Howard Lake-Waverly Herald, July 24, 2000

Howard Lake residents opposed to purchase of Sand Bar for city on-sale business

By Andrea Vargo

Residents packed the Howard Lake city council room and overflowed into the hall Tuesday as discussion began on the possible purchase of the Sand Bar and Grill by the city.

The council has under consideration a lease/purchase agreement with Security State Bank of Howard Lake and move the on-sale liquor store business to that building, said Mayor Gerry Smith.

Although Smith presented the information the council had gathered, the council delayed a decision until today at 7 a.m. in the community center.

His presentation to the assembly included liquor store sales information and figures on space at the city hall building.

Sales at the liquor store are not separated into on-sale and off-sale numbers. The two businesses have their expenses and sales lumped together, and this is common practice for cities, Smith said.

He said he felt the on-sale is making money, and the sales over-all have increased by about 13 percent per year.

This compares favorably with the state average of 6.7 percent, he said.

Out of space

Space in the city hall building, is very cramped for the employees, and something needs to be done was the general feeling of the council.

Off-sale space in the city hall building is about 448 square feet and needs to be expanded, Smith said.

The on-sale area is 1,418 square feet, and also could be expanded, he said.

The police department has only 180 square feet for three police officers and all the equipment, Smith noted.

"They can't buy a file cabinet," he said, because there isn't any place to put it.

City offices are not much bigger at 525 square feet.

The plan to move the on-sale could give the off-sale 896 square feet. The police department could take over the current city office space, and the city hall could be moved to the center of the building with about 1,150 square feet of space, Smith said.

Plan for the Sand Bar and Grill

Two and a half acres come with the 5,062-square foot Sand Bar and Grill building, and there are more than 50 parking spaces, Smith explained.

The proposed plan for the Sand Bar would be to do a lease/purchase agreement with the bank. This would allow the city to get out of the contract easily, if necessary, Smith said.

There are possibilities that some areas of the building could be turned into a game area, sports bar, and lounge in the downstairs.

The upstairs should be kept available for groups to rent for weddings and other events, he said.

Eventually, the upstairs might be leased to someone for a supper club, but it still should be available for events, he said.

The city has the authority to buy or sell land in this case, according to the information available.

The city can and would require a non-appropriation clause in the agreement. Such a clause allows the city to terminate the lease/purchase agreement if the council does not appropriate sufficient money to make the required payments, Smith explained.

The cost to purchase the building would be $410,000, plus $160,897.47 in interest, for a total of $570,897.47.

Payments would be made from revenue taken in by the liquor operation, Smith said.

The cities contacted other municipalities that remodeled, moved, or built new in the last two years.

The response was that this was the best thing they ever did. Profits increased by 20 to 40 percent in all cases, Smith stated.

Options for space

Several options to meet the space needs at the city hall were presented by Smith:

· The city could expand the off-sale and city hall offices in the current location and close the on-sale. No new taxes would be needed.

· The city could move the on-sale to the Sand Bar, expand city offices, and off-sale in the current location. No new taxes would be needed.

· The city could make the city hall entirely city offices and build a new off-sale store by itself, or build a new on and off-sale business on Highway 12 somewhere. A bond would be needed and could be funded by liquor store revenues. The city hall portion can be funded by grants and existing general fund. It could be that no new taxes would be needed.

· The city could add on to the library to include all city offices and more space for the library, based on the feasibility study done in 1997. At that time, the cost of expansion was $710,000. Since 1997, a conservative inflation rate for construction materials could add another 25 percent or more to that figure. Expansion would be paid for by a bond, which would increase taxes.

· Nothing could be done, and the city could continue to deal with the space problems.

Public comments

No positive comments were received from the public on the purchase of the Sand Bar and Grill.

Rod Werner expressed concern over the $3,400 in lost tax revenue and speed limits in the area.

Wright County sets the speed limits on that road, Councilman Shelly Reddemann said.

Milt Jensen suggested the city keep the liquor store in its present location. Perhaps the city could purchase one or two of the old houses on Highway 12 and use them for the police department.

The city needs to keep the city offices in the city hall building to get matching fund grants for its restoration, Smith replied.

John Lideen said there are only so many people who will go to the bar. He felt it was not a good idea to expand the on-sale to the Sand Bar. Use some of those lots in town (with the older homes on them) for city police. There are other people who want to come back into town and (run the Sand Bar), he said.

"Why are we bidding on this, when we could get by for less and still serve the people of the town?" he asked.

Vern Kleve asked the council to consider what it will cost to start up and operate the new facility. The liquor store has no rent to pay, and there will be a need for more employees. He felt Highway 12 exposure is very important to the success of the operation.

The liquor operation is generating money for the general fund, and the city will be taking business options out of the city, Ron Miller said.

"Priorities are not right. We have the lousiest drinking water in the county. We need a new well. We all drink water; we don't all drink whiskey," Russ Pettit said.

The city could purchase the old hardware building and remodel it for the on-sale for much less than $400,000, Wanda Werner said.

Later, City Administrator Doug Borglund told the Herald he felt there is too much expense to remodel and repair the hardware building for city use.

If an elevator were installed in the city hall building, the city offices could be moved upstairs, the police department could move into the city offices, and the off-sale could expand, Molly Van Oss said.

She agreed that the Highway 12 frontage is important for business.

Reddemann told the group that changes at the Sand Bar might not be what people expect, if the city doesn't buy it.

More than half of the parties interested in the property are developers, he said.

This means that spot might become townhomes, he said.

"Leave it to the private sector and stay out of it," Kleve said. The crowd applauded.

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