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3. Approval of a Conditional Use Permit to allow a micro brewery and micro distillery with taproom at 1160 Red Fox Road. 2. Legal Background In 2011, the State Legislature amended State Law to allow taprooms in microbreweries in Minnesota. This bill was commonly referred to as the "Surly Bill", and was first proposed by the owner of Surly Brewery. The law allows microbreweries that produce fewer than 250,000 barrels of beer a year to have a taproom where they can sell beer for on site consumption which is brewed on site. The law also allows sampling of beer which is produced on site. State law also allows microbreweries which produce fewer than 3,500 barrels of beer a year to provide off-sale sales of 64 ounce "Growlers" and 750 milliliter bottles; however, off-sale sales of beer by the bottle, case, or keg is not permitted by State law. The sale of on and off sale products brewed on site is allowed for microbreweries but not micro distilleries (manufacturers of spirits). Distilleries are allowed by State Statute, but cannot provide on-sale, off-sale, sales of their products at the location in which the spirits are produced. The spirits must be distributed to another site for on and off sale sales. Municipal ordinances may be more restrictive than State law in terms of the sale of alcohol. At the August 20, 2012 City Council work session, Staff were directed to research amending the zoning code to allow microbreweries and micro distilleries as conditional uses to the maximum extent allowable under state law. These recommendations were brought to the September 5, 2012 planning commission work session where it was recommended to staff that brewpubs also be included as a new, and separate, land use from micro breweries and micro distilleries. Brewpubs are microbreweries that have a restaurant component with on- sale sales of products brewed on site. Brewpubs also provide food and can also serve alcoholic products other than those brewed on site. The Planning Commission also discussed allowed prepackaged food to be served on site within a taproom, as opposed to food that is prepared on site. The distinction is important because establishments that have food prepared on site would be considered brewpubs rather than taprooms, and have different legal requirements within State Statute. Staff has prepared draft amendments (Attachment B) to the zoning code that reflect these recommendations. Currently,Arden Hills' Zoning Code allows breweries and distilleries, as well as distributors of alcohol, in zoning districts that allow manufacturing and processing. City of Arden Hills Planning Commission Meeting for October 3, 2012 P:IPlanning0anning Cases12012112-015-Zoning Code Amendment-Brewery Taproom License) 10-03-12- PC Memo-Brewery Taproom Discussion Page 2 of 6