Ocean City Today

County develops budget to maintain Pocomoke store

Wholesale, retail liquor exit strategy hits snag, misses July 1 deadline with appeal
By Brian Gilliland | Jul 20, 2017

(July 21, 2017) Since the July 1 deadline for the county government to exit the wholesale and retail liquor business has come and gone, Worcester County taxpayers are likely to get more than they bargained for as problems have arisen during the divestment process.

First, the county was forced to draw up a fiscal 2018 budget for the operation of the Shore Spirits location in Pocomoke City, as an appeal has been filed of the June decision to award the liquor license to the high bidder, Kalpesh Patel.

The budget, introduced during Tuesday’s meeting of the Worcester County Commissioners, allocates more than $1 million to maintain the last vestiges of the Department of Liquor Control until the appeal is settled. The hearing on the matter is scheduled for Aug. 31 in Worcester County Circuit Court.

The commissioners approved scheduling the proposed budget for an Aug. 15 public hearing during the county’s regular session in Snow Hill on Tuesday.

Based on County Treasurer Phil Thompson’s projections, the roughly $791,000 cost of goods sold and almost $150,000 in personnel expenses along with other expenditures should be completely offset by sales, with room to spare. The proposed budget reports an estimate of about $19,000 in income from operations, should things go to plan.

Thompson said he thought it was best to include the entire fiscal year in the proposal, since there was uncertainty as to when or if the county would be able to transfer the business to Kalpesh Patel.

Patel, of Berlin, successfully bid $1.175 million for the store and its inventory, which was first made public during an April meeting of the county commissioners.

Patel bid $950,000 for the real estate, furniture, fixtures and improvements, and the existing inventory for a 15 percent markup from county cost for the business.

In June, after longer-than-normal deliberations, the Board of License Commissioners awarded Patel a Class A liquor license allowing the sale of liquor, wine and beer at the shop, which previously only stocked wine and liquor. The sale of the store and its contents to Patel is contingent on the delivery of the license.

As part of the bidding process, the county is obliged to endorse and support Patel’s claim, which county government spokesperson Kim Moses said includes at least some of the costs of defending the board’s determination. Operating the store in the interim, she said, is preferable to shuttering it, because a viable business is preferable to starting from scratch.

The Shore Spirits store in Pocomoke City is located in a strip mall near the Wal-Mart with two other businesses that also have liquor licenses.

However, the owners of those shops were not allowed to petition for the same kind of liquor license Patel inherits through the purchase because of the way the state law was enacted.

All three license commissioners — Marty Pusey, Billy Esham and Charles Nichols — blamed the state law enabling the county to exit the liquor business for the trouble.

Previously, there was no such thing as a Class A liquor, beer and wine license in Worcester County, because the county had control over all liquor sales via the Department of Liquor Control. That license was created with the beginning of the new fiscal year on July 1.

In addition, those owners argue that allowing beer sales at the county store would negatively affect their businesses, and called the modified liquor license for Shore Spirits unfair competition.

Those owners aren’t alone. Other shops in the same mall as well as other citizens and Pocomoke City Mayor Bruce Morrison came out against the change, telling the board that the liquor needs of the community are being met.

Competition not being one of the criteria to allow or deny a liquor license to an applicant, the board decided to grant the license.

In 2015, when the decision was made to dissolve the county’s liquor department, losses were estimated between $1-2 million by the former county attorney. The former head of the department, who resigned in protest over the action, said the losses would be closer to between $4-5 million. Bids on the county stores, especially the Pocomoke City store, beat expectations, but couldn’t account for litigation or missed deadlines.

The county said it wouldn’t release information on department assets, profits or losses until the annual audit is complete and released in December.

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