Farmington’s downtown liquor store likely to move
Council seeks performance improvements
Farmington’s downtown liquor store should remain in a leased space
until profits increase enough to justify the city remaining in the liquor store business, City Council members decided at a May 29 workshop.
With council members Jason Bartholomay and Christy Jo Fogarty absent, Mayor Todd Larson and council members Julie May and Terry Donnelly narrowed a list of six options to either staying at its City Center location or moving to Tamarack Ridge Shopping Center off of Highway 3.
Council members emphasized the need for vast improvements in store operations and profitability.
The most recent state auditor’s report found Farmington earned $17,935 (0.4 percent of sales) in net profits in 2010, the lowest of any of the 19 metro municipal liquor operations cited in the report.
Farmington’s 2010 operating expenses were reported at 22.9 percent of sales; most metro municipal operations reported operating expenses below 20 percent of sales.
In an interview, Larson said the city has since cut costs by reducing part-time starting employee wages and cutting the number of full-time employees.
At the workshop, City Center owner Tom Wartman urged the council to keep the liquor store in the City Center, stating he is willing to reduce rent to $20 per square foot.
“At the end of the day, I’m recognizing rent in this market needs to be adjusted,” Wartman said. “Times change, parameters around regarding the market changed, but I still feel we have a strong downtown core.”
Wartman recognized the city has a lease option for the space at Tamarack Ridge for $9.50 per square foot, but said staying in its current location would save the city remodeling and relocation costs.
He also emphasized the Family Fresh Market in City Center is returning to a full-service grocery store and makes a good match for a liquor store.
Wartman added a Verizon store is opening in the center at the end of June and said a tenant for the old Pellicci Ace Hardware store, which moved to Highway 3, is soon to be occupied.
“I feel confident I will have something in place soon,” Wartman said.
Larson said other City Center tenants he has spoken to are “concerned.”
“Ultimately, we have to make the best decision,” Larson said. “Under our current lease, it is not the best option for the city.”
City Administrator Dave McKnight and Larson relayed that Fogarty and Bartholomay indicated Tamarack Ridge was their preferred location.
Bartholomay said Tamarack Ridge is his first choice, but he would also support the city purchasing land in Vermillion River Crossing to later build a new liquor store if the operation improves.
May and Bartholomay have both opposed the city’s involvement in the liquor store business. Without a majority in support of that position, they have worked with council to assess the city’s best options.
Noting a recent Minnesota Municipal Beverage Association study that found poor management has blocked what could be a profitable enterprise, May said the city has to show residents the liquor store can be successful.
“Just because a study says we can make money, we have not shown we can do it,” May said.
Calling the city’s profit margins “pitiful,” May said she will not vote for ownership of land or a building, and is interested in the cheapest lease option available.
She indicated support for Tamarack Ridge, noting it is on a road with high traffic counts and more convenient for township residents.
“To me, Tamarack Ridge is downtown Farmington,” May said, adding a Highway 3 location “deserves a shot.”
“I don’t disagree with you at all,” Larson said, adding the city should not be distracted with a building project, but be focused on operating the business profitably.
Larson said ultimately, the city should own its own building but must first prove the city can make money in the liquor business.
Donnelly agreed, stating a private lender would not give the city a loan with its current profit and loss levels.
“They would say go back and make more money, then come back,” Donnelly said.
Laura Adelmann is at firstname.lastname@example.org or facebook.com/sunthisweek.