Joni Astrup, Star News
Elk River's city-owned liquor operation is making money and transferred $685,059 to help fund city operations in 2014.
An additional $689,718 was budgeted to be transferred to the city in 2015, and early projections show $718,950 in liquor profits going to fund city operations in 2016.
Northbound Liquor, located along Highway 169 in Elk River, is one of two city-owned liquor stores in Elk River.
Dave Potvin, who manages the city's liquor operation, said his first goal for 2016 is to maintain the current level of fund transfers, but that could become more difficult as competition increases.
"There's a lot of big box retailers coming into the market. The pie is getting sliced thinner and thinner," Potvin told the Elk River City Council during a budget work session Monday.
He specifically noted that Target is in the liquor business and Hy-Vee is coming into the Twin Cities and will sell liquor.
That being said, Potvin said he's seeing little impact from the Otsego Target selling liquor.
"Target in Otsego, as far as I know, hasn't affected us at all," he said.
"They're too far away and it's such a tiny little store."
The city of Elk River owns two liquor stores, Northbound at 19348 Evans St. and Westbound at 13484 185th Ave.
Northbound had total sales of $4.67 million in 2014, and Westbound had $2.15 million.
Beer was the top seller at both stores, followed by liquor and wine. The average sale was $24.76.
Combined in 2014, the two stores posted a gross profit of $2.07 million and operating income of $1.05 million.
The city's preliminary 2016 budget shows the stores' gross profit projected at $1.98 million and operating income at $909,900.
Profits fund city operations, parks
Of the $689,718 in municipal liquor store profits budgeted to be transferred to the city this year, about half will go to the city's general fund and half to parks.
City Administrator Cal Portner said the general fund transfer - $399,050 in 2015 - is not specifically allocated for an operation or purchase.
"The benefit of municipal liquor operations is that we control off-sale liquor sales and the profits reduce the tax liability for property owners," he said.
"The general fund transfer alone equates to approximately a 3.5 percent tax levy cut."
The liquor operation is also transferring $290,668 to the park improvement fund in 2015.
Portner said that money is used for park improvements, which would otherwise be levied on property taxes as well.
Among the 2015 improvements are trail repairs and trail expansion, Orono Park improvements, park irrigation system improvements, athletic field improvements, skate park design, design review of River's Edge Commons Park and improvements to Bailey Point Nature Preserve and the Houlton Farm property.
In the past, Portner noted that liquor store profits were also used for Elk River's public works facility, which allowed the city to bond for less and save on interest costs.
"We also will use an advance from the funds to pay for (railroad) quiet zone improvements so taxpayers won't feel the brunt of a large, one-time tax hit," he said.