Agenda of Hearings Subcommittee

HuttCity_TeAwaKairangi_BLACK_AGENDA_COVER

ALCOHOL Hearings Subcommittee

1 February 2019

Order Paper for the meeting to be held in the

Council Chambers, 2nd Floor, 30 Laings Road, Lower Hutt,

on:

Friday 8 February 2019 commencing at 9.30am

The purpose of the hearing is to consider the proposed Alcohol Fees Bylaw

Membership

Deputy Mayor D Bassett (Chair)

Cr L Sutton
Cr G Barratt

For the dates and times of Council Meetings please visit www.huttcity.govt.nz

4 08 February 2019

Hearings Subcommittee

24 January 2019

File: (19/87)

Report no: HSC2019/1/11

Proposed Alcohol Fees Bylaw

1. Council is considering a proposal to establish a new funding system for licenced premises for the sale and supply of alcohol. The aim is to ensure that the costs associated with the licensing of on-licences, off-licences, club licences and special licences is funded from the revenue Council receives from licensing fees to align with the way Council charges fees for other areas of its business. The proposed new funding system would be enacted through an ‘Alcohol Fees Bylaw.’

Recommendation

That the Subcommittee

(a) notes the report; and

(b) determines whether to accept and consider the late submission from Mr Mark Atkin.

Proposed timeframe to develop bylaw:

1. Pre-consultation phase (to decide whether a bylaw is needed or not).

a. 2 November 2018: letters sent out to all current licence holders advising them of the proposed changes and inviting them to make submissions on the proposal.

b. 15 December 2018: Submissions closed.

c. 8 February 2019: Alcohol Fees Bylaw Hearings Subcommittee hear submissions received.

2. 26 March 2019: The Subcommittee recommends to Council whether or not to develop the proposed Alcohol Fees Bylaw. If Council agrees then Council will need to agree to proceed with public consultation using the special consultative procedure.

3. 2 April: 3 May submission period.

4. 23 May: The Subcommittee to hear submissions and agree what if any amendments to bylaw to recommend to Council.

5. 5 June: Council decides whether to adopt the Bylaw.

Attached as Appendix 1-2 is a copy of the letter sent to all current liquor licence holders advising them of the proposal.

Council received nine submissions, attached as Appendices 4-6 and 10-14. Council also received a late submission that was received mid-January, attached as Appendix 15. The Subcommittee will need to determine if it is prepared to accept this late submission from Mr Mark Atkin (Wildfern NZ Ltd). Mr Atkin has also asked to speak to his submission.

A summary of submissions has been prepared to assist the Subcommittee with its deliberations. This is attached as Appendix 3.

Two email submissions were received from Housing New Zealand. Officers have responded to these two emails and their responses are included as Appendices 7-9.

Appendices

No.	Title	Page
1 ⇩	Pre-consultation letter 7 November 2018	7
2 ⇩	The Proposal - Alcohol Fees Bylaw For pre-consultation - November 2018	9
3 ⇩	Summary of Submissions - Pre-consultation phase hearing February 2019	12
4 ⇩	SAB18/1 - Submission to The Alcohol Fees Bylaw First Round - Kuldeep Kaur on Behalf of Simply Indian Petone	17
5 ⇩	SAB18/2 - Submission to The Alcohol Fees Bylaw First Round - Stephen Winmill on Behalf of The Stokes Valley Memorial RSA	18
6 ⇩	SAB18/3 - Submission to The Alcohol Fees Bylaw First Round - Nick Hill on Behalf of Hospitality New Zealand Wellington Branch	21
7 ⇩	Officer reply to 12 December initial submission from HPNZ seeking background information	28
8 ⇩	Officer reply to 14 December HPNZ submission.	31
9 ⇩	Budget attached to officer email to HPNZ 14 December 2018	33
10 ⇩	SAB18/4 - Submission to The Alcohol Fees Bylaw First Round - Nirmal Gandhi	35
11 ⇩	SAB18/5 - Submission to The Alcohol Fees Bylaw First Round - Manisha Gandhi	39
12 ⇩	SAB18/6 - Submission to The Alcohol Fees Bylaw First Round - Judy Francis on Behalf of Muritai Yacht Club	43
13 ⇩	SAB18/7 - Submission to The Alcohol Fees Bylaw First Round - Janice Price on Behalf of Massey Avenue Bowling Club	46
14 ⇩	SAB18/8 - Submission to The Alcohol Fees Bylaw First Round - Fiona Christeller on Behalf of Chamber Music Hutt Valley	48
15 ⇩	SAB18/10 - Submission to The Alcohol Fees Bylaw First Round - [LATE] - Mark Atkin	51

Author: Graham Sewell

Principal Policy Advisor

Author: Dean Bentley

Team Leader Environmental Health

Reviewed By: Bradley Cato

General Counsel

Reviewed By: Helen Oram

Divisional Manager Environmental Consents

Reviewed By: Wendy Moore

Divisional Manager, Strategy and Planning

Approved By: Kim Kelly

General Manager, City Transformation

Attachment 1

Pre-consultation letter 7 November 2018

8 November 2018

Graham Sewell

Strategy and Planning

DDI: 570 6865

graham.sewell@huttcity.govt.nz

Our reference:DOC/18 /154657

<Name>

Hutt-City-corporate-letterhead-masthead

To Whom It May Concern

Pre-consultation on proposed Alcohol Fees Bylaw

The Hutt City Council is considering a proposal to establish a new funding system to licence premises for the sale and supply of alcohol. The aim is to ensure the costs associated with the licensing of on-licences, off-licences, and special licences is funded from the revenue Council receives from licensing fees to align with the way the Council charges fees for other areas of our business. The proposed new funding system would be enacted through an “Alcohol Fees Bylaw”.

To assist with the development of this Bylaw a ‘pre-consultation’ phase is being held between now and Friday 14 December.

What is the purpose of the proposed bylaw?

The Sale and Supply of Alcohol Act and Regulations enable the Council, via the creation of a Bylaw, to establish alcohol licensing fees for Lower Hutt to cover the costs incurred by Council in undertaking the licensing of alcohol related businesses as required by legislation.

What are the proposed fees?

Attached are the details of what is proposed.

The proposal is to cover 90% of the costs incurred by the Council to administer alcohol licensing. The remainder of costs will be subsidised via rates which is consistent with the Council’s other charges for services.

Why are we approaching you?

The Sale and Supply of Alcohol Act and Regulations require the Council to undertake a ‘pre-consultation’ phase with those people and businesses affected by this proposal. To assist with the development of this proposed bylaw we want to start a conversation with you based around the following questions:

1. What questions do you have about this proposal?

2. What are the issues you think need to be addressed when developing this bylaw as it relates to your business?

3. Is there anything else you think we should be aware of when developing this proposed bylaw?

Process we are following:

Proposed timeframe for development of the proposed Alcohol Fees Bylaw:

1. Thursday 8 November: Letters sent out to all licensees affected advising of the pre-consultation phase and inviting feedback on the proposal.

2. Friday 14 December: Submissions on the pre-consultation phase close.

3. Friday 8 February: Hearing Subcommittee of Council to hear submissions and in light of submissions received make recommendations to the Policy and Regulatory Committee.

4. Monday 4 March: Policy and Regulatory Committee meeting. Consider report back on submissions received and recommend if the proposed bylaw should proceed or not to Council.

5. Tuesday 26 March: Council meeting to consider recommendation of the Policy and Regulatory Committee and whether proposed bylaw should proceed to the next stage of calling for public submissions.

We welcome your input:

Council now invites you to reply to this letter. Council has sent this letter to all current alcohol licensees and recipients of special licences over the past year. If you know of other people or businesses who you think would want to be involved please feel free to pass this information onto them as we are interested to hear from anyone with an interest in the proposal.

To assist you to lodge a submission we have placed this letter and a submission form on the Hutt City Council website: http://www.huttcity.govt.nz/alcoholfeesbylaw

Alternatively, you can return the attached submission form by post to Hutt City Council, Private Bag 31912, Lower Hutt 5040.

If you have some specific questions about this matter please feel free to reply, ideally using the submission form on the Council website.

Graham Sewell Yours sincerely

Graham Sewell

Principal Policy Advisor

Attachment 2

The Proposal - Alcohol Fees Bylaw For pre-consultation - November 2018

THE PROPOSAL

ALCOHOL FEES BYLAW 2019

1. introduction

Since November 2013 Council has had the ability to amend the fees charged for alcohol licensing related functions under the Sale and Supply of Alcohol Act 2012. For the past 3 years the cost recovery for licensing functions has only achieved 42% - 52% with the balance being met by rates.

The Sale and Supply of Alcohol Act 2012 and associated regulations provide the expectation that alcohol licensing should be ‘user pays’. The proposal is to cover 90% of the costs incurred by the Council to administer alcohol licensing. The remainder of costs will be subsidised via rates which is consistent with the Council’s other charges for services.

2. background

One of Council's regulatory prescribed roles is to undertake licensing and monitoring functions in relation to the sale of alcohol. The Sale and Supply of Alcohol Act 2012 (the Act) came into force in December 2012. Since November 2013 Council's fees have been prescribed and charged in accordance with the Sale and Supply of Alcohol (Fees) Regulations 2013 (the Regulations).

Council can set fees above those set by the Regulations, where necessary, to recover total costs.

Any such fees must be set through a bylaw.

3. Discussion

Council has incurred additional costs to meet legislative requirements in relation to alcohol related activities. This includes the new requirements to establish and maintain the District Licensing Committee and paying members of the committee to determine applications as per the Council’s fee schedule. The Act also prescribes expanded monitoring and reporting requirements of Licensing Inspectors, adding to staff resourcing costs.

While most applications are straightforward and proceed unopposed, those that are opposed are required to be determined by way of public hearings before a full committee and to date such hearings have ranged from half a day to two days of sitting time.

The new regulations have increased Council's cost recovery related income but this has to be balanced against the additional workload required.

Current fees

The cost to Council associated with alcohol licensing is not being funded adequately by the current licensing fees set by regulation and outlined below.

Financial Year	Annual Alcohol Revenue	Annual Alcohol Expenditure	Shortfall	Percentage of expenditure recovered
2017/18	$239,858	$464,277	$224,419	52%
2016/17	$193,286	$464,277	$270,991	42%
2015/16	$229,680	$464,277	$234,598	49%

The Sale and Supply of Alcohol Act and associated regulations provides the expectation that alcohol licencing should be ‘user pays’.

4. Proposal

The Regulations provide that bylaw fees relating to manager's certificates must be the same across all territorial authorities including Hutt City Council.

It is proposed to increase the fees by the same percentage amount across all categories (excluding manager's certificates) to preserve the relativity of the fee structure of the Regulations and to ensure consistency as required by the Act.

Any increase in fees is proposed to become effective from 1 July 2019.

Legal requirements when setting fees

Any bylaw must be consistent with the Sale and Supply of Alcohol Act and any regulations. The Regulations provide the framework within which Councils are enabled to charge fees for their costs relating to licensing and other matters under the Act. This includes:

§ application fees (which cover the cost of the licence application and grant)

§ annual fees (which cover the cost of monitoring) for on licences, off licences, and club licences

§ fee categories for on, off and club licences. The fees category for any premises is determined by reference to its cost/risk rating, which is arrived at on the basis of 3 factors: type of premises (e.g. class of restaurant, class of club, hotel or grocery store) latest alcohol sales times, and number of recent enforcement actions. There are 5 categories for premises: very low, low, medium, high and very high

§ for special licences, the Regulations prescribe a range of licence fees that reflect the number and size of the event(s) to be held in the relevant premises

§ manager's certificates.

The Regulations further provide in regulation 7 that fees set through a bylaw must be set in the context of that framework. The proposed fee structure mirrors this framework and shows a uniform increase in all fee classes.

Below is the proposed fee schedule:

Notes to support fee increase

The proposed fees will enable 90% cost recovery in this area to ensure consistency with the Council’s approach to cost recovery. The proposed fees for special licence applications are consistent with all other fee category increases (90%). The Act requires that applications for special licences be received at least 20 working days prior to the date of the first event.

Late applications require more administration time, and put additional pressure on existing resources to enquire into the applications and report in time. It is therefore proposed to raise the fees for ‘late’ special licence applications by a further 100% - this is the detail as noted in the “Fast track fee – 10 working days” outlined above.

Attachment 3

Summary of Submissions - Pre-consultation phase hearing February 2019

SUMMARY OF SUBMISSIONS:	* Speak to submission.
Name	Submission summary	Staff Comment
1. Kuldeep Kaur (Simply Indian)	· Sort clarification on aspects of the proposal	· Submitter provided with answers to his questions.
2. * Stephen Winmill (Stokes Valley Memorial RSA)	· The current rates equates to a 52% expenditure recovery. This has not been taken into account in calculating the new rates.	· The current recovery of 52% relates to the Alcohol team as a whole not each individual fee type. The approach proposed is to take the overall income and expenditure related to alcohol licensing and increase all fees by the same percentage
3. * Nick Hill (Hospitality NZ)	· A full detailed and itemised breakdown of expenditure be made available	· Two emails were sent to Mr Hill to outline the information he was seeking. The information and answers to questions is attached as Appendix 1.
4. Nirmal Gandhi	· Strongly oppose the proposed alcohol fees. · Cannot afford the proposed fees in the current business environment. · No supermarket can survive without alcohol sales – they are the same. · No need to do an inspection every year. · Unfair on small businesses compared to supermarkets who sell greater quantities of alcohol. · Risk category should be based in proportion to turnover of sales. · High alcohol turnover should be considered as a higher risk.	· Noted. · Grocery stores were prevalent and ‘surviving’ prior to their ability to sell alcohol. Unsure how the current business environment has affected this ability. · Monitoring of licensees performance is a requirement under SASAA 2012. · Risk ratings are set by Regulation and determined by the type of licence, the latest trading time and any enforcement holdings within the last 18 months.
5. Manisha Gandhi	· Same as submission 4 above.	· Refer to comments above.
6. Judy Francis (Muritai Yacht Club)	· Increase in fees seems exorbitant for the amount of work undertaken by Council. Seems to represent a ‘cross subsidisation rather than strictly ‘user pays’. · Prior to 2015 Council did not charge an annual licence fee – just a renewal fee every 3 years. · They are in the very low risk category and a low number of hours operating per annum. · The proposed increase in fees might result in the club not being able to hold a liquor licence.	· The proposed increase accurately reflects the amount of work undertaken by Council and in order to achieve a 60% cost recovery across the Consents Division. · While Council could seek to increase fees to 100% of cost recovery, only a 90% increase is proposed in order to meet the above cost recovery model. · The annual fee was introduced by regulation in 2013. Prior to that only an application fee was required. · Depending on the number of events held per annum, a special licence may be appropriate for some small clubs – potentially only $207
7. Janice Price (Massey Avenue Bowling Club)	· Possible to treat sports clubs into high, medium or low risk? · Putting bowling clubs in with sports clubs seems unfair. · Proposal will be a deterrent to social bowls – a major fundraiser for bowling clubs. · Council not helping to encourage people to ‘have a try’ and socialise in a low risk environment.	· Risk ratings are set by Regulation and determined by the type of licence, the latest trading time and any enforcement holdings within the last 18 months. · Depending on the number of events held per annum, a special licence may be appropriate for some small clubs – potentially only $207
8. Fiona Christeller (Chamber Music Hutt Valley)	· Current cost for a liquor licence they consider it worthwhile. · Consider keeping the current fee for small charitable organisation who use their licence infrequently.	· The costs associated in processing and reporting etc are still the same for Council. The Act does allow for the total cost to be recovered. A fee reduction (by one class) can be applied for but as this activity is on the lowest class of special licence, there is no means to reduce it further.
10. * Mark Atkin (Wildfern NZ Ltd)		· Late submission – if Hearing Committee decides to accept this submission along with Mr Atkin’s request to speak to his submission, staff would be prepared to provide verbal comment on this submission, if requested by the Hearing Subcommittee.

Appendix 1:

Further breakdown of costs and additional information provided to Nick Hill, Hospitality NZ.

Q. Are you able to provide the following:

Council yearly reports on income, costs, and performance as is required to be done under the Regulations?

A. These can be found on our website here http://www.huttcity.govt.nz/Services/Licences-permits/alcohol-licences/decisions-of-the-licensing-committee.

There is an error in the revenue reported for 2017/2018, however the proposed fees calculations are based on the correct figure.

Q. Number of licensed premises visits (preferably broken down to on, off, club, and special if council have it)?

A. On – 56; OFF – 20; Club - 19 plus 106 visits after hours per annum

Q. Number of applications filed against licenses for offences under SSAA (by on, off etc if you have it)?

A. None by Council but we do assist the police where necessary. E.g Combined Enforcement Group Meetings with licensees.

Q. Total number of licences in the district (by on, off etc)?

A. ON – 109; OFF – 67; CLUB – 47

Q. Overtime vs normal time (could be percentage, rather than dollar amount) and how council assesses whether overtime is justified (ie: who approves it)?

A. Approximately 108 hours O/T per year vs 3.65 FTE ordinary time per annum. Overtime is approved by the Environmental Health Team leader and is necessary to monitor performance of licensees and assist agencies with controlled purchase operations.

Q. What are the property related costs? Is a further breakdown available?

A. The Property overhead charge relates to Market Grove and includes the costs incurred to occupy this building including… Lease costs, Electricity, Cleaning, Maintenance and Insurance – The Environmental Health team gets 25.9% of these charges however the portion allocated to alcohol was less and we based this on the number of FTE (3.65) in the team.

Q. What percentage of each of those things (IT, property costs, financial services) are allocated to licensing?

A. The overheads have been apportioned to 3.65 FTE’s, being the number of licensing inspectors doing alcohol related work.

Q. What percentage of total council does licensing make up?

A. For 2017/18 Alcohol made up approximately 0.14% of Council’s total revenue and 0.27% of Council’s total operating expenditure (i.e. excluding Capital Spend).

Q. Can you define what 'alcohol related work' actually entails? Is there a definition used?

A. Alcohol related work means any work/time spent by alcohol staff, including: administration of, vetting/inquiring into and reporting on alcohol applications. Attending liaison/tri agency meetings, training course and conferences. Appearing at hearings. After hours compliance checks and controlled purchase operations.