Above: A mural at The Cosmos in Lansing's Old Town.

In a rare instance of deregulation in East Lansing, City Council has voted unanimously to repeal the so-called 50/50 law. The repeal happened Tuesday night following years of discussion and debate by various boards and commissions.

Council’s discussion before the vote was lively and occasionally contentious, particularly on the question of whether establishments like The Cosmos could make it in East Lansing’s market. The topic of over-regulation also was raised.

The 50/50 law had required most alcohol-serving establishments in East Lansing to derive at least 50% of their sales from food. It was put in place thirty years ago in the hopes of stopping East Lansing from becoming a town full of low-end bars.

The current City Council and other supporters of the repeal have expressed hope the repeal will diversify dining and drinking options in East Lansing’s downtown – that East Lansing will see establishments of more interest to adults thirty years and older, including wine and tapas bars, jazz clubs, and the like.

In advance of Tuesday’s meeting, East Lansing’s Downtown Development Authority (DDA) indicated unanimous support for the law’s repeal, as did the Downtown Management Board (DMB). At the meeting, East Lansing’s Director of Development Tim Dempsey provided staff’s perspective. (City Manager George Lahanas was absent from the meeting, so Dempsey, who is also Deputy City Manager, took on the role of City Manager at the meeting.)

Dempsey said that, over the years, there had been companies looking to set up bars or restaurants “that would be attractive to a broader demographic” in East Lansing but that didn’t because they didn’t want to deal with 50/50. So, he said, the repeal could be beneficial.

That said, “there is some element of risk” in the repeal. The risk, in Dempsey’s words, is that existing establishments “might devolve into just a bar.” But Dempsey said that if an establishment violated state liquor control laws, they could of course be brought into line or shut down.

East Lansing Deputy Police Chief Steve Gonzalez came to the podium to second what Dempsey said on this point. Gonzalez said the City’s liquor control officer spends time with local businesses developing a good relationship and making sure owners and managers know how to watch for fake IDs and solve problems before they become an issue. If there are persistent problems with a bar, they can be reported to the State.

Asked whether 50/50 had helped downtown, Gonzalez indicated the data was unclear. He said there has been a marked decline in assault, drunk driving, and suspicious activity calls downtown starting around 2013-2014. This declined happened while 50/50 was in place, “possibly due to a culture change,” according to Gonzalez. “We don’t necessarily see a concern” with repeal.

Below: The current City Council.

Mayor Mark Meadows wanted to make sure establishments would still be required to sell food. He noted the repeal of 50/50 left in place the requirement of bars to have cooking facilities, to provide seating areas to accommodate dining, and to offer a menu of at least ten items of food. City Attorney Tom Yeadon noted the law required a “varied menu,” and also that food be cooked and prepared on the premises, so selling from bags of peanuts and potato chips would not count as selling food for purposes of the law.

Meadows conveyed concerns expressed by former Council Members Kathy Boyle and Kevin Beard about potential negative effects of repeal. Meadows referred to the “demands of a captive audience across the street,” namely MSU students, “who want their dollar-fifty jello shots” and said the fear is that that is the direction downtown’s offerings will drift with 50/50’s repeal.

Meadows conveyed Beard’s suggestion that, rather than essentially taking the word of managers about sales records, the City audit the books of these establishments to see if they are following the 50/50 law. Dempsey responded that that kind of regulation would require a “forensic auditor” which would be expensive and complicated.

Mayor Pro Tem Erik Altmann reported what he had learned from a DDA subcommittee meeting that was attended by Lansing-based entrepreneur Sam Short of Potent Potables, the restaurant group that runs Zoobie’s Old Town Tavern, The Cosmos, The Creole, and Punk Taco. Altmann referred to Short as having a “track record of setting up interesting and successful restaurants [of the type] that we want here” and explained that he had been asked to come share his ideas.

Below: Image of rock shrimp tempura, image taken from Ann Nichols' report on The Cosmos.

According to Altmann, Short said the Cosmos-Zoobie’s set-up “would not make it under 50/50 because they are 60/40,” that is, they are deriving about 60% of sales revenue from alcohol. This, Altmann said, is because they sell lower-priced food with more expensive beer, targeting a 35-and-older clientele. “He considers 50/50 a risk,” Altmann said.

Altmann added that if he himself was a business owner, he would find the 50/50 reporting requirement “annoying.” Altmann runs a human subjects research psychology lab at MSU, and so is subject to strict regulation in that regard. He told Council, “If I could set up a lab across the street and avoid it, I would.” He added, “We ignore annoyingness as affecting people’s business decisions” and said it mattered for businesses even when it doesn’t impact the bottom line.

Council Member Shanna Draheim responded, “Sam Short and his businesses are always in my brain when we are thinking about this.” She said one reason she ran for City Council was specifically to get rid of 50/50.

“The nature of downtowns has changed in the last 30 years,” she said. “Vibrant cities have been geared towards entertainment and much less towards things that used to be in downtowns. This is a national trend,” she said, and “our trying to use 50/50 to fight against it is going to be futile and cause us to miss opportunities for cool and interesting restaurants.” She said she would accept a few more jello-shot bars to have what Potent Potables offers.

But Meadows said Short “knows squat about this.” He said Short had never applied to open a business in East Lansing and that he’s in “an adult area of Lansing,” very different from having a major campus downtown. He said it was “an entirely different population on the sidewalks” compared to Old Town in Lansing. “Zoobie’s wouldn’t last here,” Meadows said.

Draheim sharply disagreed, but Meadows said higher-end food places had been tried and had failed in East Lansing.

It was only well into the discussion that City Attorney Tom Yeadon explained that, if Council eliminated the 50/50 law, Council might be able to reinstate it later if things turned out badly. In the past, Yeadon had said reinstatement of the law would not be possible, because it would reset the grandfathering date, so that all existing businesses could not be subject anew to 50/50 – essentially making reinstatement impossible.

This week, Yeadon opined that because the law is not in the zoning code but in regulatory code, it could be reinstated effectively in some form. But a majority of Council did not seem interested in questions of reinstatement, making clear they think it was time for the unique regulatory law—apparently the only one of its kind in the nation—to be gone.

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