Officials Rule Club Permit Not Necessary For Beer, Wine Sales

Thursday, May 9, 2013

ROGERS — A review of city ordinances and state laws means a benefit for restaurants selling only beer and wine, but a possible loss of revenue for Rogers.

An ordinance requires restaurants selling mixed drinks or spirits to have a private club permit to operate in the city. The restaurant also must have a private club license from the state. The ordinance doesn’t address beer and wine sales only.

“We looked at our ordinance this week and realized we couldn’t enforce the private club conditional use permit for restaurants selling beer and wine only because our ordinance didn’t have a clause for beer and wine,” said Jim Clark, deputy city attorney.

Fast Facts

Rogers Clubs

There are more than 60 private club licenses in Rogers, according to the city clerk.

• Some of the recent private club licenses issued are for beer and wine sales only.

• It's no longer necessary for a restaurant selling only beer and wine to acquire a private club license.

• Only restaurants, hotels and bars selling spirits are required to have a private club license from the state and city.

• A 5 percent alcohol sales tax is collected by the city on private club drink sales.

• The alcohol sales tax isn't collected at restaurants selling only beer and wine.

Source: Staff Report

Clark, Mayor Greg Hines and Ben Lipscomb, city attorney, checked state law to see if the local ordinance covered beer and wine.

“We determined it didn’t. Restaurants selling only beer and wine no longer need a conditional use permit from the city to operate,” Clark said.

“When Benton County voted wet last year it changed the liquor laws,” said Michael Langley, administrator of the state’s Alcoholic Beverage Control Administration.

“The state offers a combination permit for beer and wine sales for restaurants. Once a restaurant has that permit they are allowed to sell beer and wine as far as the state is concerned,” Langley said.

Liquor is another matter, he said. For a hotel, club, bar or tavern to dispense liquor it must have a private club license from the state and acquire any permits required by local ordinance, Langley added.

The owner of Smokin’ Joe’s Ribhouse in Rogers benefited this week because of the decision by city staff.

“I was on the planning agenda Tuesday to apply for a conditional use permit to operate a private club so I could sell beer and wine in my Rogers restaurant. I got a call Tuesday before the meeting and was told I didn’t need the permit, that I could go ahead and sell beer and wine,” said Johnny Howard.

“My restaurant in Bentonville has been a private club for about five years, but it was just too costly because of taxes, for me to get a private club license in Rogers as well. The private club fee for the city was never the issue, it was the alcohol tax,” Howard said.

The city charges a $250 fee to businesses with a private club license. The decision Tuesday saved Howard that fee.

Dave West, co-owner of Serendipity Event Center, in downtown recently applied for and received a private club permit from the city.

“Looks like I should have waited a couple of days,” West said Wednesday. “I was following the rules and went through the process to get the private club license although we are only going to serve beer and wine. That’s the license we got from the state,” West said.

Whether the city will refund the private club permit fee for beer and wine sales to restaurants that recently acquired permits is up in the air, said Peggy David, city clerk.

“We don’t know how we are going to handle it yet. It hasn’t been discussed, but I’m sure it will be in the near future,” David said.

Not only will city coffers lose money on private club licenses for establishments serving beer and wine only, it will lose money on the liquor tax. An ordinance requires a 5 percent tax on the sale of liquor in private clubs.

“We will lose some money from not collecting the 5 percent fee on alcohol sales for beer- and wine-only establishments,” Hines said. “We hope we make that up on sales taxes.”

City officials estimated they would collect $550,000 in alcohol beverage tax this year, according to the city budget.

“We don’t know if any of the existing restaurants will drop their private club permits and apply for a beer and wine permit. I don’t think the chain restaurants will because most of them serve liquor as well as beer and wine,” Hines said.

Bentonville officials addressed the issue earlier this year when they changed the liquor ordinances, said Beau Thompson, a city planner.

“We allow beer and wine sales in three commercial districts without a conditional use permit from the city,” Thompson said.