Commonwealth Journal

January 24, 2013

Can Somerset, ABC come to terms?

By CHRIS HARRIS, CJ Staff Writer
Commonwealth Journal

Somerset —  

Mayor Eddie Girdler is optimistic that the city can resolve its alcohol store problem the easy way. The hard way, however, is also on the table.
Girdler confirmed that a potential lawsuit was one option the city is looking at in order to obtain liquor stores better suited to the vision Somerset officials had when the city went “wet” back in June.
“We are going to very aggressively pursue the way the licenses were issued and either expand those or take another legal route to enforce local ordinances,” Girdler told the Commonwealth Journal last week.
In fact, the city will be doing both — though they still hope to work things out more diplomatically. Girdler told the Commonwealth Journal on Thursday that city officials would both send a letter to the Kentucky Office of Alcoholic Beverage Control (ABC) requesting additional package liquor retailers and file motions with Pulaski Circuit Court as a sort of back-up plan given the ticking clock looming over the situation.
“We’re under a time frame of getting all this stuff done,” said Girdler. “We’re hoping this can be resolved favorably and negotiated (with the state). Otherwise, we’re going to go ahead and file several motions to allow the circuit judge to look at factors that, by ordinance, have to be looked at (regarding) our way of doing business vs. the state’s reluctance or virtual ignoring of all the rules to issue licenses.”
Earlier this month, it was revealed that the Kentucky ABC had selected five businesses to fill the allotted quota Retail Liquor Package licenses for stores to sell distilled spirits and wine (as opposed to beer, which is already sold at an unlimited number of local retailers). 
Among them were two national drug store chains — Rite-Aid and Walgreens — and three smaller-scale businesses: Apple’s Wine and Spirits, First Stop Party Supply and Package Store, and Wildcat Beer, Wine, and Spirits.
Passed up was Liquor World, a high-volume liquor retailer with stores in Richmond and Manchester, which had plans to invest $5 million in a renovation of the North Plaza shopping center, which would also likely include a national chain restaurant.
It was that kind of economic investment that Girdler was hoping for and believed that the state would grant the city — but it didn’t happen. Now Girdler is seeking to lobby the state to allow Somerset more than the five liquor store licenses the state allotted.
“We’ve been in correspondence with the state ABC about our options,” said Girdler. “Hopefully we’ll be able to resolve the issue.
“In addition to working with the state ABC, we’re pursuing every avenue, including legal,” he added. “Most of this has been done through our attorneys so far. Nick (Bradley, Somerset’s own ABC administrator) has done a great amount of work, particularly with the lake going up.”
That “work” refers to a detailed study of the impact more and larger liquor stores would have on the community, including traffic counts, the amount of retail sales, and more.
“We’ve done a whole lot of work on the number of jobs (that would be) created, (and) the location of facilities as related to the tourist population,” said Girdler, who noted that none of the liquor store were on the north side of town, close to the proposed I-66 interchange, or on the far south side near the southern bypass — two areas were tourist traffic would be most heavy.
A sobering discovery was made: Somerset would lose out on a projected $150,000 a year in alcohol fees based on the state’s decisions regarding the licenses.
“That’s way too much money to be giving away because of some internal politics in Frankfort,” said Girdler. “We shouldn’t be caught in that and lose $150,000 for the community. Our people voted for it, they expect certain things and demand certain things. For us to roll over and not fight for (what’s best for the city) is irresponsible on our part.”
Girdler and Liquor World CEO Wesley Morgan have both mentioned that store’s recent lawsuit against Kentucky ABC regarding the way licenses were distributed in nearby Corbin — where Liquor World was also seeking to open a store and was denied — and how that case may factor into the state’s decision not to grant them a license in Somerset either.
It’s the kind of merchandise volume that Girdler says he’s looking for in asking for additional stores, considering that three of the five awardees offered the least economic impact of all 17 quota license applicants, according to the city’s research.
“We still come back to the same conclusion: that the state did not achieve the greatest economic growth either in dollar investment or number of jobs, or meet any of our community objectives regarding economic growth.,” he added.
“We looked at additional data to see if there was any reason the state ABC might have that we didn’t have (for choosing the license applicants as they did) and we can’t come up with any logical reason for the decision they made.”
Girdler said the city intends to have “everything be done” regarding the legal motions and letters to be sent by early next week. The letter will make a request for the state to consider anywhere from two to four additional liquor package licenses to be granted for Somerset — four being a preferable option based on what Girdler believes Somerset can reasonably support, but “if we have to go less than that,” a couple of larger stores would be the bare minimum.
“(Kentucky ABC) gave Pikeville, which has 8,000 people, 11 quota licenses,” said Girdler. “We’ve got 12,000 people, and they gave us five.”
Moreover, the city’s studies by Bradley indicate that Somerset actually serves a market of 200,000 to 250,000 people when considering the size of the county and the traffic from residents of neighboring counties, like McCreary and Wayne, that utilize Somerset as a commercial hub. When factoring in seasonal tourists — a number that is likely to rise with news that Lake Cumberland is to be raised later this summer — that number could climb as high as 400,000 people, all of whom would potentially be utilizing the town’s liquor retailers. 
As such, the city could support more than five stores — especially given the limited retail capability of those selected.
“Realistically, we’re talking about the economics of it,” said Girdler. “We need a larger place, at least one or two with party supplies. Drug stores are great, but they have limited supplies, one little aisle (for alcohol). They will play a role, but their sales would be 10 times less.”
Girdler made it clear that the city is not asking the state to replace the licensees that were selected, but to add to that number. That said, the city has not issued any Retail Liquor Package licenses yet to finish off the process, and won’t until the situation is resolved, according to Girdler.
“We want to be fair to the applicants,” said Girdler. “(We’ll ask) for a quick court hearing unless the state says, ‘Hey let’s sit down and work something out.’”
Girdler said the purpose of filing the motions would be for a circuit court judge to take a look at the circumstances and indicate whether or not the city has recourse to take action against the state  in order increase alcohol sales revenue.
However, the “simple solution to the problem” is that the state has not dotted all the i’s and crossed all the t’s on the quota-setting process for Somerset — Girdler says the number was solidified for Pulaski County, but not for the town, as it still needs to go through another procedure to be “codified” according to state law. Thus, there may still be room to expand the number of available licenses without much fuss.
“If they really care about the public’s wishes, they can simply sit down and work with us and everybody’s happy,” said Girdler, “but if they choose to exert their power ... (and) be arbitrary and capricious, and say they don’t really care, we’ll have to ask the circuit judge to take a look at it.
“We want to work with the state ABC,” he added. “ ... We can do this the positive way, which we hope will be successful, or the legal way, which we hope will be successful too.”