Minutes of Olcc Advisory Committee Meeting Oar 845

MINUTES OF OLCC ADVISORY COMMITTEE MEETING

OAR 845-005-0460 AIA Petition (Downtown Portland) Part 2

Tuesday, November 8, 2011 9:00 AM in Room 103A, Commission Offices, Portland

Present: Tom Bizeau (City of Portland), Theresa Marchetti (ONI), Amy Archer (ONI), Mike Boyer (ONI), Stephanie Reynolds (ONI), Officer Mark Friedman (PPB), Marvin Mitchell (Julia West House), Kaitlyn Allegretti (Macdonald Center), Karl Vaught (PPI), Tom Parker, (Oregon Partnership), Brian Butenschoen (Oregon Brewers Guild), Katie Jacoy (Wine Institute), Hasina Squires (Wine Institute), Duke Tufty (Oregon Winegrowers Association), Shawn Miller (NW Grocery Association), Gwenn Baldwin (Whole Foods), Erica Hagedorn (7-11/Anheuser Busch), Richard Kosesan (ONSA/Beer Institute), Chris Girard (Plain Pantries), Kara Ruecker (ORLA), Dan Croy, Farshad Allahdadi, Christie Scott, Rudy Williams, Bill Schuette, Steve Pharo, Jennifer Huntsman and Susan Rudberg (OLCC staff).

Observing: MaryAnn Pastene (NWDA), Dan Lenzen (Concept Entertainment), Nancy Turner (Columbia Distributing), Mary Rait (Craft Brewers Alliance), and Lise Gervais (Public Action Management).

Invited but not present: Commissioner Fritz (City of Portland), Officer Josh Kraner (PPB), Suzanne Hayden (Citizens Crime Commission), Brooke Buxbaum (Eliot Tower Condo Association), Joan Booth (Allied Health Services Alder), Veronica Rinard (Travel Portland), Shane Abma (Clean & Safe Program), Ed Blackburn (Central City Concern), Tony Williamson (Portland Rescue Mission), Mary Ellen Glynn (OR Alcohol & Drug Policy Commission), Paul Romain (Oregon Beer & Wine Distributors Association), Evyan Jarvis (Fred Meyer/Safeway), Rick Underwood (Rite Aid), Peter Chung (KAGRO), Doug Peterson (Peterson’s on Morrison, Yamhill & Fourth Ave.), Ted Chong (Katina’s Deli & Grocery), and Donna Vandall, Judith Bracanovich, & Shannon Hoffeditz (OLCC).

The meeting began at approximately 9:00 am in Room 103A of the OLCC’s Milwaukie office. Jennifer Huntsman, OLCC Rules Coordinator, moderated the discussion and opened the meeting with a review of where we left off at last week’s meeting and stated we would begin today with a brief revisiting of product restrictions before moving on to boundaries and the other items on the agenda. Ms. Huntsman asked members to introduce themselves before proceeding to discuss proposed rule language.

1 Product Restrictions – Specific Sections : Several committee members stated that they had concerns with the City’s new section (5) regarding the creation of a product exception list and how “sufficient evidence” would be defined for purposes of proving that a product is not contributing to the problem. Several committee members pointed out that single containers are not addressed at all in section (4) of the banned product list version and that is a concern. Staff shared that both (4)(a) and (4)(b) propose to ban “all flavors and container sizes” of those products on the banned list. Other members shared that a unilateral ban on all single containers of malt beverage would be problematic because that would include many craft brews and imports which are not the problem. One member asked that it be further clarified in this language that all “Camo” products for example would be included in the ban. By including all sizes and flavors in the ban, we would actually be creating a list of brand families that would be banned, not just specific products. This could address the concern that manufacturers will come out with new labels or products to get around the ban; as long as they are still part of that brand family, they too would be banned. Many committee members felt that not only size but also packaging needs to be taken into account. Some pointed out that the bladders in boxed wine are being stolen by street drinkers. Other members stated that theft of legal products should not be factored into what is banned. Still others were concerned with the City’s proposed language in section (4)(b)(ii) that would prohibit the sale of wine in a “flexible soft package”; this is because there is an industry trend towards milk carton packaging. Several committee members felt that container size needed to be addressed no matter what ban approach is taken. Some members asked that single containers and size be taken into account on top of pricing. Boundaries : The City of Portland’s original petition asks to establish an AIA in its downtown core, and describes an area which includes Old Town/Chinatown, Downtown, and Goose Hollow. The original proposed area excludes any of South Portland (by stopping at the 405 Freeway to the south), most of the Northwest District, and specifically carves out the Pearl. Some stakeholders advocate for expanding the area to include the east side of the river. They point out that the City’s petition data shows street drinkers traveling up to a mile between where they purchase alcohol and where they consume it. Because the Burnside Bridge is only .3 miles long, there are already problems on the east side of the river, and there is a synergy between the two sides of the river with the services available, these committee members believe that limiting the AIA to the west side will make the SE problems worse and also not limit alcohol access for the downtown folks. Some committee members state that the environment is different on the east side (industrial/business vs. urban/residential) with the street drinking problems being

2 of lesser magnitude. Because of this, the City of Portland has focused their current request on the downtown core; the required voluntary effort was centered in the downtown core (west side) and there was no product data collected on the east side. The City has also acknowledged their ability to come back to the Commission and request additional Alcohol Impact Areas in the future, including one in the inner east area of Portland. Because of this, staff has concentrated their exploration of possible boundaries for this current rulemaking on the west side of the river.

The Commissioners have the ultimate authority to set the boundaries, including the ability to “extend the boundaries beyond the actual area where problems are concentrated” (OAR 845-005-0303). This existing rule language contemplates dispersal of the street drinking problems which is a known outcome of establishing an AIA. Because of this and because of Portland’s petition data showing that street drinkers travel on average 8 blocks from where they purchase alcohol to where they consume it, staff collected additional product data from the City of Portland in an additional expanded area. The additional area includes the Pearl, all of Northwest, and a small portion of South Portland between the 405 Freeway and the Ross Island Bridge. The additional product data provided was very consistent with the problem products contained in the original area data. The purpose of this expanded data collection was to be able to provide the Commissioners with the most information possible on which to base the ultimate decision on where the boundaries in the downtown core should be. Because of dispersal, staff believes that both the location of street drinking problems and the location of alcohol outlets are essential to determining boundaries. Wherever the Commissioners set the boundaries, (original area, expanded area, or somewhere in the middle), they will now have data for both inside and outside that boundary line, supporting the rationale for the decision. Some members believe that any boundary will be somewhat arbitrary and that unless you make your AIA citywide, there will always be an alcohol outlet just outside the boundary line. One member stated that the boundaries should be as small as possible so as to limit any impact on non-problem products. Another member asked whether flexible rule language could be incorporated so that boundaries could be changed as needed without going back through a rulemaking process. There was no consensus from the Advisory Committee as to which west-side boundaries are preferred. Training Requirements : The one area of specific rule language that the Advisory Committee was able to reach consensus on was required training (subsection (4)(c)). All stakeholders, including industry representatives and the City of Portland, agreed that the proposed language should be revised to grant full credit to those licensees who are part of the Responsible Vendor Program (RVP), as well as reflect a specific off-premises tailored annual OLCC training offering for those who are not. Licensees would be required to submit proof of the required training to the Commission on an

3 annual basis. City Council Notification : The City’s draft contains rule language in section (6) requiring 75 day advance notification of a hearing before the Commission for both the one-year mandatory review and after receipt of a petition to amend the Downtown Core AIA rule. The staff draft does not include this section because we believe it to be unnecessary in the case of the one-year review, and in regard to rulemaking petitions, to be both outside the allowed scope of the Administrative Procedures Act (APA) as well as impractical given the 90-day window in which the Commission must vote on petitions. The majority of committee members felt that this was an issue for the City of Portland and the OLCC to resolve. Reporting : The staff draft contains rule language in section (5) that mandates the City of Portland submit an update to the Commission one year after AIA establishment and every two years after. Some members stated that crime and detox statistics are readily available and that it is completely reasonable to bring back statistics that are behind the request for an AIA. One member suggested that we track crime data in the area surrounding the AIA as well so that we can monitor dispersal. Some members shared a concern because the product data (originally collected by PPI) will not be readily available on an ongoing basis. Some members suggested that the language be more specific regarding exactly what data would need to be included in the updates while others were worried that too much specificity might prove problematic if say certain report titles change. The possibility of revising the language to be a little more specific, with say a list of examples, was mentioned. It was also suggested that staff speak to the PhD in Washington who completed their AIA studies for ideas on what types of data to track ongoing.

Fiscal Impact: Ms. Huntsman led the committee through a discussion of the Fiscal Impact Statement and the need to quantify (if possible) fiscal impacts this rulemaking will have in general, as well as any adverse impact on small businesses (defined as having 50 or fewer employees). During the discussion on the Fiscal Impact Statement, the following points were made:

Most industry stakeholders felt that the banned product list would have zero fiscal impact on them, while the formula approach would have a significant negative impact. Other stakeholders felt that the end result of either approach should be the same if implemented effectively as there would be a mechanism in either approach to mitigate the fiscal impact on non-problem products.

There should be a positive impact on the City of Portland in terms of mitigating the current negative impact on businesses (including non-alcohol retailers) and residents

4 as well as reducing the resources currently expended on street drinking and associated crimes. Some shared that there has to be some fiscal impact since we are banning some products or else the AIA will be a failure and that the hope is that the improvements in the area will more than compensate for any negative impact.

Most industry stakeholders felt that it was premature to get more specific with possible fiscal impacts with so much current uncertainty around the product restriction approach. However, some members shared that whatever the impact on large chain markets, the impact will be even greater on single retail operations.

One stakeholder did share specific analysis of potential fiscal impact on a particular store in the Pearl where they state that they do not sell high alcohol/low costs beverages found with street drinkers. In order to get a snapshot of the impact of an AIA on the Pearl store, they looked at sales figures for March through September 2011. If the formula option was applied to these sales revenues and units, the total estimate is a loss of $435,737 in beer and wine revenue, 50% of the wine units sold and 67% of the beer units sold. This does not include staff time to vet the existing 2000 products we sell, nor does it include new products that would constantly need vetting. Those items include 100% of the most popular cooking wine categories: vermouth, port, sherry and Madeira, which are not replaceable in recipes with other wines, as well as premium sake. Today, regular still wines are commonly over 14% alcohol and the content level changes from year to year and among varietals, increasing the cost and uncertainty of what would comply. Shoppers frequently have baskets that include alcoholic beverages and some will undoubtedly choose to shop outside the area. While they cannot specifically predict the impact, they fully expect losses in grocery, meat, seafood etc will heighten the impact of the formula option. If the banned product list option was applied to these sales revenues and units, the total estimate is a loss of $0 in beer and wine.

Some members felt that it was important to differentiate between gross sales and profit margin when attaching specific dollar figures to potential fiscal impact.

Ms. Huntsman clarified that there will still need to be a formal rulemaking hearing on this matter as well as a written comment period. These steps will take place before this rule matter goes back to the Commissioners for possible final action.

Ms. Huntsman closed the meeting by thanking members for their attendance and participation. The meeting ended at 12:00 pm.