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HomeMy WebLinkAboutPacket - 10/31/2021 - City CouncilThe City of McHenry is dedicated to providing its citizens, businesses, and visitors with the highest quality of programs and services in a customer-oriented, efficient, and fiscally responsible manner. AGENDA SPECIAL & EMERGENCY CITY COUNCIL MEETING Sunday, October 31, 2021, 1:00 p.m. In light of the current COVID-19 public health emergency, this meeting will be held remotely only. The public can observe and participate by connecting online via Zoom at https://cityofmchenry.zoom.us/j/83870167891 Or call (312) 626-6799, Meeting ID 838 7016 7891, 1.Call to Order 2.Roll Call 3.Public Comments 4.Motion to adopt an Ordinance amending Title 4, Chapter 6: Video Gaming Terminals, of the City of McHenry’s Municipal Code 5.Adjourn Posted: October 29, 2021 at 11:00 a.m. By: Monte Johnson, Deputy Clerk Office of the City Administrator Derik Morefield, City Administrator McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2100 Fax: (815) 363-2119 www.ci.mchenry.il.us SPECIAL MEETING AGENDA SUPPLEMENT DATE: October 31, 2021 (Special / Emergency City Council Meeting) TO: Mayor and City Council FROM: Derik Morefield, City Administrator RE: Amendment to City Ordinance, Chapter 6, Video Gaming Terminals ______________________________________________________________________________ BACKGROUND: In July of 2012 the City of McHenry adopted an ordinance allowing for the legal operation of video gaming terminals. Currently there are 41 establishments in McHenry that have video gaming terminals, which are each allowed to have a maximum of six machines. The Illinois gaming law allows each participating municipality to receive a portion of the proceeds from video gaming activities, along with the collection of license fees. There is no restriction or limitation on home rule municipalities from collecting taxes or fees from video gaming licenses or business operators. The implementation of a “push tax” on video gaming terminals has become a recent opportunity for home rule communities. A push tax refers to a fee or tax based on each play or “push” of a gaming machine by players. As this new opportunity has become available municipalities have been implementing revisions to their local gaming ordinances to include a push tax. The Village of Oak Lawn, City of Waukegan and most recently last month the City of Crystal Lake have all implemented a push tax in video gaming. Currently, municipalities receive 5% of the revenue generated by video gambling machines. The state collects 25%, the Video Gaming Terminal Central Communication System collects 1%, and the remaining 69% is evenly split between the machine operator and the establishment hosting the machine. The below table shows the City’s current revenues received from video gaming. The City currently imposes a $1,000 annual fee for business licensees (bar or restaurant) paid for by the machine owners (operator) and a $1,000 per terminal fee split 50/50 with between the business owner and the machine owners (operator). Non-profit establishments pay $250 for the annual fee for business licensees (bar or restaurant) paid for by the machine owners (operator) and a $250 per terminal fee split 50/50 with between the business owner and the machine owners (operator). Fiscal Year City share of terminal revenue for machines in McHenry. Licensing Fees collected from business owners and gaming operating companies 2019/2020 $484,097 $49,250 2020/2021 $327,363 $301,744 2021/2022 (YTD) $287,342 $26,552 The State Gaming Board does not currently provide data on the number of pushes for each machine which can make estimating revenues challenging. We can estimate conservative and mid-range annual revenues from a push tax by examining the total dollars played annually in McHenry. The push tax is $.01 per play. The maximum play bet is $4 by law and the midline average play bet is therefore $2. Based on the average of two full years of play (FY 19/20 & FY 20/21) the average annual play amount is $100,916,000. This would equate to a conservative annual push tax revenue between $252,000 and 505,000. In the vent the average bet (push) is lower than $2 the revenue would increase. ANALYSIS: City Staff with the assistance of the ZRFM Law and available IML resources specific to this law, has prepared the attached ordinance for Council consideration. The proposed ordinance would impose a tax rate of one cent ($.01) per play on a video gaming terminal within the City. The responsibility to collect and transmit this tax to the City would fall upon the operator and licensee. This tax is collected from the player(s), not the licensee, as they play the machines. Penalties are outlined in the proposed ordinance that will take effect in the event that any operator or licensee falsely reports or fails to report the amount of the “push” tax. The decision to implement this proposed ordinance is time sensitive. HB3136 was passed through both houses on Thursday October 28, 2021 and the City Administration only learned of the November 1st deadline at that time. Within this bill the following language was amended in direct reference to the “push” tax. (d) Any home rule municipality that has adopted an ordinance imposing an amusement tax on persons who participate in the playing of video gaming terminals before November 1, 2021 may continue to impose such amusement tax pursuant to such ordinance but shall not increase, expand, or extend the tax or tax rate on such persons participating in playing video gaming terminals in excess of that tax or rate set forth in such ordinance and shall not otherwise impose any other tax upon any entity or person identified in subsection (c). This subsection (d) is a denial and limitation of home rule powers and functions under subsection (g) of Section 6 of Article VII of the Illinois Constitution. The proposed ordinance was drafted to allow the City the flexibility to delay the tax’s implementation. The proposed City Ordinance would be effective as of October 31, 2021 but the obligation of the licensees and operators to collect the tax would not commence until the Finance Director sends notice to such video gaming licensee or video gaming operator. RECOMMENDATION: Therefore, if Council concurs, it is recommended that a motion be made to approve the attached ordinance, amending Title 4, Chapter 6: Video Gaming Terminals, of the City of McHenry’s Municipal Code. ORDINANCE NO. __________ An Ordinance Amending Title 4, Business and License Regulations, Chapter 6, Video Gaming Terminals, of the City of McHenry Municipal Code WHEREAS, the City of McHenry, McHenry County, Illinois, is a home rule municipality as contemplated under Article VII, Section 6, of the Constitution of the State of Illinois, and the passage of this Ordinance constitutes an exercise of the City’s home rule powers and functions as granted in the Constitution of the State of Illinois. NOW, THEREFORE, BE IT ORDAINED by the CITY COUNCIL of the CITY OF McHENRY, McHenry County, Illinois, as follows: SECTION 1: Title 4, Chapter 6, Section 4-2-1, Definitions, shall be amended by repealing and replacing Chapter six as follows: CHAPTER 6: VIDEO GAMING TERMINALS Section 4-6-1: Definitions 4-6-2: License Required 4-6-3: Limitations Of Establishments And Terminals 4-6-4: Application For License 4-6-5: Fees For Establishments And Terminals 4-6-6: Push Tax 4-6-7: City Clerk To Administer Licenses 4-6-8: Development Agreement 4-6-9: Inspection Of Premises 4-6-10: Display Of Licenses 4-6-11: Existing Video Gaming Establishments 4-6-1: DEFINITIONS: As used in this chapter, the following terms shall have the meanings so indicated: AMUSEMENT: (1) Any theatrical, dramatic, musical or spectacular performance, motion picture show, flower, poultry or animal show, animal act, circus, rodeo, athletic contest, sport, game or similar exhibition for public entertainment, including, without being limited to, boxing, wrestling, skating, dancing, swimming, racing, or riding on animals or vehicles, baseball, basketball, softball, football, tennis, golf, hockey, track and field games, bowling, billiard and pool games. (2) Any entertainment offered for public participation, including, without being limited to, dancing, carnival, amusement park rides and games, bowling, billiard and pool games, or any Video Gaming Terminal. PERSON: Any natural individual that participates in an amusement, including a firm, organization, society, foundation, institution, partnership, association, joint stock company, joint venture, limited liability company, public or private corporation, receiver, executor, trustee or other representative appointed by order of any court, or any other entity recognized by law. PLAY: Shall mean each individual push of the Video Gaming Terminal which initiates the simulation provided by the Video Gaming Terminal. Play shall not include the physical pushing of individual wager amounts, selection of types of the games on the VGT, or the entry of any information or printing of winning receipts. TERMINAL OPERATOR: Any individual, partnership, corporation, or limited liability company that is licensed under the Video Gaming Act, 230 ILCS 40/1 et seq., and that owns, services, and maintains Video Gaming Terminals for placement in licensed establishments, licensed truck stop establishments, licensed large truck stop establishments, licensed fraternal establishments, or licensed veterans establishments. VIDEO GAMING ESTABLISHMENT: Any establishment holding a valid and current video gaming establishment license issued by the City. In order to qualify for an establishment license, the establishment must: A. Hold a current and valid video gaming location license issued by the Illinois Gaming Board; B. Hold a current and valid Class A (full bar) or Class B (table service) liquor license in accordance with chapter 2 of this title, or hold a valid Class C license with a truck stop endorsement as defined by Illinois Statute; C. Meet all other criteria required by applicable laws of the State of Illinois and/or the City of McHenry, as may be amended from time to time. VIDEO GAMING TERMINAL: Any electronic video game machine that, upon insertion of cash, electronic cards or vouchers, or any combination thereof, is available to play or simulate the play of a video game, including, but not limited to, video poker, line up and blackjack, as authorized by the board utilizing a video display and microprocessors in which the player may receive free games or credits that can be redeemed for cash. The term does not include a machine that directly dispenses coins, cash or tokens or is for amusement purposes only. This definition shall be expanded by any amendments to the Video Gaming Act, 230 Illinois Compiled Statutes chapter 40/5. 4-6-2: LICENSE REQUIRED: No person or establishment shall have, keep or operate a video gaming terminal in any place or public resort, unless it is a licensed video gaming establishment and every video gaming terminal therein is annually licensed in accordance with these regulations. 4-6-3: LIMITATIONS OF ESTABLISHMENTS AND TERMINALS: A. Establishment Licenses: Unless and until the City Council acts on an application for an additional video gaming establishment license, the existing maximum number of video gaming establishment licenses shall not be increased. When a video gaming establishment license is revoked or relinquished, or is not renewed, the maximum number of video gaming establishment licenses shall be reduced for each such revocation, relinquishment or nonrenewal. B. Terminals: Individual video gaming terminal licenses shall be issued by the City Administrator or designee but only after a video gaming establishment license is authorized by Council. No authorized video gaming establishment shall be issued more than six (6) individual video gaming terminal licenses. 4-6-4: APPLICATION FOR LICENSE: A. Required: All applications for video gaming establishment and video gaming terminal licenses issued by the City shall be completed on forms provided by and filed with the City Clerk. All applications shall conform to the general provisions set forth in chapter 1, “Business Licenses Generally”, of this title, as well as the State of Illinois, through the Illinois Gaming Board, and pursuant to the Illinois Video Gaming Act and the rules and regulations implemented thereto. B. Action On Filed Applications: Filed applications for video gaming establishments shall be submitted to the City Council for approval or denial. The City Council may issue or deny the application, within its sole discretion, taking into consideration factors, including, but not limited to, the following: location of the applicant’s establishment, past history of the applicant and its principals, the nature of any proposed business(es) associated with the applicant, surrounding property uses, and any other factors deemed relevant by the City Council members regarding aesthetics, the character of the community and welfare of the public. Issuance of a liquor license shall not entitle the holder to renewal of a video gaming license, and no protectible property interest or vested right shall have been created. 4-6-5: FEES FOR ESTABLISHMENTS AND TERMINALS: The annual license fee payable to the City shall be one thousand dollars ($1,000.00) for each video gaming establishment to be paid by the video gaming terminal operator and one thousand dollars ($1,000.00) for each video gaming terminal, five hundred dollars ($500.00) to be paid by the video gaming establishment and five hundred dollars ($500.00) to be paid by the terminal operator. Fees for licenses obtained, revoked, or relinquished in the middle of the license year shall not be reduced or refunded. The fees for any not-for-profit establishment shall be two hundred fifty dollars ($250.00) for the annual video gaming establishment to be paid by the video gaming terminal operator and two hundred fifty dollars ($250.00) for each annual video gaming terminal (one hundred twenty five dollars ($125.00) to be paid by the video gaming establishment and one hundred twenty five dollars ($125.00) to be paid by the terminal operator). All renewal license fees shall be submitted simultaneously and paid prior to May 1 of each year as licenses are effective from May 1 through the following April 30. (Ord. 19-1197, 6-17-2019; amd. Ord. MC-19-1197-A, 7-20-2020) 4-6-6: PUSH TAX IMPOSED. Except as otherwise provided by this Section, an amusement tax to be known as a “Push Tax” is imposed upon any person who participates in the Playing of Video Gaming Terminals that takes place in the City. The rate of that tax shall be equal to one cent ($0.01) per Play on a Video Gaming Terminal. A. Tax Additional. The tax imposed by this Section is in addition to all the other taxes imposed by the State of Illinois, the City, or any municipal corporations or subdivisions thereof. B. Collection; Payment; Accounting. It shall be the joint and several duty of any video gaming licensee and video gaming operator licensee to secure, from each person participating in the Play of a Video Gaming Terminal, the Push Tax imposed by this Section. For the purposes of this Section, it shall be presumed that the amount of the Push Tax imposed on each person has been collected from the person by the video gaming licensee or video gaming operator licensee, unless the taxpayer or tax collector demonstrates otherwise with books, records, or other documentary evidence. 1. Push Tax payments shall be remitted to the City on or before the 20th day of the month following the month in which the tax is collected or is required to be collected and shall be accompanied by a tax return, which shall be in a form prescribed by the City Finance Director. 2. Every video gaming licensee and video gaming operator licensee who is required to collect the Push Tax by this Section shall be considered a tax collector for the City. All Push Tax amounts collected shall be held by the video gaming licensee or video gaming operator licensee as trustee for, and on behalf of, the City. The failure to collect the Push Tax shall not excuse or release the individual person Playing the Video Gaming Terminal from the obligation to pay the tax. The ultimate obligation of the Push Tax shall remain on the individual person Playing the Video Gaming Terminal, and shall never be shifted to the video gaming licensee or video gaming operator licensee. 3. Notwithstanding any other provision of this Section, in order to permit sound fiscal planning and budgeting by the City, no person shall be entitled to a refund of, or credit for, the Push Tax imposed by this Section unless the person files a claim for the refund or credit within one (1) year after the date on which the Push Tax was paid or remitted to the City. 4. The video gaming licensee and video gaming operator licensee of any Video Gaming Terminal(s) Played in the City shall be subject to audit, inspection, and record keeping provisions of the City Code. It shall be unlawful for any video gaming licensee, video gaming operator licensee, or individual person Playing a Video Gaming Terminal, to prevent, hinder, or interfere with the City, its officers, employees, or agents in any manner that is designed to or has the effect of preventing, hindering, or interfering with such officials, employees, or agents in the discharge of their respective duties related to the performance, audit, or enforcement of the provisions of this Section. It is the duty of every video gaming licensee and video gaming operator licensee to keep accurate and complete books and records for each Video Gaming Terminal to which the City’s officers, employees, or agents will at all times have full and complete access. C. Promulgation of Rules and Regulations. The City is authorized to adopt, promulgate, and enforce any additional rules and regulations pertaining to the interpretation, collection, administration, and enforcement of this Section. D. Violations; Penalties 1. Violations. (a) A video gaming licensee or video gaming operator licensee who falsely reports, or fails to report, the amount of Push Tax required by this Section shall be in Violation of this Section, and shall be subject to a fine, as defined in this Section, as well as suspension or revocation of their license. All payments not remitted when due shall be paid together with a penalty assessment on the unpaid balance at a rate of five percent (5%) per month, which penalty shall compound monthly. (b) It shall be deemed a violation of this Section for any video gaming licensee, video gaming operator licensee, or individual person Playing a Video Gaming Terminal, or any agent of any of the foregoing, to knowingly furnish false or inaccurate information to the City. (c) Each day a violation continues shall constitute a separate violation. 2. Suspension or Revocation of License. The Mayor as local liquor commissioner shall have the power to suspend for not more than thirty (30) days or revoke any liquor or video gaming licenses if, after hearing, it is determined that a video gaming licensee or video gaming operator licensee shall have violated any of the provisions of this Section, any of the Statutes of the state, or any ordinances, resolutions, or rules enacted by the City. Ten (10) days’ written notice of the hearing shall be given to the video gaming licensee or video gaming operator licensee. Alternatively, the video gaming licensee or video gaming operator licensee may agree to negotiated terms and penalties rather than proceeding to a hearing. 3. Fines Imposed. In addition to the foregoing, or any other penalties provided by the City Code, any video gaming licensee or video gaming operator licensee violating the provisions of this Section shall be subject to an additional fine of $500.00 for a first offense and $750.00 for a second offense. For a third offense, a video gaming licensee or video gaming operator licensee shall be subject to a$1,000.00 fine and a mandatory revocation of any license relating to a Video Gaming Terminal or its operation within the City jurisdictional limits. 4. Action to Enforce. Whenever any person obligated to remit any tax as provided in this Section fails to do so, the City may bring an action to enforce the payment of such tax in any court of competent jurisdiction. 5. Penalties Additional. Any citations issued under this Section may be in addition to any other citations or enforcement mechanisms authorized by or issued pursuant to the City Code. E. Effective Date. The Push Tax shall be effective as of October 31, 2021; provided, however, that the duty of any video gaming licensee or video gaming operator licensee to collect and remit the Push Tax will not commence until Finance Director sends notice to a video gaming licensee or video gaming operator licensee at the address provided in the most recent application for such license. 4-6-7: CITY CLERK TO ADMINISTER LICENSES: Upon approval of the issuance of a City video gaming establishment license the City Clerk is hereby directed to increase the maximum number of authorized City issued gaming licenses accordingly. Any time a City issued gaming license is revoked or voluntarily surrendered, the City Clerk is hereby directed to reduce the maximum number of authorized City issued gaming licenses accordingly. 4-6-8: DEVELOPMENT AGREEMENT: All video gaming establishment licenses shall be subject to a written agreement between the licensee and the City Administrator addressing issues deemed relevant by the City Council, including, but not limited to, outdoor signage and partitions. With regard to partitions, at a minimum, the agreement shall provide that all Class B liquor license holders, and all Class A liquor license holders whose business includes table seating for patrons under the age of twenty one (21), must erect a partition that effectively separates the gaming area from visible view of the remaining customer area of the business. Plans and specifications of the partition shall be included with the agreement. Video monitoring of the gaming area by staff must be installed in all locations in which any full partition is installed where the view of the gaming area by staff is screened out. 4-6-9: INSPECTION OF PREMISES: The City reserves the right to inspect the premises of any licensed video gaming establishment for compliance with these regulations and all other applicable ordinances. Refusal of inspection is ground for revocation of all video gaming licensing. 4-6-10 DISPLAY OF LICENSES: Upon approval of the video gaming establishment license, including receipt of the payment of the license fee, the City shall issue a license certificate bearing the notation “City of McHenry Video Gaming Establishment License”. One license shall be issued for each licensed video gaming establishment and list the number of video gaming terminals licensed for said establishment, and it shall be affixed in a conspicuous place near any video gaming terminals. Upon approval of the video gaming terminal license, including receipt of payment for each video gaming terminal, a licensing sticker issued by the City must be affixed to each video gaming terminal and visible for inspection. (Ord. 19-1197, 6-17-2019) 4-6-11: EXISTING VIDEO GAMING ESTABLISHMENTS: Upon renewal of each video gaming establishment, in existence at the time of adoption of this chapter, each licensee shall enter into the Development Agreement referenced in section 4-6-7 of this chapter. SECTION 2: If any section, paragraph, subdivision, clause, sentence or provision of this Ordinance shall be adjudged by any Court of competent jurisdiction to be invalid, such judgment shall not affect, impair, invalidate or nullify the remainder thereof, which remainder shall remain and continue in full force and effect. SECTION 3: All ordinances or parts of ordinances in conflict herewith are hereby repealed to the extent of such conflict. SECTION 4: This Ordinance shall be in full force and effect upon its passage, approval and publication in pamphlet form (which publication is hereby authorized) as provided by law. Ayes Nays Absent Abstain Alderman Harding Alderman Devine Alderman Glab Alderman Mihevc Alderwoman Miller Alderman Santi Alderman Schaefer APPROVED: Mayor Wayne Jett (SEAL) ATTEST: Passed: Approved: C E R T I F I C A T I O N I, Trisha Ramel, do hereby certify that I am the duly appointed, acting and qualified Clerk of the City of McHenry, McHenry County, Illinois, and that as such Clerk, I am the keeper of the records and minutes and proceedings of the Mayor and Aldermen of said City of McHenry. I do hereby further certify that at a regular meeting of the Mayor and Aldermen of the City of McHenry, held on the day of , 2021, the foregoing Ordinance entitled An Ordinance Amending Title 4, Business and License Regulations, Chapter 2, Alcoholic Liquor, of the City of McHenry Municipal Code, was duly passed by the City Council of the City of McHenry. The pamphlet form of Ordinance No. , including the Ordinance and a cover sheet thereof, was prepared, and a copy of such Ordinance was posted in the City Hall, commencing on the day of 2021, and will continue for at least 10 days thereafter. Copies of such Ordinance are also available for public inspection upon request in the office of the City Clerk. I do further certify that the original, of which the attached is a true and correct copy, is entrusted to me as the Clerk of said City for safekeeping, and that I am the lawful custodian and keeper of the same. GIVEN under my hand and seal this day of 2021. Trisha Ramel, Clerk City of McHenry, McHenry County, Illinois (SEAL)