Agenda of Hearings Subcommittee

HuttCity_TeAwaKairangi_BLACK_AGENDA_COVER

ALCOHOL Hearings Subcommittee

29 July 2019

Order Paper for the meeting to be held in the

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

on:

Tuesday 6 August 2019 commencing at 9.30am

The purpose of the hearing is to consider submissions received for
a proposed Alcohol Fees Bylaw

Membership

Deputy Mayor D Bassett (Chair)

Cr G Barratt	Cr L Sutton

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

4 06 August 2019

Hearings Subcommittee

23 July 2019

File: (19/955)

Report no: HSC2019/4/74

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 are 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.’

Recommendations:

That the Alcohol Hearings Subcommittee

(i) notes and receives the report;

(ii) considers the submissions received concerning the proposed Alcohol Fees Bylaw;

(iii) notes the proposed fee structure;

(iv) recommends to Council what, if any, changes should be made to the proposed fee schedule; and

(v) notes the recommendations will be considered by Council at its meeting on 17 September 2019, and a decision will be made on whether or not to adopt the proposed Alcohol Fees Bylaw.

2. Process followed to develop the proposed Bylaw.

Proposed timeframe to develop bylaw:

Pre-consultation phase (to decide whether a bylaw is needed).

a. 2 November 2018: Letters sent 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: The Alcohol Hearings Subcommittee (the Subcommittee) heard the 10 submissions received.

3. 26 March 2019: The Subcommittee recommended Council developed the proposed Alcohol Fees Bylaw. Council agreed to proceed with public consultation using the special consultative procedure.

4. 2 April - 3 May 2019: Submission period.

5. 6 August 2019: The Subcommittee to hear submissions and agree what, if any, amendments to the bylaw to recommend to Council.

6. 17 September 2019: Council decides whether to adopt the Bylaw.

The following documents are attached:

· The Summary of Proposal, Statement of Proposal and the Proposed Bylaw used to undertake the special consultative procedure. These are attached as Appendices 1-3.

· The three submissions received are attached as Appendices 4-6.

· A Submissions Summary has been prepared to assist the Subcommittee with its deliberations. This is attached as Appendix 7.

· A Fee Reduction Guide for Alcohol Premises is attached as Appendix 8. If required staff can answer any questions concerning this guide at the hearing.

Late Special Licence Application fee

Legal advice has been received that the proposed Late Special Licence Application fee is not consistent with the Sale and Supply of Alcohol Act and Regulations so should be removed. This would result in the following changes:

Proposed Bylaw Clause 6 – Table 1

o Special Licences –Fast track fee – 10 working days to apply in Year 1 deleted. Delete Class 1 (2,000), Class 2 (800) and Class 3 (240).

o Special Licences – Fast track fee - 10 working days to apply in Year 2 deleted. Delete Class 1 (2,000), Class 2 (800) and Class 3 (240).

Council can however reduce any category by one. Refer to Reg 6 (4) below.

o 6 Fees categories for premises

o (1) A territorial authority must assign a fees category to any premises for which an on-licence, off-licence, or club licence is held or sought.

o (2) The fees category must be assigned in accordance with the following table, except as provided in subclause (4):

o Cost/risk rating of premises Fees category

o 0–2 Very low

o 3–5 Low

o 6–15 Medium

o 16–25 High

o 26 plus Very high

o (3) The date on which the fees category for premises must be determined is—

o (a) for the purpose of an application fee, the day on which the application is made; and

o (b) for the purpose of the annual fee, the day on which the annual fee is payable.

o (4) A territorial authority may, in its discretion and in response to particular circumstances, assign a fees category to premises that is 1

o level lower than the fees category determined under subclause (1); but no premises may be assigned a category lower than very low.

Appendices

No.	Title	Page
1 ⇩	Summary of proposal - Alcohol Fees Bylaw 2019	8
2 ⇩	Statement of Proposal to make Hutt City Council Alcohol Fees Bylaw.	9
3 ⇩	Proposed Hutt City Council Alcohol Fees Bylaw	15
4 ⇩	SAB19/1 - Submission to the Proposed Alcohol Bylaw 2019 - Max Shierlaw	19
5 ⇩	SAB19/2 - Submission to the Proposed Alcohol Bylaw 2019 - Mark Atkin	21
6 ⇩	SAB19/3 - Submission to The Proposed Alcohol Fees Bylaw - Nick Hill on Behalf of Hospitality New Zealand	23
7 ⇩	Alcohol Hearing Summary of Submissions	28
8 ⇩	Fee Reduction Guide for Alcohol Licences.	32

Author: Graham Sewell

Principal Policy Advisor

Reviewed By: Dean Bentley

Team Leader Environmental Health

Approved By: Wendy Moore

Divisional Manager, Strategy and Planning

Attachment 2

Statement of Proposal to make Hutt City Council Alcohol Fees Bylaw.

STATEMENT OF PROPOSAL TO MAKE THE HUTT CITY COUNCIL ALCOHOL FEES BYLAW 2019

April 2019

Contents

1. Introduction. 3

2. Background. 3

2.1 The perceived problem... 3

2.2 Most appropriate way to address perceived problem... 4

2.3 Most appropriate form of bylaw.. 4

2.4 Implications under the New Zealand Bill of Rights Act 1990 (“NZBORA”) 5

3. The Proposed Bylaw.. 5

3.1 Explanation of the proposed Bylaw content 5

4. Process for the development of the proposed bylaw.. 5

1. Introduction

The Council proposes to make a Hutt City Council Alcohol Fees Bylaw.

This statement of proposal has been prepared in accordance with section 83 of the Local Government Act 2002 (“LGA”). It includes information about the review process and whether it is appropriate for the Council to have an Alcohol Fees Bylaw.

2. Background

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, and the Sale and Supply of Alcohol (Fee-setting Bylaws) Order 2013.

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.

The Council must determine whether a bylaw is the most appropriate way of addressing the perceived problem. If so, Council must determine whether the proposed bylaw is the most appropriate form of bylaw and whether the proposed bylaw gives rise to any implications under the New Zealand Bill of Rights Act 1990 (“NZBORA”). No bylaw can be inconsistent with the NZBORA.

Under section 145 of the LGA, the Council may make bylaws for its district with the purposes of:

a. Protecting the public from nuisance;

b. Protecting, promoting and maintaining public health and safety;

c. Minimising the potential for offensive behaviour in public places.

Hutt City Council proposes 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.’

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 pursuant to the Sale and Supply of Alcohol (Fee-setting Bylaws) Order 2013. Any such fees must be set through a bylaw.

2.1 The perceived problem

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.

For the past 3 years the cost recovery for licensing functions has only achieved 42% - 52% with the balance being met by rates. This is inconsistent with the expectations of the regulation that the costs of licences of selling and supplying alcohol should be met on a ‘user pays’ basis and results in ratepayers effectively subsiding the sale and consumption of alcohol.

2.2 Most appropriate way to address perceived problem

Legal requirements when setting fees: Any bylaw must be consistent with the Sale and Supply of Alcohol Act and any regulations or orders. 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.

The Council considers that the proposed bylaw is the most appropriate way to address the perceived problem.

The table shows that the average income ($220,941) does not cover the average total expenditure ($464,277) for the 2015/18 financial years.

The Council therefore proposes 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. 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.

2.3 Most appropriate form of bylaw

The proposed bylaw addresses the perceived problem by establishing a new funding system for the sale and supply of alcohol to ensure that the cost of this licencing is recovered in a way that is consistent with both the expectations of the regulation and consistent with Council’s charges for other services.

The proposed bylaw is therefore the most appropriate form of bylaw.

2.4 Implications under the New Zealand Bill of Rights Act 1990 (“NZBORA”)

Section 155(2)(b) of the LGA requires the Council to determine whether the proposed Bylaw gives rise to implications under the New Zealand Bill of Rights Act 1990. It is the Council’s view that no provision in the proposed Bylaw is inconsistent with the Bill of Rights Act 1990.

3. The Proposed Bylaw

This section outlines the outcome of the proposed Bylaw and provides and explanation of the proposed Bylaw.

3.1 Explanation of the proposed Bylaw content

Hutt City Council proposes to establish a new funding system for licenced premises for the sale and supply of alcohol. The following outlines the rationale for the inclusion of each of the clauses in the proposed bylaw.

Proposed clause 1- Title

The purpose of this clause is to give the title by which this bylaw will be known.

Proposed clause 2- Commencement

The purpose of this clause is to outline that the enforcement of this bylaw will come into force at a date to be confirmed by Council.

Proposed clause 3- Application

The purpose of this proposed clause is to outline the geographical area in which this bylaw will be applied to.

Proposed clause 4- Purpose

The purpose of this clause is to ensure the purpose of this bylaw is clear.

Proposed clause 5- Interpretation

This clause is proposed so the meaning of the terms used in the bylaw is clear.

Proposed clause 6- Fees payable

The purpose of this clause is to outline the proposed new fee structure – refer to attached bylaw.

Proposed clause 7- Relevant legislation

The purpose of this clause is to outline the relevant legislation that authorises Council to establish this bylaw.

4. Process for the development of the proposed bylaw

The special consultative procedure will end at 5:00pm on Friday June 28 2019. Hearings and meetings on the proposed bylaw will be open to the public, and people may speak to their submissions at the relevant committee meeting.

An analysis of all submissions will then be presented to the relevant committee for consideration. The proposed bylaw will then be referred to the Council for consideration and adoption.

Attachment 3

Proposed Hutt City Council Alcohol Fees Bylaw

Pursuant to the Sale and Supply of Alcohol Act 2012 and the Sale and Supply of Alcohol (Fee-setting Bylaws) Order 2013, Hutt City Council prescribes in this bylaw the following fees and charges.

Contents

1. Title. 3

2. Commencement 3

3. Application. 3

4. Purpose. 3

6. Fees Payable. 4

7. Relevant Legislation. 5

1. Title

1.1 This bylaw is the Alcohol Fees Bylaw 2019.

2. Commencement

2.1 This bylaw will come into force on (TBC).

3. Application

3.1 This bylaw applies to the Lower Hutt District.

part 1

Preliminary provisions

4. Purpose

4.1 The purpose of this bylaw is to prescribe fees for all matters for which fees payable to territorial authorities are prescribed in the Sale and Supply of Alcohol (Fees) Regulations 2013.

5. Interpretation

5.1 In this bylaw, unless the context otherwise requires, -

Application fee has the meaning given by the Sale and Supply of Alcohol (Fees) Regulations 2013.

Council means the Hutt City Council

Regulations means the Sale and Supply of Alcohol (Fees) Regulations 2013

Licence has the meaning given by the Sale and Supply of Alcohol Act 2012

5.2 The Interpretations Act 1999 applies to this Bylaw.

PART 2

FEES

6. Fees Payable

The table below sets out the fees payable to Council for annual fees, applications, licences and authorities, as functions of Council which are carried out under the Sale and Supply of Alcohol Act 2012.

TABLE 1: FEES PAYABLE (Incl GST)

	Fees to apply Year 1 (Date to be confirmed)		Fees to apply Year 2 (Date to be confirmed)
Risk category	Application fee	Annual fee	Application fee	Annual fee
Very low	534.00	230.50	700.00	300.00
Low	879.75	570.50	1,150.00	750.00
Medium	1,183.25	916.25	1,550.00	1,200.00
High	1,461.75	1,467.50	1,900.00	1,900.00
Very high	1,703.75	2,068.75	2,200.00	2,700.00
Special Licences	Standard fee - 20 working days	Fast track fee - 10 working days	Standard fee - 20 working days	Fast track fee - 10 working days
Class1	787.50	2,000.00	1,000.00	2,000.00
Class2	303.50	800.00	400.00	800.00
Class3	91.63	240.00	120.00	240.00

Managers certificate	316.25		316.25

Other
Temporary Authority	433.35		570.00

7. Relevant Legislation

Sale and Supply of Alcohol Act 2012	The purpose of this Act is to provide a legal framework for the sale, supply and consumption of alcohol and the associated systems of control and licensing.	www.legislation.govt.nz
Sale and Supply of Alcohol (Fees) Regulations 2013	Provides regulations for the fees that can be charged and how fees are established for alcohol licensing related functions of Local Authorities.	www.legislation.govt.nz
Sale and Supply of Alcohol (Fee-setting Bylaws) Order 2013	Every territorial authority is authorised to prescribe, by bylaw, fees for any matter for which a fee payable to territorial authorities can be prescribed by regulations made under the Sale and Supply of Alcohol Act 2012.	www.legislation.govt.nz

Attachment 7

Alcohol Hearing Summary of Submissions

submitter number:	Submitter name/ organisation:	Submission Summary	Staff Comment
1	Max Shierlaw	1. Indirect costs : disagrees with indirect costs being included in the costs recovered from licence holders -only direct costs should be charged, and the indirect costs are not viewed as reliable. 2. 90% cost recovery approach is not appropriate as there is a clear public benefit to alcohol licences. 3. Sport clubs contribute greatly to the city and should be no more than 25% recovery of direct costs for them.	1. Recovery of indirect costs is appropriate and in accordance with guidance from the Ministry of Justice. The indirect costs have been apportioned appropriately to the 3.65 FTE. 2. A 90% fee increase is required for the Consents Division to meet it's 60/40 cost recovery model. Council also resolved to adopt a greater user pays policy in recent years. 3. The Sale and Supply of Alcohol (Fees Setting-Bylaws) Order 2013 requires consistency with the Act and Regulations, therefore it is not considered appropriate to have a disproportionate fee framework (lesser rate for sports clubs), however Council does have the ability to reduce a licence fee by one category, and the Licensing Inspectorate have done so on occasion. A Council approved policy would be ideal in order to be clear about when a fee category could or should be reduced. This could be of assistance to sports clubs.
2	Mark Atkin	1. Special licences: perceived issue with the way multi-vendor events are licenced. The cost will make these events unviable for vendors. 2. 3 yearly licencing cost: "There is already a compliance cost over and above the fee, in terms of public advertising. Processing of the application is in itself simple. I cannot see what the justification for claimed costs can be, as I have no contact with licensing staff between renewals. If the cost is monitoring and enforcement that should apply only where these are necessary, such as when former breaches raise the category."	1. Multi vendor events - each licensee is required to have their own licence, so the relevant fee is not simply apportioned to the number of licensees. There has on occasion, been a reduction by one fee category for such events where it was unlikely that the total number of people attending an event would actually purchase from the stall. This could again be incorporated into a Council policy. 2. The "processing of an application is in itself simple", is simply not correct for all applications. Many are incomplete requiring a lot of officer time to process and report on. Flow charts illustrating this were sent to Mark and Hospitality NZ.
3	Nick Hill/ Hospitality New Zealand	1. Concerned with the justification for the proposed fee increase- specifically the salary and wage cost and views these as being excessive. 2. Concerned that adequate evidence has not been provided to demonstrate what Council is doing to increase efficiencies/ reduce costs. · 2a. "Formally request further reports, research, or any other documentation as to what these ‘potential efficiencies’ that were assessed were, and how the current performance and costs are the most cost-effective" 3. Concerned that Council will not be able to adhere to future budgets. · 3a. "Formally request a clear response from Hutt City Council as to why they are unable to operate within the budget of the current alcohol licensing income, as almost every other council seems able to, and why the repercussions of this should be handed down to operators". 4. “Formally request copies of any impact studies or research that Council has undertaken into the impact on increased fees. If studies or research has not been undertaken, we formally request a statement from Council as to why this has not been done". 5. Requests Council acknowledge compliant operators who reduce workloads. 6. Considers an increase in licencing fees would encourage drinking in uncontrolled environments and increase alcohol related problems.	1. The staff and salary costs for the 3.65 FTE, are not believed to be too dissimilar to some other local authorities, and with similar numbers of applications and licensed premises. The flow charts provided to HNZ demonstrate the time it can take to process and report on an application. An operational review of the Environmental Health Team (who report on alcohol applications etc) was undertaken by Council in 2017. This identified a need for more staff to cope with the increased workload required in both the alcohol and food areas. 2. The question around potential efficiencies was addressed at the first hearing. Work regarding electronic processing identified as a potential efficiency is ongoing. The EH Team have only recently commenced the use of Time Track, an application that tracks the time taken by officers in carrying out their work. This will provide better data around specific resourcing requirements for alcohol related work; however it will take more time using the app in order to obtain useful information. Future budgeting includes an annual review of fees and charges, and as mentioned, the use of Timetrack will provide better more useful information going forward 3. The justification to increase fees is due to Council's policy to introduce a more user pays fee regime, the financial goal of achieving 60/40 cost recovery across the Consents Division, and the review of the EH team in 2017, confirming that more staff resources were required. 3a) Whangarei District Council have already increased fees by about 85% under a bylaw. We are aware that Wellington City Council are looking at proposing an alcohol fee bylaw, and this is currently out for consultation. Southland District Council were able to reduce their annual fees by 30% due to having accrued budget surpluses within the business unit, therefore alcohol fee revenue was carried over to the following year. Once this reserve is depleted, SDC will look to cancel the current bylaw, and establish another with a likely increase in fees. Just because other councils haven’t raised their fees does not mean they are covering their costs, resulting in ratepayers subsidising the industry. The MoJ have been quite adamant that the fees are intended to cover all costs associated with licensing and monitoring. The National Default fees are now 6 years old and have not been increased since then. It is therefore an appropriate time to review those fees and consider recovering the majority (not all) of the costs associated with alcohol licensing, in accordance with the legislation. 4. The Hearings Sub Committee did request whether the fees could be phased in over a period of time, and the proposal was therefore for an increase in fees over two years. This period could be increased, however that will mean a prolonged period by which Council is not recovering its costs and the Division meeting its 60/40 model target. The concern about increased fees resulting in business closures or employment rates may be unfounded, given that officers are unaware of any businesses that closed, or reduced staff when the Sale and Supply of Alcohol (Fees) Regulations 2013 became effective . In fact, numbers of licensed premises have increased over time. Costs of compliance - immigration, living wage etc - these costs are simply seen as the cost of doing business, and affect many businesses, not just the alcohol industry. There have been no impact studies or research on the impact of increased fees carried out by Council. Justification has however been provided for the proposed increase. 5. It is agreed that good operators should have less compliance costs, and this is reflected by the risk category, so the fee framework already accounts for good vs poor operators. 6. In relation to pushing people into uncontrolled environments - the submitter claims that 80% of alcohol is consumed away from licensed premises, and that most alcohol related problems come from, and occur at homes and public places. Does the submitter have any evidence to show an increase in these problems after the fees were increased in 2013 ?

Attachment 8

Fee Reduction Guide for Alcohol Licences.

FEE REDUCTION GUIDE FOR ALCOHOL LICENCES

References

Sale and Supply of Alcohol (Fees) Regulations 2013

REQUESTS TO REDUCE FEES BY ONE CATEGORY

When a request for a reduction in fees is received, and meets the particular circumstances below, either the Chief Licensing Inspector or a Senior Officer has delegated authority to decide – this will be dependent on the particular circumstances of the applicant and activity.

Requests must be made in writing at the time of application, with the reason for a fee reduction.

Any request outside of the below particular circumstances can only be decided by the Chief Licensing Inspector.

Special Licences

The fee payable for any special licence application may be assigned a fees category that is 1 class lower than specified in Clause 10 (1) of the Sale and Supply of Alcohol (Fees) Regulations 2013.

The reduction is available only if:

§ the application is for a Class 1 or Class 2 special licence;

AND

§ the event or series of events is a community or fundraising activity that will benefit the community or recognised charities;

AND

§ the special licence holder is not a commercial entity that will make any commercial gain from the event;

AND

§ no infringement notice has been issued for related events in the last year.

ON-/OFF-/CLUB Licences

(Other than at time of renewal – the next renewal application should reflect the hours and lower fee accordingly, if requested)

Particular Circumstances

Reduction proposed

Example

Current cost/risk rating

Result

On-licence holders that have 3:00am as the latest time allowed by their licence but never operate after 2:00am

(Only to be applied if there are no enforcement holdings)

Reduce fee category

Restaurant licensed until 3:00am but closes at midnight

High

Medium

Off licence holders that have 11:00pm as the latest time allowed by their off-licence but never operate after 10:00pm

Club licence holders that have 2.00am as the latest time allowed by their club-licence but never operate after 1.00am

(Only to be applied if there are no enforcement holdings)

Reduce fee category

Bottle store licensed until 11:00pm, that closes at 9:00pm

Class 2 Club licensed until 3:00am but that closes at 1:00am

High

Medium

Low

In particular circumstances a written undertaking is to be provided by the licensee, that they will adhere to the reduced hours until the next renewal, at which time they will seek a variation to formalise the reduced hours, which will be reflected on the ‘new licence’ issued. So they will enjoy lower annual fees until time of renewal.

For all licences, the lower fee will be paid upon application – if the request for a lower fee is declined, the applicant must pay the remainder before the licence will be issued.

For all premises requesting a lower fee, please ask the cashiers to place the fee in the holding account 1HE Licence.