Wednesday, February 8, 2023

Pender commissioners table ABC Board’s request to keep more profits until after election

The Pender ABC Board is hoping to construct a new warehouse and retail store in Burgaw but needs to retain extra profits, typically distributed to the county and municipalities, to cover the costs. (Courtesy photo)

PENDER COUNTY — The Pender County ABC Board is trying to keep more of its profits to pay for an upcoming project three years in the making, but the county commissioners hesitated on the issue during last week’s meeting.

The request comes after Burgaw Board of Commissioners approved a special-use permit for the Pender County ABC Board to relocate its current warehouse and retail store to a vacant tract of land across the street to construct a larger building.

READ MORE: Burgaw ABC Store to double in size, relocate

In order to cover expenses for the architect, Smith Sinnett, and construction company, Bordeaux Construction, the board asked county commissioners if it could retain up to $300,000 in profits, typically distributed 65% to the county and 35% to municipalities quarterly.

The ABC board would take $150,000 from the first two quarters of the current fiscal year before making its usual disbursements. The money would cover a deposit on the board’s loan for the construction.

The second ask was a long-term one, requesting $150,000 per quarter over the course of its 20-year loan term. Pender County ABC Board general manager Susan Crawford explained the project will cost about $8 million total — more than double what the board anticipated two years ago — with a 4.7% interest rate.

Crawford said keeping additional money before distribution would not impact alcohol education. The board is legally required to use 3.5% of profits for substance use services, which it allocates to local nonprofit Coastal Horizons.

General Statute 18B-805 requires that after all ABC taxes and operating expenses are paid, plus mandatory percentages allocated to law enforcement and alcohol education, the remainder of the gross income must go to the county and cities where the board is located.

The board is allowed to retain 1 cent from every mini bottle sold and 5 cents for every other bottle sold, times 1.5. The general statute allows the ABC board to keep more revenue specifically for capital improvements if the county signs off on it.

“Every ABC system in North Carolina has to go through a process very much like this to expand and grow as needed,” Crawford told Port City Daily. “All of our surrounding ABC systems, whether county or city appointed, have already grown and updated to keep up with the needs of their customer base over the years. We are several years behind.”

Pender County commissioners were split on the issue. David Piepmeyer was most adamantly against it, given the current economic state.

“Wouldn’t it not behoove us to not do this today?” he asked Crawford and ABC board attorney Robert Kenan at the meeting. “To table this until finances are better positioned? This isn’t an emergency situation; this is a business decision. You’re doing this to make more money.”

Crawford explained if the store expands, it will bring in more money, which in turn impacts everyone in the county.

“If we don’t do this, we’re not going to grow or make any more profit than we do now,” she said. “We would lose out on a lot.”

Right now, the Pender ABC Board can only store enough inventory to procure one delivery per week — the majority going to other retail stores in Rocky Point, Hampstead and Surf City. Crawford explained the current 60-year-old, 5,150-square-foot facility only has 3,200 square feet of warehouse space.

Its new facility would total 15,300 square feet, with 8,000 square feet of warehouse space, 3,000 square feet for retail and a 1,500-square-foot stockroom. The remaining 1,500 square feet would be retained for administration.

Without extra space, the board cannot get many new products that might be available or participate in buy-ins, such as purchasing in bulk when a product is discounted.

“We have a limited window that items go on sale for us to purchase,” she said. “If we can’t take advantage of that, we have less profit to distribute later.”

For example, when Tito’s vodka goes on sale, New Hanover County purchases five truckloads — enough to last the county through the year. It also saves upward of $45,000.

“It’s good for the community because the extra we can make on it helps fund the profit distributions and grants programs,” NHC ABC general manager Charles Hill said. “If [Pender] has the space, it helps the board out tremendously. It will come back to the community.”

Crawford used NHC as a comparison to Pender commissioners as well, essentially reaffirming what Hill told Port City Daily.

“If we triple our warehouse space, we would be able to do that and have room for growth down the line,” she said.

Over the last five years, profit distributions paid out to Pender County have increased by nearly 50%. In fiscal year 2021-2022, the county received $601,414; $323,838 was distributed to the municipalities and the ABC board retained $41,296.

“We have exhausted what we had in retainer,” Crawford told commissioners, adding it holds about $8,000 to $10,000 per quarter.

The Pender County ABC Board has paid about $700,000 toward the new building from its saved funds, accumulated over the last 50-some years. Estimated costs so far include purchasing the property at nearly $400,000, plus $266,000 for the contractor and another approximately $60,000 for an environmental study, traffic impact analysis and preliminary “soft costs.”

The current facility is appraised at almost $600,000. Once the new building is complete — slated for 2024 — the board would sell the former building and use the profits toward the principal of its loan.

Commissioner vice chair Jackie Newton questioned if the ABC profits are budgeted and what might be impacted in the county’s finances for the remainder of the fiscal year.

County finance director Meg Blue confirmed to Port City Daily, Pender budgeted an estimated $666,000 for fiscal year 2023 — “a projected increase based on historical trends,” she said.

County manager David Andrews added, although the county is fiscally sound, it’s enduring many budget demands due to growth, including new school and county facilities, plus a water plant expansion.

“$650,000 is a significant amount,” he said.

Other commissioners agreed.

“That’s a huge hit to the county,” commissioner George Brown told Crawford at the meeting. “I want to work with you the best we can; it’s just a bad time for anyone trying to build anything.”

County commissioners were also concerned the ABC board had not yet met mayors of affected municipalities, including Burgaw, Surf City and Topsail Beach.

Kenan said the local governments were aware their distributions would be diminished at some point. He said the board sent letters two years ago.

The board still plans to meet with the municipal leaders soon but hoped to secure approval from the commission first.

“We wanted to be proactive instead of reactive,” Kenan said.

In the short-term, it may mean some revenue losses for municipalities, but the end goal would equal revenue once the facility expands and is able to sell more products, Kenan added.

Commissioners asked the board to bring back the request to the December meeting when new board members are in place.


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