Municipal liquor store profits down: Two Bemidji stores still generate $645,000 for city coffers
BEMIDJI—Profits for the Bemidji municipal liquor stores were down slightly in 2017, according to a report from the Minnesota State Auditor's report.
But the revenue generated from the two stores still plays an important role in the city's finances, officials said.
The net profit of Bemidji's two stores—Discount Liquor and Lakeview Liquor—was $645,024 in 2017, down from $713,240 in 2016.
In total, Bemidji's stores made a gross profit of $1,768,689 and an operating expense of $1,138,357, coming to $630,332. When accounting for non-operating revenue of $15,112 and non-operating expenses of $420, the net profit comes to $645,024.
"The numbers were pretty consistent," Bemidji City Manager Nate Mathews said. "We did have the Sunday liquor store issue we're dealing with, so we did have some extra costs, and we've had to get use to those rhythms of customer visits. That's probably the biggest thing."
Historically, profits from both stores have been used to reduce property taxes and fund special projects. Mathews said the city allocated a contribution of more than $200,000 to the Carnegie Library restoration project from liquor store profits. The project costs $2.2 million and $2 million was raised by the Friends of the Carnegie Library group. The City Council agreed to cover the shortfall, with the condition that the group continue fundraising to ultimately make up the shortfall.
"We have also allocated our contribution to the Bemidji veterans home from liquor store profits," Mathews said. "It's going to be paid from construction reserves, and the liquor store profits will replenish that reserve."
The city's contribution to the veterans home, a $43.7 million project that will be funded through federal, state and local monies, was $250,000. The plan is to pay the $250,000 upfront with the construction reserve fund, and then replenish the fund by allocating $50,000 from the liquor profits on an annual basis.
Next year's report from the auditor's office will be the last to include numbers from Discount Liquor. A new 16,300 square-foot building is under construction to replace the 40-year-old Discount Liquor store on Paul Bunyan Drive.
"With the new store, we'll have to see how our sales are," Mathews said. "We're anticipating that when it opens, the sales go up. The same thing happened in Bagley with their new store. We're hopeful for that.
Mathews said the new store is scheduled to be completed in February, with a June or early July grand opening.
The new store, located at 500 Paul Bunyan Drive NW at the intersection of Irvine Avenue, is estimated to cost $4.1 million, with architectural fees coming to $205,500. For extra storage, the building will include an elevator and basement space.
Outside of Bemidji, other regional communities experienced mixed results when it came to their net profits:
• Blackduck's municipal liquor store had $74,540 in net profits. In 2016, the net profit was $59,971.
• Bagley's had a $25,979 net profit. In 2016, it's net profit was $36,043.
• Clearbrook's store had a net loss of $6,811. In 2016, the net profit was $22,696.
• Kelliher's store had a net profit of $39,801. In 2016, the net profit was $32,437.
• Northome's store had a net loss of $1,051. In 2016, the net profit was $6,629.
In total, 190 Minnesota cities operated 223 municipal liquor stores in 2017. The majority of municipally owned liquor stores are in Greater Minnesota, while 19 cities within the seven-county metro area also operate establishments.
The combined net profit of all liquor store operations totaled $23.1 million in 2017, an increase of $286,832, or 1.3 percent, over the amount generated in 2016. Over the past five years, though, net profits have decreased by 13.7 percent.