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Memorandum and Argument to City Council City of Mounds View Ramsey Count, Minnesota January 26, 1976 From: John G. Bell Attorney at Law In behalf of the Anchor Inn, Donatelle's, Launching Pad, and Mermaid, Liquor Establishments in the City of Mounds View. Re: On sale liquor and caberet licenses. Gentlemen: There is no questions but the licensing of certain businesses in a municipality is an exercise of the police power which has been delegated to municipalities by the legislature. The paver to license, however, is not a power to tax. The service for which a City may be reimbursed by a license fee must be reasonably related to the police power function of inspection, supervision, and regulation. While there is no question that the municipality has within its authority to set a fee for a license, a reasonable license fee should be charged and should be such as to cover the expense of issuing the license and the services and other expenses directly or indirectly arising out of the issuance of the license. The amount of the license fees should be limited to the cost of issuing the license and the probable expense of police supervision of those engaged in the business to be licensed. A charge or fee to defray the cost of a police power regulation need not be so restricted in amount so as to eliminate a reasonable revenue, incidental to the issuance of the license. However, the revenue aspect of a license fee should be incidental and the issuance of a license should not be for the purpose of raising revenue, for then it becomes a tax. While there is a presumption that in exacting a license fee, a lawfull purpose was intended by the municipality, a license fee may so far exceed the reasonable expenses incurred for police power purposes as to be a revenue measure in disguise, and therefore invalid. There has been no showing that on sale liquor establishments or caberet establishments in the City of Mounds View have by their operations increased the costs for the City of Mounds View in regulating their establishments in any way other than general increase in costs for all government services. One might expect that on sale liquor or caberet establishments would require a more extensive use of the police department than some other regulated businesses, but the fact is that the records of the Mounds View Police Department reveal that the Mounds View Square Shopping Center has had a greater need for police department services than the liquor or caberet establishments. Information obtained by my clients would indicate that out of a total of 2,836 police runs in 1975 only 120 were to the liquor and caberet establishments, amounting to 4% of the total. The minutes of the December 8, 1975 Mounds View City Council Meeting, in the course of discussing the City's current financial crunch, would blame inflation, state surplus funds as not being shared with municipalities, and a 18% increase in police salaries. Such a find does not single out as the culprit in increase City costs the liquor business, the caberet business, or for that matter the restaurants. Liquor and caberet and resturant establishments as well as other businesses are entitled to municipal services since they pay a real estate tax. In the absence of showing a need for a regulation of an industry to protect the public health, safety, and welfare and morals, no license fee at all is justified. While licensing is a function of the City and the exercise „ter 1s c e' clip„ 1 hP cn1111YnPnsiirate with the cost involved in the Y0.: y�Pr..Pf^ s �? licensing, and fees substantially in excess are actually a tax. It would thus appear that the , City is attempting to use licensing as a device to raise revenue which is properly to be raised by taxes. The Council has a duty to exercise limitations on its licensing power lest the power be used as a power that could destroy a business. Taxes are spread out, licenses single out a particular group.