SPRINGDALE — Springdale aligned with other cities’ procedures and state laws recently when it revised an antiquated ordinance regulating beer permit fees.
The City Council approved an ordinance in December changing how the city calculates permit fees for retail beer sales at restaurants, private clubs and liquor stores. Everyone who sells retail beer has to buy an annual permit from the city. The permit’s cost is based on the business’s previous year’s sales.
The new ordinance uses sales figures that retailers report to the state to calculate permit fees. The old ordinance directed the city clerk to estimate beer sales from sales reports from wholesalers. The old procedure, from the date listed on the city code, had been used since 1973.
“It’s at least that old,” said City Attorney Jeff Harper. “I don’t know where it came from. In my research, I couldn’t find another city in the state that used our old procedure.”
The change drew a tentative approval from Doug Allen, owner of Jose’s Southwest Grille.
“If they are trying to get in line with other cities and state laws, I guess I’m for it,” Allen said. “As long as it doesn’t raise what we pay. The city raised the mixed drink taxes and that had a big effect on business.”
The old procedure had the city clerk collect sales totals from beer distributors and add 20 percent as a markup. A 2 percent fee was levied on the total to determine the cost of the annual permit. The city used a list of four beer wholesalers in the state, said Denise Pearce, city clerk. If another wholesaler did business in Springdale, the city was unaware and the permit fees would not reflect sales by that company.
Four beer wholesalers should be correct, Allen said.
The city clerk’s office will charge $37,733 this year for permits.
“The new law makes the fee accurate and not an estimate,” said Denise Pearce, city clerk. “We didn’t know how much each business marked up their beer. Now we’ll have their true sales.”
Fee collection could increase because of more accurate figures, Pearce said.
If the 20 percent added to the old method reflected the approximate markup between wholesale prices and retail prices, the fees may not change. If the percentage is high or low, the permit fees would reflect the difference.
The fees are collected when the beer retailer renews a beer permit, which has to be done each year before Feb. 15. The old method will be applied to 2009 sales for the purpose of calculating renewal fees for 2010.
“We didn’t raise the fee,” said Mayor Doug Sprouse. “We were more interested in smoothing out this procedure.”
The city could have boosted the fee, to as much as 5 percent of sales, Harper said.
“That’s how much the cities around us charge,” he said.
Since the new fee calculation didn’t start until 2010, revenue will not be collected until February 2011.
“I guess I’ll have to wait a year to see what effect it has on what we pay,” Allen said.
Changes in city alcohol regulations, including charging sales taxes on mixed drinks, led to an examination of the city’s alcohol laws, Harper said. He approached the mayor about changing the procedure.
“When we find procedures that haven’t changed to reflect state law, we’ll try to change them,” Sprouse said. “We haven’t run across too many, but I’m sure there are still some out there. We just have to find them.”
By The Numbers
Beer Sales
In 2010 Springdale has issued 65 permits. Permit cost is based on sales from the previous year. Over the last four years, the city has issued 248.
Year Beer Sellers Permit Cost
2010 65 $37,893
2009 63 $37,771
2008 61 $37,621
2007 59 $37,364
Source: City of Springdale