generally disruptive. At the time of the April 28, 2008
gang-related shooting across the street from ENR, complaints were received attributing
that shooting to ENR’s operations. There is no evidence to support a conclusion that
this criminal activity was in any way connected to ENR.65

58. The majority of the complaints regarding ENR related to its Saturday night
events. On Saturday nights, ENR features live Latino-oriented entertainment. This
entertainment usually draws capacity crowds. ENR also hosted a variety of community
events for the Latino community.66

59. Inspector Olds and Inspector Casey each opined that the activities at ENR
and the patron behavior that they observed pose a problem for the neighboring
residential community. This patron behavior, in the estimation of the inspectors,
negatively impacts the livability of the neighborhood and supports City License Division
intervention. Inspector Casey maintained that off-duty police officers are not a good
source of security. That perception arises out of Inspector Casey’s belief that the
business, as the employer, exercises undue control over the off-duty officers.67

60. The ALJ finds the off-duty officers’ testimony to be highly credible and
finds no evidence to support a conclusion that their testimony is influenced by their
contractual relationship with ENR.

61. The off-duty police officers employed by ENR noted that restaurants and
bars located in other neighborhoods in Minneapolis, such as the “Downtown” area,
generate more calls for service and police reports than does ENR. ENR has
significantly fewer problems compared to other similar establishments in the City, and
neighborhoods.68

62. ENR submitted a petition signed by 1,194 people in support of ENR

maintaining its existing operations. ENR described the signatories as neighbors and
63
Exs. P268, P269; Test. of R. Cervantes.
64
Exs. P282-P310; Test. of J. Casey.
65
Test. of R. Cervantes; Test. of M. Lopez-Santamaria; Test. of G. Schiff.
66
Test. of R. Cervantes; Test. of G. Schiff.
67
Test. of J. Casey; Test. of M. Olds.
68
Exs. R67, R68; Test. of Frank Kutz; Test of Derrick Chauvin.

17
patrons. The petition stated that the signatories believe ENR is an important cultural
asset to the Latino community, and that ENR is “enjoyed by thousands neighborhood
residents and that they greatly outweigh the handful of senior residents whom have
complained for petty issues (at ENR) in the past years - most of which have now been
addressed and resolved.”69

63. On January 25, 2010, State Senator Patricia Torres Ray wrote a letter to
Council Member Schiff, supporting continued operation of ENR. Senator Torres Ray
noted the letter highlights the financial benefits, in the form of tax revenue, to the State
of Minnesota, the City, and through the employment that ENR provides for its
employees. Senator Torres Ray expressed her belief that ENR provides an important
role in the Latino community as a “cultural Mecca in Minnesota for Mexican and Latin
music, art and entertainment . . . there is truly nowhere else like it for Latinos in the
state.”70

64. Joyce Wisdom is the Executive Director of the Lake Street Council (LSC)
and a resident of the neighborhood that includes ENR. Ms. Wisdom expressed her
perception that the behavior of ENR has significantly improved over the years. The
LSC has never had any complaints regarding ENR from any of the other LSC members.
Ms. Wisdom maintained that ENR is “in the spirit with” the 27th and Lake Entertainment
District Initiative (Initiative #8); seeking designation by the City Council of the
neighborhood as a “retail and entertainment centered district.” While the City Council
has not formally adopted the initiative, the LSC believes that ENR is a business that fits
within the proposed neighborhood business plan.71

65. Melanie Majors is the Executive Director of the Longfellow Community

Council. According to Ms. Majors, it has been 18 months since the Council had a
complaint about ENR. She has not had to hold any community meetings to deal with
issues arising from ENR. Ms. Majors opined that ENR is a crime deterrent in the
Longfellow area because it remains open late and has off-duty police protection during
those hours. The Longfellow Community Council supports Initiative #8 which would
make the area around ENR an entertainment district. ENR would compliment that
initiative.72

ENR Security Policies and Off-Duty Police Officers

66. ENR has implemented multiple preventative measures to address security

concerns both on and immediately adjacent to the business premises. ENR has
retained the services of off-duty police officers. In addition, ENR has increased its

69
Exs. R72, R73.
70
Ex. R74.
71
Ex. R75; Test. of J. Wisdom.
72
Test. of Melanie Majors.

18
private security staff and has installed all of the video cameras inside and outside the
premises as stipulated in the September 10, 2008, settlement agreement.73

67. ENR has one or two off-duty police officers employed on weekend nights
to maintain security at ENR and to address neighborhood livability issues. On rare
occasions, ENR requires more off-duty police officers in order to provide additional
security. The off-duty officers that work at ENR have effective and frequent
communication with the security staff. The management of ENR communicates with the
off-duty officers to maintain a high level of security.74

68. ENR maintains a “Trespassing List” or “86 List” containing the names and
photocopies of the driver’s licenses or identification cards of people who have been
banned from ENR. ENR maintains a record book, which the security staff reviews
before beginning each shift, to prevent unauthorized people from entering ENR when
examining potential patrons’ identification.75

69. ENR maintains a strict no tolerance policy for weapons and narcotics.
ENR conducts a physical search for drugs and weapons of all people who enter their
premises. The physical search for narcotics is conducted by hand; the security staff
also utilizes a metal detector to check for weapons on all patrons who initially enter
ENR, and all patrons who exit then reenter ENR. ENR has two “wand-style” metal
detectors for this purpose.76 Any person who violates ENR’s drug or weapon policy is
immediately turned over to the off-duty police officer present. Any narcotics or weapons
found on individuals are turned over to the off-duty police officers. The police then
handle these limited incidents, at their discretion, in accordance with the law.77

70. ENR monitors all minors that enter the establishment. Minors must be
accompanied by a parent in order to enter ENR. The names of the minors as well as
the information of the parents are obtained when entering ENR. Once permitted entry,
minors are identified with an ink “X” on their hand, while those displaying proper
identification are given single-use wristbands. If a minor attempts to remove the ink
marking, or stands within 4 feet of bar areas they are issued a warning. If a minor is
observed violating this policy a second time, ENR security removes the minor from the
public area, finds the parents, and then removes the party from ENR.78

71. ENR security staff removes people who appear to be intoxicated from the
establishment. Their security works closely with the off-duty police officers present to
ensure their individual safety, as well as that of the community, by taking the motor

73
Test. of R. Cervantes; Test. of D. Chauvin; Test. of F. Kutz; Test. of M. Lopez-Santamaria; Test. of
Carmen Moran; Test. of Eric Mulvihill.
74
Test. of D. Chauvin; Test. of F. Kutz; Test. of M. Lopez-Santamaria; Test. of C. Moran; Test. of E.
Mulvihill.
75
Test. of C. Moran; Test. of M. Lopez-Santamaria.
76
Ex. R65; Test. of M. Lopez-Santamaria.
77
Ex. R65; Test. of M. Lopez-Santamaria, Test. of D. Chauvin, Test. of F. Kutz, Test. of C. Moran, Test.
of E. Mulvihill.
78
Test. of C. Moran; Test. of E. Mulvihill.

19
vehicle keys of intoxicated individuals, and by encouraging these individuals to use
public transportation or a taxicab when required to leave ENR.79

72. At approximately 3:00 a.m., ENR security staff sweeps the area for a full
block around ENR to remove garbage that may have been discarded by ENR patrons
leaving the premises. The ENR staff picks up that garbage no matter where it
originated. ENR’s cleaning staff does a second pass of that area after 4:00 a.m.80

73. ENR spent approximately $120,679 in 2008 for security services. ENR
paid approximately $13,068 to retain the services of off-duty police officers, and
approximately $107,611 to employ its in-house security personnel.81 The state-of-the-
art security camera system installed in 2008, as part of the September 10, 2008
settlement agreement, cost over $20,000.82

74. ENR spent approximately $94,622 in 2009 for security services. It paid
approximately $20,595 to retain the services of off-duty police officers, and it paid
approximately $74,027 in to employ its security personnel.83

75. Deputy Director Cervantes described ENR’s security plan as detailed and
well-written. He concluded that ENR’s security and off-duty police officers performed
their duties as expected. Deputy Director Cervantes described ENR’s security as
having generally responded adequately to the incidents which occurred on ENR
premises from 2008 to the date of the hearing in this matter.84

76. Deputy Director Cervantes noted that ENR security operations have
shown exceptional improvements since 2008, and are in compliance with MCO
§ 259.250. Deputy Director Cervantes described the spike in the number of incidents
requiring police involvement in 2008, as justifiable where related to the enforcement
efforts taken by ENR to reduce illegal activity on ENR’s premises. Deputy Director
Cervantes acknowledged that from mid-December 2008, to the date of hearing, two of
the five police-related incidents have occurred off of the ENR premises.85

77. Carmen Moran, ENR head of security from June 2007 through November
2009, has 10 years of previous nightclub security experience and described ENR’s
security operation as:

A. ENR’s security has drastically improved since she has been employed
there, as a result of multiple changes in ENR’s security polices and
practices.

79
Test. of C. Moran.
80
Test. of M. Lopez-Santamaria.
81
Ex. R65; Test. of G. Bermudez.
82
Ex. R65; Test. of M. Lopez-Santamaria.
83
Ex. R65; Test. of G. Bermudez.
84
Test. of R. Cervantes.
85
Test. of R. Cervantes.

20
 B. ENR strictly enforces a policy that live entertainment is to stop no later
than 1:50 a.m.

C. ENR security staff thoroughly cleans the neighborhood after big events;
which often results in ENR staff “picking up the garbage” from other
businesses in the area (i.e. Denny’s).

D. In response to the April 28, 2008, shooting that occurred off of ENR’s
premises, ENR enhanced its security by having a range of 9 to 15 security
guards on duty during event evenings, with two security guards posted in
the adjacent U.S. Bank parking lot, and security personnel posted in the
alley adjacent to ENR.

E. ENR hired two armed security guards to patrol the street in front of ENR to
improve the security of the area outside of the establishment.

F. Only in rare instance have narcotics been found on individuals, and she
has not seen or heard of anyone attempting to bring a weapon into ENR.

G. Compared to other similar places that he has worked security, ENR is

safer and has better security in place.

H. ENR is a very safe place, and that ENR has enhanced the quality of life
and the livability of the neighborhood.86

78. Eric Mulvihill, ENR head of security from December 2009 to the date of
hearing, has a degree in criminal justice and 13 years of previous nightclub security
experience in the downtown Minneapolis area. He described ENR’s security operation
as:

A. Strict enforcement of ENR’s security polices and procedures is

maintained at all times.

B. Any person who would attempt to bring drugs or a weapon into

ENR would be turned over to police with the contraband.

C. ENR is safer and has better security in place compared to other

nightclubs that he has worked at previously in the City’s Downtown
area.

D. He has never seen drugs or weapons at ENR.

E. ENR works very closely with law enforcement in order to maintain

effective security, and has improved the radio communication of
ENR’s security to improve the response of ENR security to address
potential security risks.

86
Test. of C. Moran.

21
 F. ENR is the safest bar/restaurant that he has ever worked at, and
ENR is much safer and has better security compared to that of
nightclubs in the Downtown area.87

79. MPD Officer Frank Kutz has provided security as an off-duty officer at
ENR for four years. Officer Kutz assessed security at ENR as having significantly
improved over the time he has worked there. Officer Kutz made the following
observations about conditions at ENR: 88

A. Effective communication has occurred on a regular basis between ENR’s

management staff, security staff, and the off-duty MPD officers to maintain
the high level of security that has been established at the business.

B. ENR’s management has appropriately requested additional off-duty police

officers when needed.

C. On one specific occasion, ENR requested 12 off duty officers in the spring
time of last year

D. Regarding people who are accused of criminal activity; off-duty MPD

officers have broad discretion when handling these alleged criminal
offenses and ENR does not restrain officers from making arrests.

E. ENR has fewer incidents, and less severe incidents in comparison to other
similar establishments, but minor incidents can always be expected at
establishments like ENR.

F. Public urination occurs outside of ENR, but very infrequently.

G. The two shootings that occurred in the vicinity of ENR were very unusual
for that area of Lake Street and there was no known connection between
the shootings and ENR.

H. ENR’s current operation requires only minimal assistance from on-duty

law enforcement personnel.

I. ENR fits within the neighborhood.

J. As a general matter, loitering at any establishment is difficult to control by

law enforcement, and ENR handles loitering very well.

K. ENR has adequate security in place to protect its patrons, the community,
and the neighborhood.

87
Test. of E. Mulvihill.
88
Test. of F. Kuntz.

22
 L. ENR’s security has drastically improved over the four years that he has
worked there as an off-duty officer.

M. ENR is very similar to “T’s Place” (located next door to ENR) in the type of
establishment and the type of security problems encountered.

N. The area patrolled by the 3rd Precinct has gang issues, but these
gang members are not patrons of ENR.

80. MPD Officer Derrick Chauvin has provided security as an off-duty officer
at ENR for four years, typically working there two to three nights per week. Officer
Chauvin assessed security at ENR as having significantly improved over the time he
has worked there. Officer Chauvin made the following observations about conditions at
ENR: 89

A. Patrons of “T’s Place” have caused problems which Officer Chauvin has
had to address while he was working off-duty at ENR.

B. Officer Chauvin was working off-duty at ENR when a person displayed a

firearm off of the premises of ENR. MPD policy places a higher priority on
responding to such incidents. This policy required Officer Chauvin to
respond to the off-premises situation. For this reason, he was not able to
address an incident that occurred at ENR at the same time. The off-duty
officers working in conjunction with ENR’s security staff are in an
ambiguous and difficult position when serious offenses occur off of ENR’s
premises.

C. The 3rd Precinct has a high level of crime in comparison to the City
average, but the majority of serious crime in the 3rd Precinct takes place
west of Hiawatha Avenue [ENR is east of Hiawatha Avenue].

D. The Downtown area nightclubs are far more disruptive than ENR.

E. ENR provides adequate security and that there have only been one to two
very minor incidents at ENR when he was working as an off-duty officer.

F. Public urination occurs outside of ENR infrequently.

Event Closing Procedures

81. ENR follows a standard practice of concluding its music at 1:50 a.m. At
that time, on nights when live music has been playing, the live music ends and the
entertainment director thanks the patrons for coming, not to drink and drive, not to litter
or make excessive noise on the way back to their cars. The patrons are also informed
about specials available in the restaurant and upcoming events. An informal lost and
found is conducted. The patrons are informed that all alcoholic beverages must be

89
Test. of D. Chauvin.

23
consumed by 2:30 a.m. Recorded mariachi music is then played at a lower sound
volume.90

False Alarms

82. The City License Division cited ENR for an excessive number of false
alarms. ENR paid the fines associated with the excessive number of false alarms. The
City has not incurred undue expenses arising out responding to false alarms. In the
opinion of Deputy Director Cervantes, the violations relating to false alarms do not rise
to the level of conduct supporting license revocation.91

Notice of Hearing

83. On January 19, 2009, the City License Division held a settlement
conference with ENR and suggested that conditions be imposed on ENR’s Class A
Liquor License with Sunday Sales. ENR rejected the suggested conditions as being too
restrictive of its business. ENR provided a proposed floor plan to be adopted as a
condition on its license. The City License Division refused to agree to the new
proposed floor plan.92

84. On May 15, 2009, the City issued a Notice and Order for Hearing to ENR,
seeking a recommendation as to whether the City has good cause to revoke ENR’s
Class A On-Sale Liquor License with Sunday Sales.

Based upon the above Findings of Fact, the Administrative Law Judge makes the
following:

CONCLUSIONS

1. The Administrative Law Judge and the Minneapolis City Council have
jurisdiction in this matter under Minnesota law and the Minneapolis City Charter.93

2. The Minneapolis City Council has the authority to consider the charges
against the Licensee and the adverse action, if any, that should be imposed by the City
pursuant to Minn. Stat. § 340A.415, and Chapter 4, Section 16 of the Minneapolis City
Charter.

3. The City License Division has complied with all relevant substantive and
procedural legal requirements.

4. The City License Division gave the Licensee adequate and timely notice of
the hearing and of the charges against it.

90
Test. of M. Lopez-Santamaria; Test. of A. Gaytan.
91
Test. of R. Cervantes.
92
Test. of M. Lopez-Santamaria.
93
Minn. Stat. §§ 14.50, 14.55, 340A.402(3), and 340A.412(2)(b); Minneapolis Charter Chapter 4,
Section 5, and Minneapolis Code of Ordinance §§ 259.250, 362.100, 362.260, 362.290, 362.500, and
362.510.

24
 5. As the party proposing that certain action be taken, the City License
Division has the burden of proving facts at issue by a preponderance of the evidence.94

6. The Minneapolis Charter authorizes the City Council to license and

regulate all bars, taverns, restaurants and cafes. According to Chapter 4, Section 5 of
the Charter:

Nothing herein shall limit the authority of the City Council to impose
by ordinance further restrictions or limitations on the granting of any
liquor license . . . . Except as herein provided; all such on-sale and
off-sale liquor establishments shall continue to be subject to the
pertinent statutes of the State of Minnesota and the City ordinances
of the City of Minneapolis.

7. The Minneapolis City Charter, Chapter 4, Section 16, states:

Licenses May Be Revoked. Any license issued by authority of the City

Council may be revoked by the City Council at any time upon proper
notice and hearing for good cause; and upon conviction before any court
of any person holding such a license for the violation of the provisions of
any law, ordinance or regulation relating to the exercise of any right
granted by such license, the city council may revoke such license in
addition to the penalties provided by law or by ordinance for any such
violation.

8. The Minneapolis Code of Ordinances (MCO) § 259.250, contains the

following provisions, among others, related to the minimum standards and conditions
required to hold a license under Titles 10, 13, and 14 of the Minneapolis Code.95
Failure to comply with any of these standards and conditions shall be adequate grounds
for the denial, refusal to renew, revocation or suspension of the license:

(1) It shall be the responsibility of the licensee to take appropriate

action to prevent further violations following conduct by any
persons on the business premises, including parking areas, in
violation of any of the following statutes or ordinances:
...
h. Minnesota Statutes, Section 609.72 and Section 385.90 of this
Code, which prohibits disorderly conduct.
...
j. Minnesota Statutes, Sections 609.74 and 609.745, which
prohibit public nuisance and permitting a public nuisance.
...
l. Any other criminal activity arising out of the conduct of the
business.

94
Minn. R. 1400.7300, subp. 5.
95
Title 14 of the Minneapolis Code, entitled “Liquor and Beer,” sets forth the City’s regulations for liquor
licenses. See Minneapolis Code, Chapter 362.

25
 (2) It shall be the responsibility of the licensee to maintain and operate
the business in compliance with all applicable laws and ordinances,
including the zoning, fire, environmental health, environmental
management, license, food, liquor, housing and building codes.
...
(4) It shall be the responsibility of the licensee to provide adequate
security to prevent criminal activity, loitering, lurking and disorderly
conduct on the business premises, including parking areas.
...
(9) The provisions of this section are not exclusive. Adverse license
action may be based upon good cause as authorized by Chapter 4,
Section 16 of the Charter. This section shall not preclude the
enforcement of any other provisions of this Code or state and
federal laws and regulations.

7. The Minneapolis Code of Ordinances provides that any liquor license may
be revoked by the City Council for any violation of City Ordinance Chapter 362 or state
law, or because “of the conduct of the business of the licensee.” A liquor license may
also be revoked “as otherwise provided” by the City Code.96

8. Minn. Stat. § 340A.415 provides that a municipality may revoke a liquor

license for any of five violations: 1) selling alcoholic beverages to another retail licensee
for resale; 2) purchasing alcoholic beverages from another retail licensee for resale; 3)
conducting or allowing unlawful gambling on licensed premises; 4) the failure to remove
or dispose of alcoholic beverages pursuant to commissioner’s order; or 5) the failure to
comply with an applicable statute, rule or ordinance relating to alcoholic beverages.

9. The City has the authority to revoke liquor licenses for the failure to
comply with an applicable statute, rule or ordinance relating to alcoholic beverages.
The City exercises that authority where, in the totality of the circumstances, the
business cannot continue to operate within its license without engaging in ongoing
violations of applicable statutes, rules, or ordinances.

10. The City License Division has not demonstrated that ENR’s ongoing
operations constitute operation of a nightclub, as that term is described under the MCO.

11. The City License Division has not demonstrated by a preponderance of

the evidence that good cause exists for the City to revoke ENR’s liquor license.

12. The City License Division has demonstrated that the imposition of a fine
for the use of temporary bars is appropriate. The City License Division has
demonstrated the 2:00 a.m. music ordinance was violated, but the fine for that conduct
has already been paid. The City License Division has demonstrated that the imposition

96
Minneapolis Code of Ordinances § 362.340.

26
of conditions regarding a minimum number of seats and retention of earlier conditions
on ENR’s license are appropriate pursuant to Minneapolis Ordinance § 259.250(9).

13. To the extent that the following memorandum contains additional

conclusions, they are hereby incorporated herein.

Based upon the above conclusions, the Administrative Law Judge makes the following:

RECOMMENDATION

IT IS HEREBY RECOMMENDED that the Minneapolis City Council not revoke

the liquor license held by Midwest Latino Entertainment & Talent, Inc., and Maya Lopez-
Santamaria d/b/a El Nuevo Rodeo. Should the Minneapolis City Council determine that
some sanction is appropriate, the ALJ recommends that the Minneapolis City Council
impose a fine for using temporary bars, and imposing the following conditions on the
license: 1) discontinuing the use of temporary bars absent City License Division
approval, 2) establishing an affirmative requirement that no fewer than 353 seats be
available in the licensed premises when the main floor is in use, and 3) that the
conditions established by agreement between ENR and the City License Division in
September, 2008 remain in effect.

Dated: March 17, 2010

s/Raymond R. Krause
RAYMOND R. KRAUSE
Chief Administrative Law Judge

Reported: Digitally Recorded (No Transcript Prepared)

NOTICE

This Report is a recommendation, not a final decision. The Minneapolis City

Council will make the final decision after a review of the record and may adopt, reject, or
modify these Findings of Fact, Conclusions of Law, and Recommendation. Pursuant to
Minn. Stat. § 14.61, the City Council will not make its final decision until after it has
provided each party adversely affected an opportunity to file exceptions and present
argument to the Minneapolis City Council. Parties should contact the City Clerk,
Council Information Division, 350 South Fifth Street, Room 304, Minneapolis, Minnesota
55415-1382; telephone number 612-673-3136, to find out the process for filing
exceptions, or presenting argument.

The Minneapolis City Council is requested to serve notice of its final decision
upon each party and the Administrative Law Judge by first-class mail.

27
 MEMORANDUM

Background

In this proceeding, the City of Minneapolis seeks to revoke ENR’s liquor license.
There are two distinct categories of behavior that have been identified by the City
License Division as reasons for taking adverse action. The behavior that has been
identified as justifying revocation is the ongoing operation of ENR as a nightclub, rather
than its licensed status as a restaurant. The other behavior is demonstrated violations
of the Minneapolis Code of Ordinances regarding liquor licenses by ENR. The City
License Division has acknowledged that the demonstrated violations of the MCO
regarding ENR’s liquor license do not rise to the level of violations that would justify
revocation as a sanction.

Initial Decision to License

ENR’s business plan is not ambiguous regarding its planned operations. At the
time of ENR’s initial licensure, the Minneapolis City Council was aware of the floor plan
of the premises that ENR was proposing to use and the manner in which the business
would operate. The City License Division was fully aware of what those impacts would
be since the prior tenant, Vanandy’s Nightclub, had been operating from that location for
over five years, with attendance at Vanandy’s events regularly filling the available
space.

The economic situation in the Longfellow neighborhood and in the vicinity of 27th
and Lake specifically, was the subject of development efforts being supported by the
City. Those development efforts included fostering responsible entertainment venues
on Lake Street. By any measure, that effort has been a success. ENR has contributed
to those development efforts by employing significant numbers of people, generating
significant tax revenues, and maintaining extensive security measures. The City has
obtained the benefits that it sought when ENR was granted its license to operate.

The consistent testimony of the City License Division witnesses was that the
initial licensure of ENR as a restaurant, rather than a nightclub, was a “mistake.” The
City maintains that it is not estopped from correcting this “mistake.”97 The record in this
proceeding demonstrates that there was no mistake made by the City. Rather, the City
exercised a reasoned judgment to authorize ENR’s business to be conducted from the
licensed premises. There was full disclosure from Ms. Lopez-Santamaria regarding
how ENR was to be run and what could be expected regarding attendance and the
resulting neighborhood impacts; and ENR has been operating as it represented it
would. ENR’s operation is clearly different from the nightclub that previously operated
from the same premises. ENR’s proposed operations were determined to be compliant
with applicable license and zoning regulations. The application of a different standard
now by the City’s inspectors does not change the propriety of the initial decision to issue
ENR its license.

97
City Brief at 5.

28
Licensing Authority

Municipal authorities have broad discretion within their geographical jurisdiction

to determine the manner in which liquor licenses shall be issued, regulated and
revoked.98 In discussing the implied powers of a city to regulate the sale of liquor, the
Minnesota Supreme Court has said,

The power to regulate the retail sale of alcohol and alcoholic beverages
conferred upon the governing board of a city includes the power to
prescribe such reasonable rules and impose such reasonable restrictions
as to the manner and circumstances in which the business shall be
conducted as will tend to promote order and protect the public from
harm.99

The City License Division contends that revocation of ENR’s license is

appropriate because ENR is no longer operating as a restaurant, as required by the
terms of its license. Minneapolis Ordinance 362.392 (a) sets out the standards for
establishments such as ENR, whose entrances are less than 500 feet from residentially-
zoned properties, as follows:

(1) The establishment shall maintain, on a monthly basis, gross sales

revenue during each fiscal year from the sale of food and beverages not
containing alcohol in an amount of not less than sixty (60) percent of its
total gross revenue from the sale of food and beverages, except that a
bowling center shall maintain such revenue in an amount not less than fifty
(50) percent.

(2) No such premises shall contain a "bar area" except as permitted

herein. A "bar area" shall mean any area not devoted exclusively to full
restaurant service to customers seated at tables, in which consumption of
alcoholic beverages is a substantial activity, except an area predominantly
used as a holding area for customers waiting for restaurant seating. The
size and capacity of such an area must bear a relationship to the size and
capacity of the restaurant area which is consistent with its purpose as a
waiting area. A waiting area of excessive size shall not be approved.

There is no dispute in this proceeding that ENR meets the 60 percent gross
revenue requirement. The City License Division contends that any area not having
seating is treated as a “bar area” for the purposes of this ordinance. From this reading,
the City License Division contends that having removed some of the tables from the
area adjacent to ENR’s dance floor constitutes a violation of the prohibition against a
“bar area” on ENR’s premises. The City License Division cited no language in any other
part of its ordinances in support of this contention regarding bar area.

98
Bourbon Bar & Café Corp. v. City of St. Paul, 466 N.W.2d 438, 440 (Minn. App. 1991), citing Sabes v.
City of Minneapolis, 265 Minn. 166, 171, 120 N.W.2d 871, 875 (1963).
99
City of Duluth v. Cerveny, 218 Minn. 511, 516, 16 N.W.2d 779, 783 (1944).

29
 The City License Division’s reading of the ordinance bears no relation to the
intent of the ordinance or its application to ENR at the time of the issuance of the
license. The common practice in many restaurants is to have a bar area, just off of the
main entrance, used as a waiting area while tables become available. This area “must
bear a relationship to the size and capacity of the restaurant area.” A dance floor is not
a waiting area. The plain meaning of the ordinance does not allow for a dance floor to
be treated as a “bar area.”

The limitations on what constituted a “bar area” existed at the time ENR’s license
was issued. The business plan and floor plan provided with the application each
indicated how the business would be operated. The ongoing operations of ENR have
been consistent with its business plan. The changes to the seating arrangements did
not substantially change the nature of the business conducted on ENR’s premises from
the time that the license was first issued.

Inspector Olds acknowledged that there is no effective definition of “nightclub” in

the MCO.100 As a substitute for a definition in the license ordinances, the City License
Division relied on the Minneapolis ordinance on zoning uses, which states in pertinent
part:

520.160. Definitions. Unless otherwise expressly stated, or unless the

context clearly indicates a different meaning, the words and phrases in the
following list of definitions shall, for the purposes of this zoning ordinance,
have the meanings indicated. All words and phrases not defined shall
have their common meaning.

***

Nightclub. A use engaged in the sale of alcoholic beverages for

consumption on the premises, including taverns, bars, cocktail lounges
and similar uses, or a use other than a sit down restaurant which provides
general entertainment.

The City License Division noted that “little food was being served” at the time that
inspectors were present. ENR’s testimony was unrebutted that its kitchen was open
during those times. The City License Division has not suggested that it imposes any
requirement that patrons order full meals after 10:00 p.m. There is no obligation under
any of the ordinance provisions cited that full meals be ordered at any time to maintain
operation as a restaurant. What ENR must do is meet the 60/40 standard and not
maintain a “bar area” beyond what was approved in its business plan.

100
Test. of M. Olds.

30
 Inspector Olds acknowledged that ENR was operating as it had when its license
was first granted.101 The City License Division itself had approved ENR’s operations as
appropriate for the zoning in place at the time the license was granted.102

Applying the plain meaning of the ordinance to the facts as developed in the
record of this proceeding, ENR is licensed as a restaurant. ENR is in compliance with
the 60/40 gross revenue standard. ENR provides general entertainment in conjunction
with its overall operation (not as a primary function of its operation). The record in this
proceeding shows that ENR falls within the category of “a sit down restaurant which
provides general entertainment.” For this reason, ENR does not meet the definition of a
“nightclub” as set out in Minneapolis ordinance.

The City License Division also cited the development standards in MCO
§ 536.20, which states in pertinent part:

536.20. Specific development standards. The uses listed below are

subject to the following specific development standards, in addition to all
other applicable regulations:

***

Nightclub.

(1) Where alcoholic beverages are served, the use shall comply with the
requirements of Title 14, Liquor and Beer, of the Minneapolis Code of
Ordinances and Chapter 4 of the Minneapolis City Charter.

(2) The premises, all adjacent streets, sidewalks and alleys, and all
sidewalks and alleys within one hundred (100) feet shall be inspected
regularly for purposes of removing any litter found thereon.

(3) Nightclubs established or expanded after the effective date of this

ordinance shall be located at least five hundred (500) feet from a
residence or office residence district boundary.

The foregoing language does not define “nightclub.” MCO § 536.20 was in
existence when ENR was first granted its license in 2003. The granting of ENR’s
license in 2003 constitutes a determination by the City Licensing Division that the
operations defined in ENR’s business plan did not meet the definition of “nightclub.”

Inspector Casey asserted that the change in seating supported the conclusion
that ENR was now operating as a nightclub. Inspector Casey indicated that the

101
Test. of M. Olds.
102
Id.

31
standard was what was shown on the business plan and any variance from that plan
needed to be authorized by the City License Division.103

The floor plan for the ground floor submitted by ENR at the time of the application
shows seating for 14 persons at the bar and 80 restaurant seats, totaling 94 seats.104
The City License Division (as set out in Findings 7 and 10 above) authorized a “seating
capacity” on the ground floor of 94, which matches the number on the floor plan. The
City License Division described the authorized seating as consisting of 77 seats at
tables and a bar with 12 seats. Those numbers total 89.

At the time of initial licensure, the City License Division described the seating of
the main floor as restaurant seating for 64 persons at tables and chairs, an oval-shaped
bar with seating for 23 persons, a bar with seating for 17 persons, and additional
seating for 160 persons at tables and chairs. In addition to describing the two bar
areas, the City License Division noted that a stage and dance floor were present on the
main floor. The City License Division’s description of the seating present on the main
floor totals 264.105

The total number of seats described by the City License Division at the time of
ENR’s application for licensure was 353 (89 lower floor, 264 main floor). Adjusting for
the lower floor total number (94) mentioned by the City License Division, this total rises
to 358. In the application assessment document, the City License Division described
the total seating capacity as being 573 persons.106 The total number of seats as shown
on the floor plans for the lower floor and the main floor totals 415.

There is no evidence in this record to show that ENR ever had seats for 573
persons on its licensed premises. The description of “seating capacity” is, under the
circumstances present in this proceeding, an upper limit only. This conclusion is
supported by testimony from Deputy Director Cervantes. There is no evidence to
support a conclusion that the City License Division expected ENR to provide seating for
573 persons in its ongoing business operations when ENR was initially licensed.

Inspector Casey indicated that the City License Division’s standard was for a
business to operate as described in its business plan at the time of the application, as
limited by the terms of the license issued. Any significant changes would require
approval by the City License Division.107 Regarding ENR’s seating, the observed
number of seats on April 16, 2008 was 341.108 While this number is below the total of
353 City License Division-described seats, the margin is not exceptional considering the
overall size of ENR’s premises.

103
Test. of J. Casey.
104
Ex. P57.2
105
Ex. R-4.
106
Id.
107
Test. of J. Casey.
108
The total of observed seats comes from the copy of the floor plans in the record as P57.1 and P57.2.
While P57.1 notes the total R-4.

32
 The record in this matter shows that the number of seats present in ENR does
not constitute a basis for sanctioning ENR’s license. The City may choose to make the
availability of 353 seats, while the main floor is in use, a condition for continued
licensure.

The City License Division contends that the Licensee’s agreement to stop
“operating as a nightclub” as part of the December 11, 2006 settlement conference
imposed some sort of obligation on ENR.109 The record in this proceeding shows that
the City License Division has proceeded under a mistaken conclusion that ENR has
been operating as a nightclub. ENR has been in compliance with the December 11,
2006, settlement conference agreement by operating in accordance with its business
plan. There is no condition placed on ENR’s license by that settlement agreement that
did not already exist in the license as issued.

Other Conduct Cited

The City License Division relied on an alleged failure by ENR to obtain a building
permit for construction that occurred in December 2008, as a basis for sanctioning
ENR’s liquor license. The City Inspector contended that ENR was responsible for
obtaining the permit simply because Ms. Lopez-Santamaria had said she was.110
Inspector Casey maintained that the responsible party for obtaining the permit varies
depending on who is doing the work. The City License Division cited no MCO
provisions in support of this contention.111 Minneapolis ordinances are clear, however,
that the lessee is not responsible for the permits but rather the building owner is
responsible.

MCO 87.90(f) authorizes the City’s building authority to require the “owner,
agent, occupant or person in charge or control of the building involved, or the contractor
constructing or altering the building involved” to bring a noncompliant property into
compliance with the building code. But the following provision states:

(g) For the purposes of this subsection, the word "owner" is defined to
mean any of the following: The fee owner of record as recorded in the
office of the register of deeds or the registrar of titles for Hennepin County;
the present owner according to the tax records of the Hennepin County
Tax Department; the owner as filed with the department of inspections for
the City of Minneapolis, according to Chapter 244 herein; a contract
vendor under a contract for deed, or a contract vendee under a contract
for deed. The owner, or owners, shall be responsible for compliance

109
City Brief, at 5 (citing Amina. Inc. v. City of Minneapolis, 2008 WL 223250 (Minn. App. 2008).
110
Test. of J. Casey
111
The ALJ notes that throughout MCO Chapter 87, the “owner” is the party with authority to obtain a
certificate of code compliance or seek relief from the Building Code Board of Appeals. The MCO
provisions on permits, Chapter 89, makes no mention of lessees obtaining permits, only owners and
owner-occupants. There may be a practice on the part of the City permitting process to allow contractors
or lessees to obtain building permits, but such a practice does not change the standards set out in the
MCO.

33
 with all orders issued against their property and within the time
period as set out in such orders, where proper notice has been given
such owner. Such notice shall be deemed sufficient and proper when
sent via prepaid, first-class postage to such owner or owners at their last
known address or their address as shown on such recordations. This
subsection shall be effective against any contracts or conveyances
entered into after August 19, 1978. (Code 1960, As Amend., § 10.200;
Ord. of 9-27-74, § 2; 78-Or-143, § 1, 8-11-78; Pet. No. 251752, § 1, 3-16-
90) 112

ENR was not ordered to bring a condition into compliance. Rather, the
construction was identified as unpermitted. Under MCO 87.90(g), the building owner,
not ENR, was responsible for obtaining the permit. ENR’s status as a volunteer in
obtaining the permit does not constitute a basis for sanctioning ENR’s liquor license.

As a further ground for revocation, the City License Division cited ENR’s
delinquency in paying overdue false alarm fines. This is a de minimis violation and the
fines have been paid. This is not a valid basis for revoking ENR’s license.

The City License Division has demonstrated three de minimus violations of MCO
§ 360.72 (f) on October 28 and November 28, 2008, and October 3, 2009 when music
continued until 2:05 a.m. Modest sanctions are appropriate for these violations, and
any associated fine has already been paid. ENR has a policy to terminate its live music
approximately 15 minutes before the 2:00 a.m. deadline. This policy failed once in the
past year to stop the music on time. Revocation of ENR’s license for these violations is
a disproportionate sanction as these violations do not constitute “good cause.”

ENR has paid the fines associated with the music violations issued in October
and November, 2008. The City License Division had not informed ENR of the decision
arrived at by Director Forte on November 21, 2008 (and before the required nexus
between any incidents and ENR had been determined), that ENR’s license was to be
revoked.113 Had ENR been informed of that decision, ENR would have been able to
contest those citations as part of this proceeding. As discussed in other parts of this
Memorandum, the violations underlying these citations do not support revocation of
ENR’s license.114

The City License Division contended that "Evidence of an inordinately high

number of incidents of criminal behavior on the licensed premises was admitted into
evidence during the course of the hearing in the form of official police reports."115 This
contention was refuted by the testimony of the MPD officers who work off-duty in ENR.
The number and seriousness of incidents of criminal behavior around ENR are 1) less
than that of adjacent areas in the same neighborhood, 2) largely occurring from
September through December 2008 as a result of instituting stricter standards in ENR,

112
MCO 87.90(g) (emphasis added).
113
Ex. R-35.
114
Test. of M. Santamaria.
115
City Brief at 3.

34
and 3) drastically reduced in the period from December 2008 to the present. While the
City Licensing Division has sought to attribute the demonstrated reduction in criminal
activity to the current economic recession or the existence of this proceeding, the
evidence in the record supports the conclusion that the reduction is due to effective
security measures implemented by ENR. Furthermore, the suggestion by the Licensing
Division that ENR might relocate to the downtown area belies its current contention that
it is a poorly managed, troubled enterprise.

Revocation of a license issued by the City is authorized by the City Charter,

which states in pertinent part:

Any license issued by authority of the City Council may be revoked by the
City Council at any time upon proper notice and hearing for good cause.
Minneapolis, Minn., City Charter ch. 4 § 16 (2001).

The standards governing the use of the MCO provision regarding “good cause” in
sanctioning a licensee were addressed recently by the Minnesota Court of Appeals,
which stated:

To satisfy the Due Process Clause, a city ordinance permitting adverse

action against a liquor license must provide sufficient objective standards
to control the discretion of the governing authority and must give adequate
notice to the licensee of the criteria used to permit adverse action against
the license. See 45 Am. Jur. 2d Intoxicating Liquors § 151 (2007) (citing
Folsom v. City of Jasper, 279 Ga. 260, 612 S.E.2d 287 (2005) (holding
due process rights violated where city council had discretion to determine
both whether a violation of law had occurred and that such violation
constituted grounds to suspend or revoke the license)).116

The City License Division has not shown that the conditions regarding the current
operation of ENR vary in any significant degree from the business plan as set out in
ENR’s initial application for licensure. Inspector Casey’s testimony made clear that the
decision to seek revocation of ENR’s license for operation as a nightclub was based on
the erroneous belief that ENR’s current operation somehow differed from the conditions
set out in ENR’s business plan and the application that was approved. Inspector Olds
acknowledged that ENR was operating in the same fashion that was originally approved
by the Minneapolis City Council when ENR’s license was granted. The City License
Division has not shown good cause to revoke ENR’s license on the basis that it is
operating as a nightclub or as a result of minor miscellaneous infractions.

Revocation and Lesser Sanctions

While the City has broad authority regarding sanctions when taking adverse
action against a liquor license, the record in this proceeding demonstrates that

116
ITMO On-Sale Liquor License, Class B, Held by T. J. Management of Minneapolis d/b/a Gabby’s
Saloon and Eatery, A08-0681 (Minn. App. March 31, 2009) (Gabby’s).

35
revocation is too severe for the few violations relating to ENR’s liquor license. The City
License Division’s witness acknowledged this to be the case.117 Further, ENR’s record
of compliance since December 2008, has been exemplary, with only one violation of the
2:00 a.m. music restriction having occurred.

As the Minnesota Court of Appeals has held:

When local governmental units exercise their licensing authority,

especially in connection with the sale of liquor, they must determine
whether continued operations will be ‘detrimental to the public good.’
Sabes v. City of Minneapolis, 265 Minn. 166, 171, 120 N.W.2d 871, 875
(1963) (footnote omitted) (describing judicial deference to discretion of city
council determining whether to revoke liquor licenses).118

The record in this matter, particularly the testimony of MPD officers with
knowledge of the situation in the immediate environs of ENR, demonstrates that ENR’s
operations are not a cause of problems in the neighborhood.119 There is ample
evidence in the record to show that the continued operation of ENR is a positive benefit
to the community. Under the holding in Diva’s, the presence of a positive benefit to the
public good should weigh in the decision regarding sanctions, particularly revocation.

An adequate evidentiary basis for revocation of a business license was described

by the Minnesota Court of Appeals as follows:

Our exhaustive review of the record indicates that there was substantial
evidence that relator did not abide by the voluntary operating conditions,
considerable criminal activity occurred in the area directly surrounding
relator’s store, and relator violated provisions of the MCO. Further, both
the ALJ and the committee recommended that respondent revoke relator’s
licenses. The committee found that relator’s store was ‘poorly-managed,’
‘had a deleterious impact upon the community,’ and consumed ‘a
disproportionate and unreasonable amount of City enforcement and
regulatory resources.’ The committee also found that while relator took
some steps to address the problems related to criminal activity occurring
around the store, the ‘lengthy negative impact upon the community and

117
Test. of R. Cervantes.
118
DRJ, Inc., d/b/a Diva's Overtime Lounge v. City of St. Paul, A07-1599 (Minn. App. November 13,
2007)(Diva’s).
119
By way of contrast, clear issues were demonstrated in a license matter regarding a different licensee
in the same building. In support of its arguments, the City cited ITMO the Applications for Class B and
Class E Licenses of Baku Entertainment & Restaurants, LLC and Fatemeh Engen, OAH Docket No. 8-
6010-19615-6 (Findings of Fact, Conclusions and Recommendation issued March 3, 2009) (Baku). In
Baku, a licensee used the third floor of the Oddfellows Building (of which ENR is on the first and second
floors) to offer musical entertainment with no food sales and significant beer and wine sales. On
October 13, 2007, continuing into the early morning of October 14, 2007, that licensee conducted an
event that devolved into a near-riot. No such behavior by ENR’s patrons has been alleged in this
proceeding. There are distinct differences in the operation of the licensee in Baku and that of ENR. The
comparison supports the conclusion that ENR is operating within its authorized business plan.

36
 upon City resources’ outweighed any mitigating efforts presented by
relator. These findings are supported by evidence in the record. See CUP
Foods, 633 N.W.2d at 564 (holding that, while the evidence was ‘hardly
overwhelming,’ there was substantial evidence to reasonably support
respondent’s decision to revoke relator’s business license).120

In this matter, the evidentiary record shows that ENR has abided by the voluntary
conditions on its license, making extraordinary expenditures to do so. The behavior
cited as criminal activity in the area of ENR has primarily arisen as ENR security has put
in place stringent policies as requested by the City License Division. Since that period
of adjustment, the number and severity of incidents has fallen dramatically.

The record in this matter shows that ENR is well-managed and responsive to
issues raised by the City License Division. The substantial security in place at ENR has
significantly reduced the burden of the cost of police protection on the City. While City
resources have been expended in this proceeding, that has been primarily driven by the
mistaken conclusion that ENR’s licensed operation, as originally approved by the City
License Division, was improperly authorized or has somehow changed. That
expenditure of City resources on this issue cannot be considered in any way chargeable
to ENR.

The record is essentially unrebutted that ENR has taken effective steps to
address problems related to criminal activity in the vicinity of the business premises and
the parking area rented by ENR. The record is also clear that ENR’s positive benefit to
the community far outweighs the relatively few problems that have been associated with
patrons leaving ENR.

Applying the Amina factors to the record in this proceeding supports the
conclusion that the City License Division has not shown good cause to revoke ENR’s
business licenses. The ALJ respectfully recommends that the City impose appropriate
conditions on the license to address the demonstrated violation, operation of a
temporary bar that was not described in ENR’s business plan. These mobile bars do
nothing to alter the proportion of food to alcohol nor do they change the approved floor
plan. They should, however, be explicitly approved by the Licensing Division before
use.

Under the holding in Gabby’s, supra, conditions imposed cannot extend to

“livability issues” off of the premises of ENR without a demonstration of a nexus
between those issues and violations of the MCO regarding liquor licenses. As
discussed above, the required nexus has not been shown by the record in this
proceeding.

The City License Division has shown that violations of the MCO regarding liquor
licenses have occurred and that lesser sanctions than revocation are appropriate. The
record in this proceeding supports the imposition of a fine for music continuing past

120
Amina, Inc, supra.

37
2:00 a.m. (which has already been paid), a fine for using temporary bars, discontinuing
the use of such bars in the future absent City License Division approval, establishing an
affirmative requirement that no fewer than 353 seats be available in the licensed
premises when the main floor is in use, and a continuation of the conditions established
by agreement between ENR and the City License Division in September 2008.

R. R. K.

38