Monday, March 26, 2018

Why ArtFest can sell alcohol at Coeur d'Alene Park, but Elkfest can't

Posted By on Mon, Mar 26, 2018 at 5:21 PM

click to enlarge There's a good reason why Elkfest is held in front of the Elk instead of Coeur d'Alene Park. State law. - DANIEL WALTERS PHOTO
  • Daniel Walters photo
  • There's a good reason why Elkfest is held in front of the Elk instead of Coeur d'Alene Park. State law.

Last week, we published a story about the hoops and hurdles the Elk has had to jump through to try to put on the Elkfest music festival this year, including fire code regulations and police costs.

After the article was published, city officials objected to one claim of Elkfest organizer Marshall Powell: that he wouldn't be able to hold the event in nearby Coeur d'Alene Park instead of in front of his business, because then he wouldn't be allowed to sell alcohol.

City officials objected to the claim, arguing that beer gardens can be held in city parks, they just have to apply for the proper permits. The city would far prefer for Elkfest to take place in Coeur d'Alene Park, instead of on Cannon Street. And ArtFest, just one week earlier, will have a beer garden in Couer d'Alene Park, featuring beer and wine from River City Brewery and Townshend Cellar.

But that event is put on by the Museum of Arts and Culture, a nonprofit. Elkfest is put on by the Elk, a for-profit business.

And that makes all the difference. The Spokane Parks' alcohol policy prohibits alcohol from being sold or consumed in the park, but makes occasional exceptions for "nonprofit organizations" with a "license from the Washington State Liquor Control Board."

Note the word "nonprofit."

Elkfest's traditional beer garden location, in front of the Elk, works as essentially an extended patio under the Elk's existing liquor license. But moving to Coeur d'Alene Park would require getting permission from the Washington State Liquor and Cannabis Board.

The board allows beer and wine to be sold by organizations off the premises at beer gardens for events like "fundraising dinners, gala events, auctions and wine tastings" through their "special occasion licenses."

But those can only be for events run by "a bona fide nonprofit organization."

Mikhail Carpenter, spokesman for the liquor board, confirms that the rules around this are strict.

"The registered nonprofit has to handle all the money," Carpenter says. "There’s no for-profit business that can run that sort of operation."

Yes, at times the nonprofit can contract with a for-profit business, like a brewery, to be paid "reasonable operating costs" to run their beer garden. (That's why we might see, say, a No-Li Beer Garden at the city's Fourth of July celebration in Riverfront Park.)

But the contract has to be worked out ahead of time. And not only do the nonprofits have to be in charge, they can't share any of their profits with a third party.

"Allowing a third party to collect part of the proceeds or take a cut of the proceeds could prevent your nonprofit from obtaining future Special Occasion Licenses," the rules say.

Attempts to get around these regulations have run into serious problems.

"A few years back, there was a promoter in the city of Tacoma, who was essentially shopping for nonprofits," says Carpenter.

He's referring to Union House Productions, which as a 2013 Tacoma News Tribune article explained, recruited charities to help put on the Tacoma Craft Beer Festival. But some of the money the charities were promised never came through.

But in that case, it was the charities that likely violated liquor laws.

"Charities, not Union House, are responsible for ensuring festivals, where alcohol is served, are operated for the benefit of nonprofits and not to enrich private businesses," the Tacoma News Tribune reported. By allowing Union House to take a cut, the charities were in violation of state law.

So it's not as simple as getting a charity sponsor to put on Elkfest, if Powell wanted to change Elkfest to Coeur d'Alene Park.

And no, Powell couldn't create, like, the Elkfest Memorial Remembrance Foundation for the express purpose of selling beer at Elkfest. The liquor board would come down hard on them.

"If it’s a transparent attempt to create a nonprofit to hold a special occasion license event" it wouldn't be legal, Carpenter says. "You have to be a bona fide nonprofit to hold one of these."

So why do state rules only allow nonprofits to put hold special occasion events? The exception was introduced specifically as a way to give nonprofits a way to make money, Carpenter says. It wasn't supposed to give a common path for for-profit businesses to get around extensive licensing requirements.

Carly Cortright, the city's special events coordinator,  recognizes the legal challenges. But she believes that if the city, Elkfest's team and the liquor board sat down, they could figure out some sort of middle ground.

She says the city would prefer to find a win-win so Elkfest can still happen without "having a giant three-day concert next to people’s living space."

"We’ve always been really creative in how we find solutions," Cortright says.

But under current regulations, at least, the Elk has no interest in moving Elkfest.

"We'd be paying $30,000 to throw a really awesome party with no way to make any profit," Powell says. "I love a good party, but no thanks."

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