Lakeville's $25,000 Liquor Question

The Lakeville City Council voted to move ahead with a comprehensive study of the city’s municipal liquor store operations on Monday evening. The study, being conducted by Minneapolis-based Shenehon Company, will cost $25,000 and is expected to be completed by September.

While council members nearly all expressed some discomfort with approving the expenditure, it was decided that a comprehensive study would be beneficial to help the city better make some upcoming decisions surrounding the three-store retail operation.

“I’ll be honest, I struggle with spending $25,000 right now for a study,” said Council member Kerrin Swecker. “I do feel that it might be right thing to do.”

But not all members were in favor of the study.

“I don’t struggle with it too much,” said Council member Matt Little. “I just don’t think we should spend it. This is the kind of study taxpayers loathe. We do know some facts, that these are the most profitable liquor stores in the state and if we eliminated that, we’d have to raise taxes 5 percent or cut 5 percent from the budget. The numbers are overwhelming in favor of keeping municipal liquor and we don’t need to spend the money. There’s just no reason to continue this issue.”

Not all agreed with Little.

“I don’t think taxes going up 5 percent is a fair statement,” said Council member Colleen Ratzlaff-Labeau. Labeau stated there was a lot to examine regarding development, leases and assets. “We have to  make sure. I hate to spend $25,000, but I cannot support the CIP plan of acquiring more land without finding out more.”

Mayor Mark Bellows echoed Labeau’s comments. “I don’t think any business would be stepping forward (with development and land acquisition) without some form of study,” he said. “It’s that simple.”

Some of Lakeville's administrators think the study is a good idea.

“There are a lot of misconceptions out there,” said Brenda Visnovec, Lakeville’s liquor pperations director. Visnovec said the study “provides some education, fact-finding and will dispel rumors.” She also said it was in the best interest of city residents to have the study conducted by an independent third party.

City Administrator Steve Meilke echoed Visnovec saying “some of the work could be done in house, but the comprehensive analysis is best done by a third party.” Meilke said it would add credibility to any results presented.

The city was prompted to look into the viability of their liquor store operations due to perceived fallout from retailers such as Costco and Trader Joe’s shunning development in Lakeville due to the state mandated “no compete” statutes with regard to municipal liquor operations. The lease on the city’s Heritage liquor store location is also due to expire soon, forcing a decision on whether to relocate that store, build an additional store, or both.

A site near the planned on the west side of Interstate 35 near Keokuk Avenue has been mentioned as a possible target for a new city-owned liquor store. That site would cost the city approximately $3.9 million to acquire.

The liquor study will be broken into phases with Phase 1 addressing the overall economic impacts of staying in the liquor business, getting out of the business and allowing private retailers to develop or lease current locations, and overall development impacts of both.

Lakeville’s liquor stores are the most successful municipal liquor operation in the state, netting the city approximately $1 million a year in revenue that is used primarily for debt reduction and capital improvement projects. Voluntarily giving up that revenue could prove difficult unless there was a viable plan to recoup those funds.

When Phase 1 is complete, Visnovec said the council could then decide on whether or not to continue on to Phase 2. That phase would examine either how to vacate the business or expand the business depending on the Phase 1 results and would range would cost an addition $11,700 to $23,000 depending on which track was taken by the city. The council could also decide not to proceed with Phase 2.