Growing interest in privatizing liquor sales in North Carolina justifiably raises concern about an otherwise reasonable plan for building a new ABC store in Wilkesboro.
The latest bill calling for replacing local government-controlled ABC stores with private liquor retailers appears to have the most support yet, but its passage isn’t expected in the current General Assembly session.
Regardless, there is growing momentum for revising how liquor sales are regulated in North Carolina and privatization may be inevitable.
The Town of Wilkesboro and the Wilkesboro ABC Board, consisting of three people appointed by the council, have a plan for building a 5,658-square-foot ABC store on town-owned land at the intersection of U.S. 421 and Old Browns Ford Road.
The land was bought for the town’s new water storage tower. The new store’s cost is estimated at $750,000, but building costs are hard to project lately.
The new store would replace an existing ABC store in a smaller facility leased for about $42,000 a year at the nearby intersection of U.S 421 and New Browns Ford Road. This lease is up for renewal in about two years.
Under a plan discussed at Wilkesboro Town Council meetings, the Wilkesboro ABC Board would borrow money to build the new store and pay it off while leasing the land from the town for 15-20 years. The debt and lease payments would come from revenue from liquor sales.
After paying off the debt in 15-20 years, the ABC board would deed the building to the town and then lease it and the land from the town, again with revenue from liquor sales.
Wilkesboro officials understandably prefer that ABC store lease payments go to the town, plus they view the ABC board’s debt payments as an investment in what eventually would be a town-owned asset.
However, what happens if the legislature approves privatizing liquor sales and ABC stores are closed within the years the debt from building the new store is supposed to be paid with ABC store revenue?
Although the latest privatization legislation calls for sharing state tax revenue on liquor sales with local governments to help compensate for what they lose, this isn’t a certainty.
Revenue from selling assets of the two Wilkesboro ABC stores would help. This typically includes $300,000 to $400,000 in liquor products, plus the two stores typically have about $100,000 in cash reserves.
Wilkesboro officials have noted that the town would also be left with a new building at a prime location on U.S. 421 that could become a satellite police station or be sold for a healthy profit. But convert a liquor store into a police station? Really?
Wilkesboro ABC store profits, which are funds left after operational expenses and state taxes are paid and the Wilkesboro Police Department gets 5%, are divided between Wilkes Medical Center, 10%; Wilkes County government, 20%; and the town, 70%.
Since the ABC store on U.S. 421 opened in 2012, the two Wilkesboro stores combined essentially have only broken even so there has been no profit sharing. For the fiscal year ending this past June 30, a little over $40,000 in profit was set aside to go toward the cost of building a new store.
This raises questions about the Wilkesboro ABC store system’s ability to pay the debts from building a new store.
However, Assistant Town Manager Bob Urness says the town’s ABC system hasn’t shown a profit recently due to needed capital expenditures. He said the U.S. 421 store has the ability to earn a $40,000 annual profit and could handle $45,000 to $50,000 annual payments on a $750,000 loan. Otherwise, the town will only pocket 70% of this.
Some discussions in town council meetings have indicated interest in building a new and more prominent ABC store to increase liquor sales. That should be the goal only to the point of not incurring a loss. ABC stands for Alcohol Beverage Control and control should be the primary objective.
Preliminary contractor bids for building the new store are due Aug. 16 and current plans call for completing construction as soon as next spring. All things considered, perhaps the town council and ABC board should allow more time for studying the ramifications of building a new ABC store.