102207 CC Public Forum Liquor OperCITY OF SHOREWOOD
PUBLIC FORUM
MONDAY, OCTOBER 22, 2007
AGENDA
5755 COUNTRY CLUB ROAD
COUNCIL CHAMBERS
6:00 P.M.
1. CONVENE PUBLIC FORUM ON POSSIBLE DISCONTINUATION OF CITY LIQUOR
OPERATIONS
A. Roll Call
B. Review Agenda
2. OVERVIEW (Att. -Staff memorandum)
3. PUBLIC COMMENT
4. ADJOURN
Mayor Lizee
Woodruff
Turgeon
Callies
Wellens
Dinner will be available for Council
CITY OC
SHOREWOOD
~ 5755 COUNTRY CLUB ROAD •SHOREWOOD, MINNESOTA 55331-8927 • (952) 474-3236
FAX (952) 474-0128 • www.ci.shorewood.mn.us • cityhall@ci.shorewood.mn.us
MEMORANDUM
TO: City Council
FROM: Craig W. Dawson, City Administrator
DATE: October 18, 2007
SUBJECT: Public Forum regarding Possible Discontinuation of City's Off-sale Liquor Operations
During several meetings this year, the City Council has had discussions about whether the City should
continue its municipal off-sale liquor operations. The City has had these operations since 1961.
The focus of the analysis will be on the performance of the liquor operations since 2004. Through
2002, Shorewood had athree-store system as it operated and managed the City of Tonka Bay's off-sale
store. From September 2002 through October 2003, the Shorewood Village Shopping Center did not
have a grocery store open, and the City relocated and upgraded its store within that Center. A two-
store operation, with the major grocery store tenant in the Shorewood Village Shopping Center, has
been constant since the start of 2004.
The performance data, in very summary form, are as follows:
2004 2005.. 2006
.Waterford (East, Store 1)
Sales $ 857,589 $ 854,693 $ 863,424
Net Income (Loss) 1,737 13,135 (18,353)
Net Income (Loss) as % of Sales 0.20% 1.54% (2.13%)
Shorewood Plaza (West, Store 2)
Sales $1,338,006 $1,180,787 $1,114,627
Net Income (Loss) 52,777 28,977 2,423
Net Income (Loss) as % of Sales 3.94% 2.45% 0.22%
Combined Liquor Operations
Sales $2,195,595 $2,035,480 $1,978,051
Net Income (Loss) 54,514 42,112 (15,930)
Net Income (Loss) as % of Sales 2.48% 2.07% (0.81%)
2004 2005 2006
..
rv f' PRINTED ON RECYCLED PAPER v
Public Forum regarding
Possible Discontinuation of City's Off-sale Liquor Operations
October 22, 2007
Page 2
The following data report on the balance in the Liquor Enterprise, transfers to the General Fund, and
the transfer as a percentage of the City property tax levy:
2003 2004 2005 2006 2007
Year-end Liquor Cash Balance $305,170 $ 413,370 $ 389,308 $ 362,687
Transfer to General Fund $ 30,000 $ 50,000 $ 50,000 $ 40,000
City's Property Tax Levy 3,344,442 3,750,633 4,190,395 4,395,308
Transfer as % of Tax Levy 0.90% 1.33% 1.19% 0.92%
In Apri12007, the City reduced costs by eliminating one full-time position. With revised budget
projections made in May 2007, the estimated net income from both stores was:
* for 2007: $ 3,760
* for 2008: $10,569
In May 2007, the City engaged the services of a business valuation consultant in order to give the
Council a preliminary indication of the range of prices it might reasonably receive if the Council will
to sell its Liquor Operations.
In August 2007, the Council agreed to the terms of extending the lease of the Waterford Store to
October 31, 2008. With that action, the leases of both stores expire on October 31, 2008.
In August 2007, the Council directed staff to begin the process to engage a broker to sell the liquor
stores, and in September 2007 selected the broker to perform these services. The City has since
received proposals from potential purchasers, which have been reviewed by the Council's Liquor
Committee.
Statutory Requirements regarding Discontinuation of L~uor Operations
Miruiesota Statutes require that the City Council hold a public hearing regarding continuation of
municipal liquor operations if, in any two of three consecutive years, the liquor operations show net
losses. This is not the case at present and the City is not required to hold a public hearing.
Minnesota Statutes do not require that a public hearing be held prior to a decision to discontinue
municipal operations as is being evaluated by the Shorewood City Council. The Council is to holding
a public forum voluntarily in order to residents to have an opportunity to make comments for the
Council to consider in its decision-making process
Minnesota Statutes also prescribe municipal off-sale operations as an all-or-nothing proposition.
Liquor stores may only be municipal or only be private operations -City and private liquor stores may
not be in business in the same city at the same time.
CITY OF SHOREWOOD
Investment Examples
Invested
Fund Balance
$ 350,000
$ 450,000
$ 500,000
$ 600,000
$ 700,000
$ 800,000
$ 900,000
$ 1,000,000
$ 1,250,000
$ 1,500,000
Annualized Investment Interest at Sample Rates of Return
4.50% 5.00% 5.50% 6.00%
$ 15,750 $ 17,500 $ 19,250 $ 21,000
$ 20,250 $ 22,500 $ 24,750 $ 27,000
$ 22,500 $ 25,000 $ 27,500 $ 30,000
$ 27,000 $ 30,000 $ 33,000 $ 36,000
$ 31,500 $ 35,000 $ 38,500 $ 42,000
$ 36,000 $ 40,000 $ 44,000 $ 48,000
$ 40,500 $ 45,000 $ 49,500 $ 54,000
$ 45,000 $ 50,000 $ 55,000 $ 60,000
$ 56,250 $ 62,500 $ 68,750 $ 75,000
$ 67,500 $ 75,000 $ 82,500 $ 90,000
Assumptions:
1. The current approximate Liquor Fund balance is $350,000.
2. Amounts are invested as per the City's Investment Policy.
Page 1 of 1
Craig Dawson
From: Cherie Daughton [jcdaughton@earthlink.net]
Sent: Wednesday, October 10, 2007 4:31 PM
To: Craig Dawson
Subject: October 22 Meeting Regarding Liquor Stores
October 10, 2007
Mr. Craig Dawson
City Administrator
City of Shorewood
5755 Country Club Road
Shorewood, MN 55331
Dear Mr. Dawson:
We are writing to offer our opinion on the sale of the municipal liquor stores.
We are against it.
We will not be able to attend the meeting on October, 22, 2007, but wanted to voice our opinion to you, hence this letter. We
hope you will share this letter with the mayor and the members of the city council.
Our concerns regarding the sale of the liquor stores are many. Here is the list:
1. The idea of selling the liquor stores is one that impacts every resident of Shorewood, and so we all should have an
opportunity to discuss the issue and offer viewpoints.
2. We are very concerned over the loss of jobs for the employees of the liquor stores. Many have been employed for years at
the stores and all go above and beyond the call of duty insofar as service and professionalism. Further, this is certainly not a
time to foster and force unemployment.
3. The Shorewood liquor stores have historically offered excellent prices to one and all, beating such liquor giants as MGM. All
patrons of the municipal liquor stores appreciate this, continue their patronage and thus add to the city coffers.
4. The ownership of the liquor stores by the government of Shorewood is not a "to-be-feared" illustration of big government.
Indeed, not only is city ownership benign governance, city ownership brings profits to the city. As for the ups and downs of
profits, this happens in every industry, every business. One needs to view the overall picture. Bottom line: any profit is just that:
Profit. And profit is good.
5. The loss of revenue to the city means an increase in taxes for us all, if not immediately, then very soon.
6. We feel the idea to sell the liquor stores was railroaded through way too quickly as far as the citizens of Shorewood are
concerned. Having seen such railroading many times in the corporate world, we know the outcome is never good.
Thank you for your time.
Sincerely,
Jim and Cherie Daughton
5935 Hillendale Road
Shorewood, MN 55331
10/11/2007
#3
From: Therese [mailto:Therese@mchsi.com]
Sent: Friday, September 21, 2007 11:21 AM
To: cityhall@ci.shorewood.mn.us
Subject: Liquor Store
Dear Mayor Lizee and Council Members:
The City should not be in the business of business period exclamation point. It's a wise idea to
rid the city of the liquor stores and would be a plus if you could make some money on sale of said
stores..
Respectfully and sincerely,
Terry Paetzel
PS Mayor Lizee, I really appreciate your Sat. coffee shop meets. So far our Saturdays haven't
coordinated but I will get there if for no other reason than to say thanks in person.
Page 1 of 2
Craig Dawson
From: Rick Stromberg [rick_stromberg@starkey.com]
Sent: Thursday, October 18, 2007 4:10 PM
To: clizee@ci.shorewood.mn.us; dwoodruff@ci.shorewood.mn.us; Iturgeon@ci.shorewood.mn.us;
pcallies@ci.shorewood.mn.us; mwellens@ci.shorewood.mn.us; Craig Dawson
Cc: Vicki.Stromberg@fsi-intl.com
Subject: Public Hearing regarding the Liquor store sales
Attachments: Rick Stromberg.vcf; Rick Stromberg.vcf
Mayor, City Council, City administrator,
I am unable to attend the public hearing regarding the liquor store sales due to prior committments
My opinion for the record:
In my opinion, the Mayor is completely in the right in calling for a public hearing regarding the decision on this issue to sell
the city owned liquor stores. Part of the process was definitely circumvented, and certain steps in the decision making
process were missed or eliminated when this decision was made. I do not know all of the issues or resons surrounding the
decision that was made, but I do know from experience how the municipal liquor stores can enhance the community.
I grew up in the city of Richfield. The city of Richfield, for as long as I can remember, had 2 municipal liquor stores owned
and run by the city. When I was in my teens they added a third.
These liquor stores provided a revenue stream that paid for most of the street and road maintenance. They also paid for
the municipal swimming pool complex, the ice arena, improvements to the junior high and high schools, and many other
smaller ticket items.
The positive influences of the revenue from the liquor stores in Rchfield made such a huge difference in the quality of life in
our community when I was growing up that I cannot comprehend how different my life would have been without the benefits
of the Richfield pool, which in itself was a huge revenue builder, the ice arena, and the improvements to the parks and
roads in the environment that I and many others grew up in.
Talk to anyone who grew up or lived in Richfield during the 60s, 70s, 80s, or even today.
The potential for Shorewood could be the same. If the city were to maintain and promote the city owned liquor stores, and
even make slight location improvements, it could improve profits dramatically, along with a monopoly of the off sale liquors
within the city limits.
Selling the municipal liquor stores will result in a revenue loss which would lead to an increase in taxes for the residents....it
would have to be accounted for somewhere, and we all know how the average working class individual responds to
increases in their taxes. Not usually favorable.
In summary , I am a ag inst the sale of the Shorewood liquor stores.
Respectfully,
Rick Stromberg
Corporate Project Manager
Starkey Labs., Inc
6600 Washington Ave. So.
Eden Prairie, MN 55344
952.941.6401 ext. 2252
work direct - 952.828.9252
10/18/2007
Page 1 of 2
Jean Panchyshyn
From: Craig Dawson
Sent: Monday, October 22, 2007 8:32 AM
To: Jean Panchyshyn
Subject: FW: What is the strategy for selling the liquor stores and making up for the revenue they generate?
From: Mike Murrell [mailto:mike@salesforcexp.com]
Sent: Friday, October 19, 2007 4:23 PM
To: CityHall
Cc: Craig Dawson
Subject: What is the strategy for selling the liquor stores and making up for the revenue they generate?
Chris Lizee, Mayor
Paula Callies
Laura Turgeon
Martin Wellens
Dick Woodruff
Dear City of Shorewood Representatives
First, I would like to thank you for all of your efforts and hard work toward making Shorewood asmooth-
running, forward-looking and fiscally sound community.
Second, I would like to voice my opinion against selling the City's two liquor stores.
I'm generally opposed to government operating commercial enterprises. But Shorewood's liquor stores provide
products, pricing and services that are better then privately owned stores in the area. Plus, they provide the
city with a valuable revenue stream.
As an example of the Shorewood stores' superior service, our company periodically hosts business-related
receptions that usually include beer and wine. We switched to the Shorewood liquor store at 7 & 41 several
years ago because of the assistance we received selecting the refreshments, availability of glasses and even
the help loading. The staff at that store (I'm not familiar with the other store) is especially helpful for such
business activities. I think it would be a mistake to risk losing this level of service and caliber of staff, especially
since I have not aware of any strategic reasons for selling the stores.
Thank you for your consideration
Mike
Mike Murrell, President
Mach1 Business Media, LLC
P.O. Box 247
27020 Noble Road
Excelsior, MN 55331
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