A proposal to require a bigger share of lawful gambling profits to be spent in Hastings has drawn the ire of non-profit organizations that oversee the sale of pull tabs at bars in the city.

The city council held a first reading of proposed ordinance changes that would increase from 50 to 75 percent the amount of net profits that need to be spent in the Hastings trade area, which includes the city and contiguous townships. Ten percent of that money would go into a charitable contribution fund managed by the city.

The ordinance change also increases the initial investigation fee for sellers from $150 to $250 and imposes an annual renewal fee of $150.

Ray Kane, President of Beyond the Yellow Ribbon, a Cottage Grove-based non-profit, and a member of the Hastings American Legion Post said the change could devastate local organizations and the veterans and community groups they support.

“For the American Legion, this is devastating,” he said.

He noted that the organization gives a lot of support to the Hastings Veterans Home, with money having to go first to the state. Also, Hastings veterans in need are helped with money going first to a veterans’ assistance fund.

“We give a lot of money in the City of Hastings, but just in a different way,” he said. “If we go from 50 to 75 percent, other parts of our veterans’ community will suffer from that. That’s going to affect our donation and what we do for veterans.”

He noted that the groups help fund the Minnesota Veterans Hospital as well.

“You have a large veterans’ community here. You have a lot of residents that use that hospital,” he said.

He said with increasing expenses, only about 3 percent of sales is able to be earmarked to be given to charitable organizations.

“That’s not what we want,” he said. “This is going to devastate programming. We won’t be able to write those big checks to community groups, athletic teams, food shelfs.”

Afton Benson, Managing Director of Climb Theater in Inver Grove Heights, said that organization sells pull tabs at Pub 55 and The Bar. She called the increase from 50 to 75 percent in the Hastings trade area “crippling.”

“That’s a lot,” she said.

Climb Theater uses funds for educational programming and contributed $30,000 to Hastings area schools last year.

“If this passes, we are going to have to reconsider doing any gambling in the City of Hastings. Seven employees could lose jobs. 1,300 Hastings students won’t get programming. I’m strongly urging all of you to not change what you have going here.”

City Attorney Korine Land clarified that money sent to a state agency that came back to the Hastings Veterans Home or local veterans would still qualify as being spent in the Hastings trade area.

“We’re not the IRS. We’re not looking at where you wrote the check to. We’d look where the money is spent,” she said. “As long as you can show good faith effort that we gave this donation for the trade area of Hastings, that would qualify.”

Hastings American Legion Commander Chris Anderson said the 10 percent to the city would be money the organization needs to keep up its facility at 50 Sibley Street.

“If that 10 percent comes off our top line, we can’t make improvements to our post,” he said.

City Administrator Dan Wietecha said the ordinance change proposal is to keep money spent in Hastings here.

“I think it is a matter of making sure we keep money raised in Hastings in Hastings and the Hastings trade area,” he said, noting that several of the organizations licensed for gambling at Hastings establishments are from outside the city.

Other cities require varying amounts to be spent within their trade area. Cottage Grove requires 50 percent. Bloomington requires 30 percent. Blaine requires 100 percent.

He stressed that the 10 percent that would go to a designated city fund isn’t on top of the 75 percent but would be included toward the 75 percent. He said that money could go to something like the city’s Community Investment Fund, where community organizations apply for funding to develop projects on city-owned property.

“This raises $35,000-$50,000 a year, maybe it’s a source for the Community Investment Fund. Other cities use the money for buying police cars and fire trucks. It’s not going to be used to fill potholes. It’s not going to be used to be a plug in our budget,” said Wietecha.

Councilmember Dave Pemble said the gambling ordinance hadn’t been reviewed since 2008.

“That’s basically how this ordinance review started out. We’re looking at what our neighbors in the metro area are doing, and we’re not doing,” Pemble said.

The council voted to pass the first reading of the ordinance, which means it should come for a final vote at the May 1 meeting.

Councilmember Trevor Lund asked for additional information to rationalize the 10 percent payment to the city.

“I think it is important to try to keep a significant portion of the funds raised within the community,” he said. “I’m not really a big fan of the 10 percent. I’m fine with looking at the 75 or some sort of increase from 50. I would like more conversation.”

He initially asked that the matter be tabled but that vote failed as it would have started the ordinance at square one again.

“Just as a point of clarification, if we consider this first reading, we can still receive further information and amend this,” said Councilmember Jen Fox.

Councilmember Tina Folch asked Land to prepare a version of the ordinance without the city’s 10 percent provision.