Displaying items by tag: abc store

After more than a year of will they or won't they, Waynesville's ABC Board will soon decide whether to open a second liquor store in the Super Walmart complex.

"Right now, we still don't have everything approved," said Earl Clark, chair of Waynesville's ABC board. But, "It's a whole lot closer than we were a year ago."

The board is contemplating a second location behind Hardee's along the entrance drive to Super Walmart off South Main Street. The area is considered a prime locale that will allow the town to capture a larger share of customers, whether it's residents or visitors.

The South Main Street plot "would be very ideal," Clark said.

While Canton and Maggie Valley have liquor stores as well, the convenience factor of a store beside Walmart makes it likely people would stop in for their liquor purchases while they are shopping in Waynesville even if they live in other parts of the county.

The ABC board has not purchased the land. A property option has expired.

However, the ABC board still has a few details to figure out. The board is working on a site layout that would work within Waynesville's development rules. One concern is providing adequate parking to match the size of the new store, Clark said.

Waynesville currently has one ABC store on Walnut Street, which dates to 1967. The building is small and can only hold so much inventory. It is also located in a strip mall that's somewhat off the beaten path from main commercial areas.

Clark said the current location is too small for the amount of business it does. Last year, the Waynesville store sold more than $2.1 million in alcohol.

The ABC board operates autonomously from other town entities, but Waynesville does receive a portion of the profits earned from alcohol sales each year.

Waynesville receives an average of $100,000, said Town Manager Lee Galloway.

Although the new store is expected to increase revenues, the town won't see a slice of that for years to come. The additional income will go toward buying the land, building the store and covering additional salaries and overhead.

The total cost of the new store is expected to hover around $1 million but could reach closer to $1.25 million when everything is said and done, Clark said. The property will cost about $500,000 and the remaining amount will cover the cost of construction and the initial stocking for the 5,000-square-foot store.

Just stocking the store alone, a cost that is borne upfront before sales start coming in, will likely cost between $150,000 and $175,000, Clark said.

"We are still counting our pennies," he said. "We want to build something nice."

If the ABC board gives the additional store the green light, then it would operate both locations for at least a couple of years. However, if the board does not see a benefit from keeping both open, it will shut down the smaller, older store in favor of the more prime South Main Street locale.

Meanwhile, Maggie Valley has struggled to make running two ABC stores pay off financially. Maggie Valley opened its second ABC store in 2009 on Dellwood Road. The town annexed a satellite tract a mile beyond the town limits for its new store, strategically situated close to Waynesville's doorstep in hopes of pulling some customers who previously traveled to Waynesville's liquor store.

In 2009 when Maggie's new store opened, revenue at Waynesville's ABC profits dove. While Maggie's ABC revenue grew, Waynesville's dropped by a comparable amount.

But, Maggie Valley's second store has yet to pay off. Sales are barely robust enough to cover overhead at two locations, and the cost of building the new store has not yet been paid off.

The Maggie Valley stores lost nearly $24,000 last year and a little more than $38,000 the year prior.


Profits for the Waynesville ABC store

2011: $146,876

2010: $156,568

2009: $263,229

2008: $252,652

2007: $237,587


Where the money goes

Surplus profits from ABC stores go back into town coffers. Waynesville's ABC profits took a hit the year Maggie Valley opened a second store on Waynesville's doorstep, siphoning off customers.

A portion of the proceeds are earmarked for local law enforcement and an alcohol education but the majority is simply added to the town's disposable revenue.

Joe Bock, an Indiana resident passing through this area on his way to Florida, was on a bit of a mission one recent day in Cherokee. Bock wanted to enjoy a beer with his lunch.

That desire remained unfulfilled, however — the restaurants on the Qualla Boundary, other than at Harrah’s Cherokee Casino and Resort, are dry. Bock wasn’t particularly upset, and said the absence of a beer with his lunch wouldn’t deter a repeat visit to the region.

“But sometimes you’d just like a beer,” he said in something of a wistful tone.

Voters might change all that in April. Cherokee tribal members will vote on referendum questions that could bring alcoholic beverages to stores and restaurants reservation-wide.

One sticking point? News that Principal Chief Michell Hicks wants the tribe to control sales of beer, wine and liquor through a tribally run alcohol store rather than allowing it on the shelves of gas stations and grocery stores.

That concerns Pete Patel, who with his wife owns Jenkins Grocery, the last stopping point on old U.S. 19 headed west to Bryson City just before motorists leave the reservation’s boundaries.

“We’re struggling even to survive,” Patel said. “If we could sell (alcoholic beverages) legally, we’d like to sell them. We could use a little extra help.”

Hicks would support alcohol in restaurants, however, and that pleases Emily Geisler, the manager of Tribal Grounds, a popular coffee shop on the reservation.

“I think it’s really important, especially for restaurants, to be able to offer beer or wine,” Geisler said. “If somebody wants the full dining experience, now they have to go out of town.”

Businesses in Cherokee are gearing up for a campaign aimed at convincing members of the Eastern Band of Cherokee Indians to vote ‘yes’ on a measure that could end the nearly reservation-wide moratorium on the sale of alcohol.

Michell Hicks, chief of the Eastern Band, decided last Wednesday to allow a controversial vote to go forward next April on whether to legalize alcohol sales on the reservation.

“At this point, I just feel strongly that it’s the people’s decision,” Hicks said. “It’s an issue for the people to vote on.”

With the exception of Harrah’s Casino, Cherokee is dry. Restaurants, grocery stores and gas stations are not permitted to sell beer, wine or liquor.

Tribal council last month voted to hold a referendum that would give all tribal members a chance to vote on legalizing alcohol sales.

The chief had until Wednesday to decide whether to veto tribal council’s decision. He spent the full 30-day time limit praying about it, he said.

In April, members of the Eastern Band will vote to approve all, none, or one or two of the following:

• To permit a tribal ABC store to sell liquor to the public.

• To permit the sale of beer, wine and liquor drinks only in restaurants licensed by the Eastern Band.

• To permit the sale of beer and wine only in grocery stores and convenience stores licensed by the Eastern Band.

No matter which of the three items is approved, Hicks said he wants the tribe to control how and where alcohol is distributed on the reservation, as well as benefit revenue-wise from its sales.

Hicks is OK with restaurants selling alcohol but doesn’t want to see beer and wine on the shelves of gas stations, and package stores cropping up across the reservation.

Instead, Hicks would prefer for the tribe to be the sole proprietor of alcohol sales to the public. Liquor sales both to the public and restaurants would be handled through a tribally owned and operated ABC store, as is the norm for anywhere in North Carolina.

Hicks would like beer and wine to be handled the same way. He does not want beer and wine to be sold in gas stations and grocery stores, saying that is “something I won’t support.” Instead, he wants the sale of beer, wine and liquor limited to tribally operated ABC stores.

Hicks is not advocating for the alcohol vote to pass, but if it does, he wants the tribe to control the sale of alcohol for two reasons. One is to keep gas stations peddling booze off every corner of the reservation, citing that he doesn’t “think it’s healthy.”

Confining sales to a tribally run store would keep alcohol from rural areas of the reservation as well, such as the Snowbird community in the remote mountainous reaches of Graham County.

The other reason is financial. Cherokee would reap the profits from selling the alcohol.

The revenue from alcohol sales “could be substantial,” Hicks said.

 

Boon to business

Many local businesses support the referendum, saying alcohol will boost their bottom line and keep tourists who might otherwise leave the reservation in search of alcohol.

Business owners met earlier this month to talk about ways to advocate for the passage of the referendum. They have formed a committee and several subcommittees to raise funds for their campaign, organize public forums and decide where to run promotional advertising.

Ninety days prior to the vote, which is expected to take place in mid-April, the committee will run advertising in newspapers and on billboards, encouraging tribe members to vote ‘yes’ and allow alcohol to be sold on the reservation. During the meeting, several people told stories of customers leaving and never returning because businesses cannot sell alcohol.

Telling people that they cannot buy alcohol on the reservation is a “very aggravating thing,” said Don Rose, a member of the Eastern Band, in a recent interview. Businesses in Cherokee could compete with those in surrounding towns if they are allowed to sell alcohol. Currently, visitors must travel to Bryson City or Sylva to purchase alcohol — or even to have a glass of wine with their meal.

“We are just trying to catch up with the rest of the world,” Rose said.

The Cherokee Chamber of Commerce and Rose agree with Hicks that businesses should purchase their alcohol from a tribally owned ABC store.

“That would be a definite benefit to have the money stay here,” said Matt Pegg, head of the Cherokee Chamber of Commerce. “There are a lot of things we could do with that.”

Pegg emphasized that businesses would be under strict regulations regarding the sale of alcohol. The tribal ABC Commission would license individual businesses and teach owners and employees about their legal responsibilities as an alcohol reseller. A business could lose its license for violating regulations once.

“It wouldn’t just be a free for all,” Pegg said.

The tribe would reap the benefits of alcohol sales by funneling sales through its own ABC store.

Although both tribal council and Hicks approved the referendum, the battle to allow alcohol on the reservation is far from over. Many in Cherokee are strong Christians and have a long history of alcoholism and diabetes, making many inclined to oppose such a referendum.

The Eastern Band has shot down similar measures in the past — and even halted some cries for alcohol on the reservation before a vote could take place.

The referendum passed tribal council in late October, with nine of 12 representatives voting for it. Two council members wanted to table the resolution, and the remaining member was not present.

When Dale McElroy plunked down $100,000 to expand Mica’s Restaurant & Pub in southern Jackson County last year, he was banking on the status quo staying the status quo: a dry county remaining dry.

McElroy, like other savvy business owners in the area, have used numerous loopholes in the state ABC law to legally sell alcoholic beverages in “dry” Jackson County. McElroy can legally sell alcohol as a semi-private club.

At Mica’s, patrons are knocking back plenty of beer, wine and even liquor. McElroy is counting on that continuing — it’s how he plans to pay for his new outdoor deck, fire pit and remodeled dining room.

McElroy also sells beer and wine from a small to-go shop adjacent to the restaurant. To keep it legal, he sells lifetime memberships for $1 and piggybacks on the golf course and country club to help qualify for the status as a private club.

It’s the beer and wine sales from that shop that help subsidize his restaurant.

But take away the corner on the market he currently enjoys, and suddenly his investment doesn’t look very rosy.

That’s the case, too, for Jacqueline and Joel Smilack, who spent what she described as “a lot” to build two, full-sized asphalt tennis courts. That transformed JJ’s Eatery along N.C. 107 in the Glenville community into a sports club, legally entitled to sell alcohol.

McElroy, for one, doesn’t mince words. If the sale of booze becomes legal for every business — not just the ones such as his and JJ’s that invested big bucks to earn the right to sell alcoholic beverages — then he’ll be forced to shut his doors. The upfront investment has been too great to suddenly have to compete with every Tom, Dick and Harry who owns a service station or restaurant in the Cashiers area being allowed in the game.

The way it works now is that each week, McElroy must call in his order to Sylva’s ABC store detailing the amounts and types of liquor he needs, wait until they call back and say it’s ready, then go pick up the filled order.

So, he must be happy that Jackson County Chairman Jack Debnam wants a vote, too, on opening an ABC store in Cashiers? Wouldn’t that be convenient?

Well, no, as a matter of fact, he’s not happy at the news.

“I’d rather spend $1,000 a week to go down to Sylva than $300 to go into Cashiers,” McElroy said.

In other words, he’s making money because of the exclusivity and inconvenience of the situation as it stands now. The referendum passes, “and I wouldn’t continue running this place,” McElroy said flatly.

It’s midday on a weekday, and the bar is hopping at Sapphire Brewing Company near Cashiers.

Jackson County, technically, is “dry,” with the sale of alcoholic beverages limited to the town limits of Sylva and Dillsboro. The truth, however, is a far different matter — businesses all over the county are selling beer, wine and mixed drinks, and they are doing so legally and by the letter of the state’s ABC law.

Nowhere is this relatively unrestricted flow of booze in an ostensibly “dry” area more evident than in the southern part of the county, “on the mountain” around the Cashiers area where droves of well-heeled retirees and seasonal residents flock each summer and fall.

“There are so many loopholes,” said Amber Powell, one of two bartenders needed this hot day at Sapphire Brewing Company to keep up with the brisk demand for cold, on-tap beer. “Honestly, the law’s not very fair — it should be all businesses, or none.”

Uniformity just might be on the horizon, if Jackson voters next year approve a referendum for the countywide sale of alcoholic beverages. Four of the county’s five commissioners say they will put the question to a public countywide vote, either in the May primary or the 2012 November general election.

 

A law of exceptions

For now, businesses outside of Sylva and Dillsboro wanting to take advantage of Jackson County’s big thirst have encountered few problems finding ways to capitalize on the numerous exceptions in North Carolina’s alcohol laws.

But working legally within the state’s ABC system can entail meeting some fairly odd requirements. Whether it’s building tennis courts to qualify as a sports club or proving historic entitlement, there’s dozens of loopholes — but they can be complicated to understand and expensive to implement.

Take one such exception — for a “tourism ABC establishment” — as an illustrative example of the apparent tailor-made nature of most of these right-to-sell booze exceptions. Restaurants or hotels within 1.5 miles of the Blue Ridge Parkway are allowed to serve alcohol — a handy exception if you happen to be the Balsam Mountain Inn in the Balsam community of Jackson County, or a similarly situated establishment, but not much use otherwise.

Far more common, especially in Cashiers, is the golf-course exemption.

Sapphire Brewing Company has a public golf course, so under the law, anyone age 21 or older can stride right up to the bar and order a drink, the bartender explained.

“These are adults who want to sit and have a beer,” Powell said. “It’s not like these are underage kids.”

Donald Irvine, busy eating a BLT sandwich at the bar and washing it down with a cold brew, was one of the patrons there last week. He retired in 2005 and now travels regularly from his fulltime home in Tampa, Fla., to the second home he built in Cashiers. Irvine believes North Carolina’s ABC laws are a mishmash of confusion, and that Jackson County would be better off just passing countywide alcohol.

“I can just put up a tennis net and say, ‘I’m a sports club’ and sell alcohol,” he said in wonderment.

 

Selling memberships

Well, it’s not quite that easy, but it’s close — if you’ve got the cash to back the dream. In the Glenville community outside of Cashiers alongside N.C. 107, JJ’s Eatery qualifies as a sports club. Owners Jacqueline and Joel Smilack built two regulation-size tennis courts, and now they are running a bar and restaurant, BP gasoline station and a package store.

Never mind that JJ’s tennis courts are up a weedy, relatively unused-looking dirt road and out of sight — they are in fact used, they do in fact qualify the couple to legally sell alcoholic beverages, and the Smilacks are doing a brisk business indeed serving thirsty lake-goers and Glenville residents unwilling to hoof it off the mountain to buy beer.

To meet the state’s requirements for a sports club, the Smilacks charge $5 for a weekly membership or $50 for a year, with tennis court rentals extra at $15 an hour. Or, for the tennis lover in their midst, there’s a $75 annual membership option with unlimited court time.

Provide a name, address, date of birth and driver’s license number, sign on the line and you, too, can buy whatever you’d like to drink from JJ’s — the membership fee is automatically included in the prices of the alcoholic beverages you buy.

“That was the requirement from ABC to do what we do here,” Jacqueline Smilack said of the sports-club designation. “We don’t make the rules, we just have to abide by them.”

Heidi Taylor, who stopped into JJ’s last week to get a cool six-pack before heading out for a hot day on the lake, moved to Glenville just last year.

It was her first experience with a dry county, and at first she thought it meant exactly that. But she quickly learned the lay of the land.

“It is really not that much of a problem to buy alcohol,” Taylor said, easily ticking off half a dozen places where you can buy it, either to go or from a bar.

She personally made the $50 investment for an annual “membership” at JJ’s.

“It was nice. I didn’t have to drive all the way to Sylva,” Taylor said.

Still, Taylor, a Christian, doesn’t drink a lot herself. She kind of likes Jackson being a dry county with only limited places where you can get alcohol.

“I guess they didn’t want liquor stores on every corner,” Taylor said approvingly.

But in Cashiers, so-called clubs have proliferated so widely that to stay competitive Mica’s Restaurant & Pub offers lifetime membership at the bargain rate of just $1.

McElroy, in abidance with state regulations, has a stack of file drawers behind the counter reminiscent of the old card catalogs. The drawers are crammed with hundreds of membership cards, a visual testimony to the pent up demand for alcohol in this “dry” county.

McElroy sells beer and wine from a to-go shop, plus has a restaurant with a bar. His loophole? The establishment is affiliated with a country club golf course.

McElroy keeps his membership files handy should a state ABC officer pop in and ask to review them. Theoretically, ABC officers could walk into his bar and ask patrons to prove that they’re members. But no worries: If they don’t have their $1 lifetime membership card on them, a driver’s license will suffice as long as McElroy can go to his files and produce the records.

Other sports clubs in the area go the equestrian route to meet the requirement: providing equine boarding and training, plus on-site dining, lodging and meeting space and host horse trials and other events sanctioned or endorsed by the U.S. Equestrian Federation.

Or, like JJ’s, they have two or more tennis courts. Or, short of tennis, an 18-hole golf course.

Those unable to pay for expensive equestrian facilities, tennis courts or golf courses still find ways to accommodate their thirsty clientele. Four restaurants in Cashiers and Glenville currently have active brown-bagging permits, the state’s ABC database of permit holders shows.

 

‘Spot permits’

The law ended up like it did — messy — because businesses in historically dry areas such as greater Jackson County were seeking the revenue boosts alcohol sales could bring.

“Trying to get a county to vote 20 years ago is a lot different than it is today,” said Mike Herring, administrator for the ABC Commission. “Businesses who needed permits for economic development knew if they tried to go the vote route, they might not have a positive result.”

That resulted in “spot permits” being written and shepherded through the General Assembly by state legislators who were responsive to constituent demands. How responsive? Put it this way — the ABC Commission relies on a 25-page report to break down, county by county, who can legally do what.

“Every county is different,” Herring said, describing the report as a roadmap “that has grown over the years.”

Longtime state Sen. Robert C. Carpenter of Franklin, who represented the state’s western most counties from 1988 to 2004, wasn’t a soft touch for businesses looking to sell alcoholic beverages. An unapologetically conservative Republican and devout Christian, Carpenter disapproved of the end-run, as he saw it, that businesses were taking around the state’s ABC law.

“They never came to me, because they knew where I stood,” the 87-year-old said, who died this weekend two days after being interviewed by The Smoky Mountain News for this story. “It needs to be reformed. I remember when I was first elected a bill came up in Bryson City (for a business to sell alcohol). I called up the senate minority leader and told him, ‘We don’t need more liquor sold.’ He took it on, and he killed it.”

Times change, politicians move on — in Carpenter’s wake, a slew of local bills would indeed pass that blew open the door to legal alcoholic beverage sales in “dry” areas.

Luckily for local ABC boards, however, the politics of alcohol are removed from the requirements of overseeing sales in a county. That’s just fine with Veronica Nicholas, who has served on the board for about a decade.

Sylva’s Board of Commissioners appoints the three-member ABC board, though the town splits revenue from the ABC store 50-50 with the county. The amount collected by the town could drop if, as Jackson County Board of Commissioners Chairman Jack Debnam proposes, the referendum includes an ABC store for Cashiers — and it passes.

Still, Nicholas said, she believes “any time to take anything to the voters, I think it is a good thing.”

Staff writer Becky Johnson contributed to this report.

 

Loopholes galore

Even in dry counties, country clubs, golf courses, inns, bars and even gas stations can use one of several exceptions in the state ABC laws to serve alcohol.

• Historic ABC establishment

• Special ABC area

• Tourism ABC establishment

• Tourism resort

• Recreation district

• Residential private club

• Interstate interchange economic development zones

• National historic district

• Permits based on existing permits

• Sports club

Harrah’s Cherokee casino bought nearly half a million dollars of liquor over the past year, netting almost $50,000 in profits each for the ABC stores in Sylva and Bryson City — which had the privileges of being the casino’s suppliers.

But despite the numbers on paper, it is hasn’t proved quite the windfall the two towns hoped.

“It was nothing like they said it was going to be,” said Monty Clampitt, chairman of the Bryson City ABC board.

“People thought there would be a world of money flowing in all of a sudden if we did this,” said Kevin Pennington, chairman of the Sylva ABC board. “I think it was a little surprising that there was not near as much money coming in.”

The casino began serving alcohol to customers last year. The Cherokee reservation was — and still mostly is — dry. The tribe made an exception for the casino, but lacked an ABC store of its own. So it turned to the ABC stores in neighboring Sylva and Bryson City to buy from.

Since the reservation lies partly in Jackson and partly in Swain counties, figuring out which store had dibs on being the casino’s alcohol supplier got complicated. Ultimately, the stores in Bryson and Sylva launched a joint venture with the sole mission of filling bulk liquor orders for Harrah’s and decided to split any profits 50-50.

Both towns hoped it would be a lucrative deal for them, since profits from the ABC stores go straight to town coffers.

But neither town has seen a penny yet, despite being more than a year into the operation.

“We haven’t gotten any of it yet. None,” said Pennington.

The joint venture has cleared $100,000 in profit so far, so at first blush it’s not clear why that money hasn’t been meted out to the towns along with the regular ABC dividends.

But Clampitt and Pennington said the profits to date have been used to build up working capital and inventory.

Roughly half the profits are tied up in inventory — $50,000 in liquor is stacked on pallets and shelves in the back storeroom of the Bryson City ABC store, ready and waiting to fill the weekly orders coming from Harrah’s.

Another $50,000 is sitting in the checking account, a cushion to ensure smooth cash flow, Clampitt said.

Since the state warehouse will only ship to local ABC stores once a month, they have to buy the liquor up front.

Harrah’s makes out a shopping list of what it will probably need, but its actual order may vary, so it could be weeks before the inventory moves off the shelves.

“You can’t tell a customer what to buy,” Clampitt said.

But with inventory and reserves now built up, profits made from here on out will be paid out quarterly. Sylva and Bryson City can each expect checks for $11,600 to arrive any day, a payout from the second quarter, Clampitt said.

 

Cherokee forays into ABC store of its own

No sooner than Bryson and Sylva’s joint venture has started paying off, however, and the end is in sight. Cherokee is well on its way to an ABC enterprise of its own and within the year will stop buying from its neighbors.

From the beginning, Cherokee has wanted to setup its own ABC store, selling the liquor to Harrah’s itself and keeping the profits for the tribe rather than sending them down the road to Bryson and Sylva.

The logistics of starting one haven’t been easy. The tribe ultimately needed a special bill passed by the General Assembly allowing it to start its own ABC venture, so it can order directly from the state warehouse without going through the Sylva or Bryson stores as middlemen.

The Sylva and Bryson stores weren’t planning on riding the casino’s liquor gravy train forever.

“I figured it wouldn’t be long before the tribe got it worked out,” said Larry Callicut, town manager of Bryson City.

“I was not at all surprised when the Cherokee said they can just buy stuff directly from the state,” Pennington added.

 

Delayed gratification

It will be several more months, and possibly even a year, before the new Cherokee ABC board is up and running, however. There’s a complicated computer system to set up, a staff to hire and a place needed to hold all those waiting pallets of liquor.

“They’ve got some organizing planning and what not to do,” Clampitt said.

Once that’s done the Sylva and Bryson joint venture will become obsolete. It would make sense to shut down the operation and close out the books, liquidating all that inventory and cashing out the checking account.

At that point, the two towns could expect a final payout of $50,000 each.

That’s a good chunk of change for small, cash-strapped, recession-burdened towns to clear. It’s better than nothing, Clampitt supposed, but it wasn’t exactly free money.

“It’s been a whole lot of work,” Clampitt said.

The Bryson ABC store lends its staff to the joint venture serving the casino. It takes labor to manage the inventory: keep up with what’s running low, place monthly orders with the state, parcel out weekly shipments to the casino and all the related bookkeeping.

They also personally deliver weekly orders to the casino — a perk afforded to their special customer. (Run-of-the-mill bars and restaurants have to do their own pick-up.)

The Bryson ABC store gets compensated for some of those hours. In June, for example, the store billed the joint operation for $607 worth of its employees’ time.

But the Bryson board also donates some of the labor and overhead to the joint venture. It doesn’t pro-rate a portion of its utilities to the Cherokee operation, for example. Nor does it bill for the labor of unloading the truckload of orders coming from the Raleigh warehouse each month.

The two stores have finally paid themselves back for start-up loans taken from their own bank accounts to get things up and running — namely building up the necessary inventory.

The stores also had to purchase a $15,000 computer system for the joint Cherokee venture. The state ABC system is particular about the software used by all the stores, requiring a certain type of program that interfaces directly to the state warehouse, not only for placing orders but also allowing the state to track the whereabouts of every bottle of liquor.

The state wouldn’t let Bryson’s ABC store use its existing computer system, since the Cherokee venture was technically considered a new standalone enterprise, Clampitt said. So both stores dipped into their own funds to buy the computer system, cutting into profits they would have made otherwise.

Pennington said he was skeptical from the start.

“It was such shall we say a unique situation to start that combined store, I personally never felt like it was done for the best interest of the people of Jackson County to begin with,” Pennington said.

Pennington said he actually advocated against it, but the state ABC people made them do it.

“It wasn’t our idea at all,” Pennington said.

As for the $15,000 computer system? Bryson and Sylva ABC boards have already written that off and deducted it from the Harrah’s profits. But it would be nice to get a little something back for it when the joint venture is shut down,  Clampitt said. He hopes they could sell it to the new Cherokee ABC board.

Coincidentally, a countywide alcohol referendum on the ballot in Jackson County next year could lead to a new ABC store in Cashiers, which if passed, might just need a computer system as well.

 

Why so complicated?

Liquor sales in North Carolina are a tightly regimented affair. All liquor coming in to the state makes its first stop at warehouse in Raleigh. Local ABC stores in turn order from the state warehouse, a means of controlling the sale and distribution of liquor to the public.

Local stores act as middlemen. They get the liquor at wholesale prices, then mark it up to resell to customers, both to the general public and to bar and restaurant owners. The state dictates how much of a markup is allowed, about 25 percent.

After covering overhead and salaries, local ABC stores turn the remaining profits over to the local government, either the town or county, or in some cases both.

In Maggie Valley’s Town Hall, the cooperative spirit has been in short supply of late, with disputes flaring at nearly every turn.

A chill fell over the Board of Aldermen when former member Colin Edwards took his leave last month, creating a vacancy on the board and a chasm between its remaining members.

Things got significantly less friendly at the board’s Feb. 15 meeting, where disagreements and outright arguments among board members erupted over several touchy issues.

Edwards departure – and the choice about how and when to replace him – was a cause of some indignation, with Alderman Phil Aldridge criticizing the other members over the extending the deadline for people to apply for the vacant seat.

Other aldermen said they were in favor of giving residents an extra month to put their names in the hat, but Aldridge said he was vexed by the extension when the town had five applications in hand already.

“We had more people to come forward that applied for this vacant position we have on the board here than we’ve ever had,” said Aldridge. “We’ve never had this many people.”

Aldridge questioned whether other town board members simply didn’t like those who have applied so far and were hoping to hand pick someone of their own choosing. Aldridge has lobbied for selecting the runner-up from the last town election, calling it the most “democratic” thing to do.

Whoever the appointee eventually is, they’ll only be sitting in the position for six months before the November election, where Alridge’s seat will also be up for grabs.

Though the decision to extend was made in consultation with the town board, Aldridge laid the blame for the extension squarely at the feet of Town Manager Tim Barth, even going so far as to call for Barth’s resignation.

“I guess I’m holding him accountable for this,” said Aldridge. “I think we need to look at Tim’s severance pay and his contract and go forward possibly looking for another town manager.”

 

ABC board controversy

The ire didn’t stop there, however, with perhaps the most heated exchanges coming over issues related to the town’s ABC board. Maggie Valley’s two liquor stores lost money in 2010 for the second year in a row, and blame was placed on a bad economy and overhead related to opening a second store. While revenue increased with the second store, overhead increased by even more, according to ABC Board Chairman Ralph Wallace.

But Aldridge, and Edwards prior to his resignation, suggested the stores have been poorly run, even mismanaged, and need more oversight. Both wanted to see the ABC board increased from three to five members.

However, Aldridge failed to garner support for the idea, as the board ultimately voted 3-to-1 not to increase the ABC board membership, at which point the meeting devolved briefly into a mire of bickering. Board members vacillated between hurling insults and accusations at one another, and taking it in turns to directly address the nearly full audience.

Aldridge logged the lone vote in favor of increasing the board, although Alderman Scott Pauley and fellow member Saralyn Price said they’d be for the measure at some point, but not right now.

Despite implications to the contrary, Price countered that she had faith in the scruples of the alcohol board’s members.

“The ABC board assures us everything is on the up and up,” Price said. Otherwise, Price said, town leaders would not “stand for somebody taking something and not doing things about it.”

After a shout from the crowd that cast derision on that claim, Price shot back, “then don’t vote for me ever again and maybe some other people should start running for these offices.”

 

Broken chain of command

Pauley made his appeal to the crowd, after proposing a policy to prevent members from circumventing Barth and going straight to town employees with their requests.

“We have a terrible communication problem,” said Pauley. “I’m not trying to mask it, I’m trying to fix it.”

Even in the public comment segment, citizens who showed up vented their spleen about nearly everything on the agenda, including the fact that public comment continued to languish at the end of every meeting. That means citizens have no venue for pitching their thoughts before votes are taken.

Several residents made the point that a poorly worded resolution that was passed before public comment could have been amended before it was voted on, had the board recognized audience members with raised hands looking to illuminate the mistake.

The resolution will now have to wait until next month’s meeting to be rectified.

In the end, Mayor Roger McElroy closed the tense session with a half-hearted adjournment, telling the few audience members who remained, “we appreciate your comments and will take them under consideration. Or at least I will.”

Maggie Valley’s liquor stores lost money in 2010 for the second year in a row, prompting some aldermen to question whether the ABC stores are being properly managed.

The two stores are opening for fewer hours. Three part-time employees have been laid off in hopes of turning the corner, according to Ralph Wallace, chairman of the Maggie Valley ABC board.

“It is paying off,” Wallace said. “I think we are going to be all right.”

But Alderman Phil Aldridge doesn’t understand how Maggie’s two ABC stores ended up in the red for a second year in a row.

“There has to be money in this. I know there is,” Aldridge said.

Towns with ABC stores get to keep a cut of the profits. That once amounted to about $40,000 a year, but instead the Maggie stores lost $70,000 over the past two years.

“I am a steward of the taxpayers money. Because of mismanagement, the ABC funds are not coming back to the taxpayers like they should,” Aldridge said. “This is an issue that needs to be brought to the public’s attention.”

Wallace blames the losses on the bad economy and additional overhead of opening a second ABC store in 2009.

In a tactical move to grow revenues, Maggie Valley opened a second store aimed at capturing business from Waynesville. Maggie strategically annexed a satellite tract into its town limits to put the new store half way between Maggie and Waynesville on U.S. 19 in Dellwood.

Financial reports out of Waynesville show a corresponding drop in revenues since Maggie opened the second store.

Liquor sales in Maggie grew by $300,000 the first full year the store was open, with $1.59 million in sales in 2010 compared to $1.235 million in 2008, according to annual revenue reports filed with the state.

But the increase in revenues wasn’t enough to offset the expense of the second store, Wallace said.

Operating costs went from around $225,000 a year to $430,000 a year, according to revenue reports.

The new store not only meant more employees and additional overhead for phones, computers and utilities, but also paying off the debt from building the store and buying the land for it.

On the surface, the growth in liquor sales seems like enough to cover the extra overhead, however, and that’s what puzzles Aldridge.

“I wouldn’t mind seeing the financial records for the past five years,” Aldridge said.

The Smoky Mountain News has requested more detailed financial records from the ABC board, but Wallace is out of town and was unable to provide them as of press time.

 

Oversight

Town leaders were not aware of just how poorly the stores were doing until recently. The town does not get regular financial reports from the ABC board, something town leaders want to change. Until now, all they got was a copy of the annual audit.

“We need to determine how they can report to us on an ongoing basis — what can they give us that will show how they are progressing over the course of the year so that we don’t just get a once-a-year snapshot,” said Town Manager Tim Barth. “Obviously it is something that concerns us.”

The town does not have a direct hand in operating the liquor stores. That’s up to a three-member ABC board. The town’s only role is appointing those three members.

“Other than that our hands are tied,” Aldridge said.

Aldridge wants to expand the ABC board from three to five members. So did former Alderman Colin Edwards.

Edwards had been leading the charge to expand the ABC board to five members. Like Aldridge, he had raised concerns about mismanagement and questioned the financial losses.

Edwards resigned as an alderman last week, however, citing irreconcilable differences with the rest of the town board.

SEE ALSO: Maggie alderman Colin Edwards resigns 

Aldridge said Maggie’s ABC board could use new faces.

“The more people the more accountability there is,” Aldridge said. Besides, it seems they could use the help.

“Five heads is better than three,” Aldridge said.

 

Red flags

Town leaders at the time hoped the second store would pay off in the long run, but it now doesn’t seem that way. Aldridge half-heartedly suggested closing the second store if it costs more to run it than it is making, but that would leave the town holding the bag on the remaining 13 years of loan payments on the building.

Barth said it wasn’t a total surprise that the stores were in the red. The issue came to a head, however, when a few aldermen noticed shelves at the second ABC store seemed empty.

“There was some concern among the aldermen about whether the stores were being stocked as they needed to be stocked,” Barth said.

The town board called a special meeting with the ABC board in early January to ask questions.

A poorly stocked store is a bad sign, and would only make financial problems worse, Aldridge said.

“You can’t sell it if you don’t have it,” Aldridge said.

It ran counter to the whole idea of capturing sales.

“We lost that edge when we let the stock run down,” Aldridge said.

Cash flow problems are likely why the store wasn’t keeping as much inventory, Barth said.

Wallace brought the attorney for the ABC board along to the meeting with the town board, as well as their accountant. Barth and Aldridge said they did not know why Wallace brought the attorney.

“It was supposed to be a casual meeting,” Aldridge said. “What was going through my mind was how can we help the ABC store.”

But the meeting allegedly got heated at times. There is no written or audio record of the meeting. The town clerk was out sick that day, and Town Manager Tim Barth said he didn’t take minutes.

This violates the NC Open Meetings Law.

 

Short of expectations

Wallace said the recession came at the worst possible time.

“When they opened the new store the economy took a downturn all of a sudden,” Wallace said. “We are not the only ABC store in the country that isn’t doing good.”

Wallace said another factor that hurt the bottom line was the closing of Thunder Ridge, a large nightclub and dancehall.

“That was a big account of ours and that has hurt business some,” Wallace said.

However, Thunder Ridge has been closed since 2004, long before the ABC board made forays into a second store.

“You can blame it on a lot of things,” Wallace said.

Indeed, in an interview in December 2009, then-chairman of the ABC board Austin Pendley cited several factors. Pendley primarily blamed the recession for a slump in tourism, further exacerbated by the closure of Interstate 40 because of a rock slide.

Meanwhile, Harrah’s Cherokee Casino began serving alcohol. Before, people gambling at Harrah’s would drive over to Maggie Valley to stock up on booze. The Maggie liquor store did a bang up business in pocket-sized airline bottles: the perfect size for smuggling into the casino.

Nonetheless, Maggie’s ABC stores posted gains in liquor sales to the public despite the recession, according to revenue reports. Restaurants and bars, on the other hand, stopped buying as much. Liquor purchased by restaurants and bars once accounted for one-third of the business done by Maggie’s ABC store.

But sales to restaurants and bars went from $300,000 a year before the recession to less than $200,000 in 2010, according to revenue reports. The recession meant fewer people were eating out, and those who did ordered fewer drinks.

Pendley passed away last year, as did fellow ABC board member Sam McCrary

Wallace said he isn’t as knowledgeable about ABC operations as they were.

“We lost both of those guys, and it has really been a struggle,” Wallace said.

For example, when questioned about overhead for the second store, Wallace couldn’t say how many new employees were added. He also said he didn’t know off the top of his head how much the annual debt on the land and building is.

Maggie Valley Alderman Colin Edwards resigned last week, prompting a special called meeting where barely-concealed animosity among the remaining board members threatened to bubble up into outright conflict.

Alderman Phil Aldridge voted against accepting Edwards’ resignation — the only member to do so — and also voted against the appointment of Alderman Scott Pauley as new mayor pro-tem.

“I’m voting against it, I’m not in favor of it,” said Aldridge. “We have a very dysfunctional board, I’m sorry to say.”

Edwards himself was not present at the meeting. The only reason he offered for his departure was his displeasure at serving with other aldermen, though over what issue the rift opened, Edwards didn’t specify.

“I had a difference of opinion with other board members on the Maggie Valley board of aldermen,” said Edwards. “I felt like I could not sit in that position no longer, so I tendered my resignation.”

Alderwoman Saralyn Price and Mayor Roger McElroy said after the meeting the only reasoning Edwards gave them was he wanted ABC Board Chairman Ralph Wallace to step down from his position.

Aldridge said he thinks the board should pick the next most-voted-for candidate from the last election, which in this case would be Phillip Wight. Aldridge said going with the next highest vote getter from the last election is the Democratic thing to do.

That’s not the method the rest of the town board has chosen, however.

“Rather than going back to the results of the election, they felt it would be better to see who was interested and to interview those candidates,” said Town Manager Tim Barth.

Barth said the board plans to appoint a new member at the board’s Feb. 17 meeting.

Buying alcohol will become a lot more convenient for residents in Haywood County.

For the first time in 43 years, a new ABC store will be constructed in Waynesville.

The second location will be situated behind Hardee’s on South Main Street and will be accessed off the entrance drive into Wal-Mart. It will likely capture traffic from all over the county, snagging a greater share of ABC profits distributed in Haywood County.

For now, the Waynesville ABC board is close to finalizing the deal but is still awaiting approval from the state ABC commission.

“Everything’s looking pretty good right now,” said Waynesville ABC Chairman Earl Clark. “It’s a real ideal spot.”

The property itself will cost between $450,000 and $500,000, according to Clark. The store, which will measure about 5,000 square feet, will cost approximately $500,000 to construct.

Waynesville’s original ABC store was built in 1967 and is far too small, Clark said. The ABC board has been anxious to build a new store for several years.

“Our store is just small,” said Clark. “We have no way of displaying and stocking like a lot of the larger stores do.”

With only two alcohol shipments each month from Raleigh and little storage space, it’s been tough for the store to replenish stock.

The convenience of neighboring Wal-Mart might increase revenues for the ABC board, but the Town of Waynesville and Haywood County might not see a payoff any time soon.

Town Manager Lee Galloway said the additional expenses of debt payment, personnel and utilities will scoop up much of the new revenue generated by the store for years to come.

“I do think because of the cost of the store and the personnel involved, the town’s revenues are going down, not up,” said Galloway.

Local governments will only realize the full benefit of the new store when it is paid off.

The town estimates that it’ll receive $94,000 from ABC profits this year. Last year, the town got $112,000, which was spent on law enforcement and alcohol education.

Alternatively, the Town of Maggie Valley has received no money from ABC’s profits in the last few years. A second ABC store was built on Dellwood Road there in 2009.

“We’ve been allowing them to keep the excess to help pay for the second store,” said Tim Barth, town manager for Maggie Valley.

The town annexed a satellite tract a mile outside town limits to get a parcel close to Waynesville, grabbing customers who’d usually travel to Waynesville’s ABC store.

The ABC board in Maggie set aside money years in advance to buy inventory for the new store and save up for the debt payments.

Maggie’s second store was successful in luring customers away from Waynesville’s ABC store, due to its strategic geographic location that’s closer to Waynesville than Maggie. Sales rose for the Maggie Valley ABC board in 2008-2009, but not enough to save the board from landing in the red.

According to annual reports from the town of Maggie Valley, the ABC board operated at a loss of $5,600 in the ’08-’09 year. In comparison, the board’s income from operations in the 2007-2008 fiscal year was a solid $72,479.

Revenues at both the Maggie Valley and Waynesville ABC stores will likely be adversely affected by alcohol sales at Harrah’s Cherokee Casino. Liquor sales at the casino started in late 2009.

 

Is privatization on the way?

Talks of privatizing liquor sales in North Carolina may hinder Waynesville’s plans for a second Alcoholic Beverage Control store.

The governor has appointed a committee to study reform of the ABC system, including the possibility of privatizing alcohol sales.

Calls for reform were sounded after it was discovered that two ABC staffers in New Hanover County were being paid a combined $350,000 annually. Meanwhile, liquor industry representatives had treated Mecklenburg County ABC board staffers to multiple lavish meals, with one tab totaling $12,700.

Earl Clark, chairman of the Waynesville ABC board, said his board would be hesitant to build a new store if the state decides to follow through with privatization and end the monopoly of ABC boards.

“There’s no doubt that it would affect us because we don’t want to do something that we’d lose money or the town would lose money,” said Clark.

Clark said though the system could use reform, privatizing the system would prove harmful for local governments that get a cut of the profits.

“I think that it would hurt the town and the county on their distribution,” said Clark

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