Brookings City Council discusses changing liquor license fees

Public’s advice sought on issue

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BROOKINGS — Fees for on-sale liquor licenses in Brookings were discussed during a Tuesday night City Council study session, but the city wants the public’s insights before taking possible action, which has been set for April 16.

Currently, the one-time fee for an on-sale liquor license is $25,000. This is the type of license held by 18 businesses in Brookings. Another type, known as a full-service restaurant on-sale liquor license, is available for a one-time $100,000 fee and is currently used by two businesses in the city. The former is limited by population while the latter has no population limits, but must meet a threshold of 60% sales coming from food and nonalcoholic beverages.

Debate centered on the merits of leaving the fees — which haven’t changed since being initiated in 2011 — as is versus raising or lowering them and how such moves might affect existing liquor license holders.

“I would suggest not changing the current cost. To me, $100,000 for a restaurant liquor license is not that big of a barrier to entry,” Kevin Raab, the owner of Pints & Quarts, told councilors. “I think there should be some because liquor is somewhat regulated, so we should do something to just make sure everyone can’t just all of a sudden start opening up restaurants and selling Jack Daniels all over town.

He continued, “I’m not, I don’t come from like some wealthy — I was a swim coach, my wife was a school teacher. If we could figure out how to make it work to get a restaurant with the current pricing and everything, I think the next person who wants to take the lead can, too.”

Raab added that he believes the fee is an investment.

“… The reality is, you pay $100,000 for that restaurant liquor license … whenever you sell, you’re getting that $100,000 back. It’s an asset on your books. If you guys were to lower the license today, all the restaurants, all the bars, the value of their business would drop immediately just because now the liquor licenses are cheaper, so one asset that we sort of have is now devalued. So that’s something to think about.”

Councilors also heard from Brookings Economic Development CEO Tim Reed, who pointed to a consumer survey report from 2019 where respondents indicated the importance of restaurants to them.

“Restaurants are important. They’re an amenity that people look for when they consider moving to town or coming or staying in town,” he said. “… We do feel that having a community with good amenities really can help us with attracting the workforce that we need in Brookings.”

Reed pointed out additional findings from the survey, including:

• Restaurant variety was the No. 1 reason people went out of town for a meal.

• The No. 3 reason for going out of town for a meal was for other reasons to visit an area. For example, when area residents head to Sioux Falls to shop.

• The No. 1 type of establishment sought by Brookings-area residents are family restaurants, with 85% saying they were very or somewhat interested in this.

• The No. 4 item for establishment type was fine dining, where 71% saying were very or somewhat interested in this.

Reed further noted that, based on data from 2018 that was in the 2019 report, food service leakage from Brookings was very low, at only $5.5 million. Meanwhile, general merchandise leakage was much worse, clocking in at $54 million. He added that four of the top 10 restaurants that were requested back in 2019 normally have liquor.

“So, we’re really doing a pretty good job. We don’t have that much leakage in Brookings,” Reed said of the restaurant data.

After listening to the pros and cons of various arguments, Councilor Wayne Avery shared his thoughts on the topic.

“In all fairness to everyone, leaving it alone is the best policy,” he advised. “It’s one of those things: It sounds like it’s a really good thing for restaurants and small business to reduce that fee, but in the end I don’t think it is.”

Meanwhile, Councilor Holly Tilton Byrne thought the on-sale liquor fee and the full service on-sale liquor restaurant fee should be equal.

“You gain the same right to do the same thing, with the exception of not having to prove food sales with the liquor fee,” she said. “Regardless of whether we decrease the restaurant fee, increase the on-sale liquor fee, change them both — my opinion is at the end of the day they should cost an equal amount since ultimately, out there in the market, it’s gaining the establishment owner the same right to serve.”

Shortly thereafter, councilors voted 7-0 to add further discussion on the fees to the agenda of a City Council meeting that will be April 16. Between now and then, councilors hope to hear from the public on the issue. 

— Contact Mondell Keck at mkeck@brookingsregister.com.