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Some say it should be closed
By Patrick Tepoorten
The future of Rush City’s liquor operations is once again in flux because of financial numbers. But the latest numbers aren’t reflective of past business, they are projections of future business.
A forecast of what Rush City can expect from a new liquor store at the Kinger Mall, including a $385,000 investment in remodeling, shows a business that would lose $13,000 in 2009; a loss that would climb to $39,000 by 2011. The figures do include an amount of roughly $20,000 a year in interest the city would lose on the investment had the money been collecting interest in a banking account. It also includes more than double the cost for inventory.
And, although the forecast shows increases in sales of 25, 20, and 10 - percent over the next three years, the sales are not enough to pay for and profit from the debt incurred over the same time frame.
On July 15, Mayor Jim Ertz said that if the liquor store - at the new location - is going to succeed, the city will have to improve the profit margins, currently at roughly 24 percent, by at least two or three points. He also said that citizens have told him the city needs to get out of the liquor business and asked the council, “Do we want to take chances based on these numbers?”
Councilor Jamie Amundson also said she has heard “many times” that the city should close it’s liquor operation, but was skeptical of the projection. “I think the sales projections are too low,” she said, and added “I can’t see how our sales wouldn’t go up from where we’re at.”
Ertz responded that the projection shows an increase in sales, it just isn’t enough to show a profit.
When asked by Amundson if he would enter into business, based on the current numbers, with his own money, Ertz replied “no.”
Councilor Nick Malchow expressed a desire to get the liquor store closer to the freeway if possible, which Amundson agreed with. Unfortunately, there does not appear to be any land available. Still, Malchow suggested, “maybe we should hang on where we’re at and hold out for the freeway.”
Councilor Nancy Schroeder said she thought there was potential in the plan for the site next to the grocery store and that the city could do better than the projections indicate.
The council agreed to take a closer look at the projections and see how improving the profit margin would affect the bottom line. The council is expected to continue the discussion at its next meeting, Tuesday, July 29.
The council decided to hold off signing a lease agreement with the Rush City School District for the property at Kinger’s Mall until a decision is reached regarding the future of liquor operations.
In other news:
• Rush City Fire Chief Bob Carlson brought the council up to speed on the department’s plans for a new pumper truck. A FEMA grant, applied for last year, was denied, but it hasn’t lessened the need.
According to Carlson, the current back-up pumper is a 1963 GMC has a host of problems and it is getting difficult to find parts for.
The cost of a new pumper, with outfitting, was estimated at $400,000. Carlson cautioned that new regulations in 2009 will make that cost rise by about $20,000. That money could be saved if the city were to have a truck on order by the end of the year.
Schroeder said that $20,000 would be better spent on equipment.
Unfortunately, according to City Administrator Amy Mell, there are few grants available at this time toward the purchase of a new pumper. There are some low-interest loans available, but Mell thought the most the city could secure in grant money is $50,000.
Ertz instructed Mell and Carlson to keep working that angle, saying, “If there is $50,000 available, we should go after it. That’s a lot of money.”
The council agreed to consider the purchase of a new pumper as part of the budget process but Ertz said the city could not commit to purchasing a new truck until it demonstrated it could be afforded. Currently, there is roughly $300,000 in the fire equipment fund.
• A text amendment to the zoning ordinance allowing multi-tenant buildings in the B-1, B-2, and I-1 districts was approved.
• Ordinance 2008-08, establishing fees pertaining to the regulation of land use, was passed. Prior to its approval, fees for such things as conditional use permits and planned unit developments, did not exceed $200. With the ordinance’s passage, fees range up to $500, with many ranging from $25 - 350. Many permits and requests will also now include deposit money, ranging from $250 - 1,000.
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