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ABC Board chairman: Several forces affect profit

By Elizabeth Cook
ecook@salisburypost.com
The chairman of the Rowan-Kannapolis ABC Board says several forces affect how much profit the agency turns over to local government.
But Marny Hendrick says his board’s goal is the same as that of Tina Hall, a county commissioner who has raised questions about the local ABC operationó maximize profits.
The local board has gone through a period of expansion and reorganization that should put it on track to increase profits, he says.
“We feel like we’re well-positioned to grow in the coming years,” Hendrick says.
Data on the N.C. ABC Commission Web site www.ncabc.com ranks the Rowan-Kannapolis ABC Board 127th in percentage of profit generated out of 157 systems in the state for the 2007-08 fiscal year. Sales totalled $8.5 million, and profit before distribution was $317,221.
Of comparable systems, the Mooresville ABC Board ranked 20th, with $877,990 in profits off $7.3 million in sales.
Concord was 61st, with $807,033 in profit on almost $9.2 million in sales.
Hendrick lists three reasons why the Rowan-Kannapolis system turned over less profit in recent years than other systems of comparable size.
– Low mixed-beverage sales: The ABC Board puts a 33 percent markup on regular liquor-store sales, but liquor going to restaurants and bars for mixed beverages gets marked up 45 percent, he says.
ABC systems in Concord and Mooresville have high mixed-beverages sales because of their retail development, he says. Concord has the Concord Mills-Lowe’s Motor Speedway area; Mooresville has booming Lake Norman. That kind of growth has not reached Rowan.
“It’s an economic development issue,” Hendrick says. “Really, if cities and the county want to help, they can encourage retail growth.”
– Debt payments: The board has accelerated payments on a $400,000 debt it took on to finish paying for the new North Kannapolis store, add two more stores and upfit others after the Rowan and Kannapolis systems merged. The board doubled up on payments and made one lump-sum payment, he said, reducing the debt to about $150,000 to $160,000. “That was a decision we made as a board because we feel like retiring debt is important to our operation,” he said.
– In-house law enforcement: State law requires ABC boards to put at least 5 percent of their profit into law enforcement. While many systems contract help from the local police or sheriff’s department, several years ago the Rowan board decided to put more profit into beefing up enforcement efforts by hiring two officers of its own. Those two positions and related expenses cost $125,000 to $130,000 a year, Hendrick says. The board has scaled that back ó first going to one full-time officer and now employing only a part-time officer who oversees store security. This year’s law enforcement expenses will total about $80,000, including training and travel, he says.
Hendrick said the board set a goal of turning over $40,000 in profit to local government this year and has exceeded that.
The system has distributed $70,000 in the first three quarters of this fiscal year, he says ó 40 percent to Rowan County, 22.5 percent each to Salisbury and Kannapolis, and the remainder to other municipalities.
The board has also given the county $32,000 for local alcohol education, he says.
ABC Board policy stipulates what type of expenses employees may incur on its behalf, the board approves all trips and the agency is audited each year, Hendrick says. Its annual process for this year begins next week, he says.

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