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Municipal Liquor System: A Legal Monopoly

Richfield Patch explores the impacts of the liquor stores owned and operated by the City of Richfield.

The City of Richfield has been in the liquor business since early 1943, when voters approved the measure in a special January election. As the city has grown, business at the city's municipal liquor stores has, as well, providing a steady source of revenue. In 2011, the city's four stores combined are estimated to gross $11.5 million in sales. (.)

“The municipal liquor stores have paid for most, if not all, of our recreation amenities,” said Richfield City Manager Steve Devich, rattling off the , the addition on the , park maintenance and a piece of .

At the same time, the city holds a legal monopoly on all off-sale liquor sales within city limits. Minnesota law bans off-sale liquor licenses to any business in a city with a municipal liquor store. This prevents Trader Joe's and lesser-known, privately owned stores from popping up in Richfield. Also, some question the ethics of any government entity leaning on vice—gambling or alcohol—and, by extension, its most vulnerable citizens, for revenue.

Residents, Readers Weigh-In

revealed that those who chose to respond are overwhelming supportive of the municipal liquor store system (76 percent of those who cast votes believe the city should be in the liquor business).

On respondent, who identified himself as Gordon Hanson, wrote, “The answer is easy on this one. Yes, we should operate our municipal liquor stores if we want well maintained parks without additional burden to our taxpayers.”

Still, . (Richfield Patch has made minor grammatical corrections to the following written comments):

“Richfield liquor stores are overpriced compared to Bloomington and Minneapolis, and they close so much earlier during the week,” Adam Erickson wrote.

“Personally, I know myself and friends within the city don't shop Richfield liquor stores unless it's a last resort," wrote someone only identified as Marc. "With the craft beer movement exploding in the Twin Cities, Richfield has fallen behind and, in that regard, is losing sales.”

“I'm for leaving the Municipal Liquor Stores as they are. But what parks are getting improvements?" wrote Paul Black. "I have lived next to since 1972 and the pond area has steadily gone downhill the last 15-20 years, whereas you can hardly see the water because of all the silt and fallen trees.”

“It is an issue worth exploring. Private ownership should always take precedence,” Kevin O’Donovan wrote.

The Competition Factor

Richfield City Manager Devich argues that Richfield is competitive in the marketplace, with its close proximity to Bloomington and Minneapolis. The city’s buying power, he adds, allows the municipal store to receive discounts from distributors.

“Let’s face it, when most people are driving around here, they aren’t sure whether or not they are in Richfield, Bloomington or Edina,” he said. “There are many options for people to choose from.”

Municipal liquor stores are also held to the same standards as any privately owned business, according to Mike McManus, alcohol enforcement administrator for the Minnesota Department of Public Safety Alcohol and Gambling division. While there is no special treatment, McManus said city-run liquor stores are generally more observant of the laws.

"Traditionally, municipals are pretty vigilant and cognisant of state rules [and enforcement],” McManus said. “We seldom get complaints on municipals.”

What would happen if Richfield stepped away from the liquor business? According to Devich, this simple question has a complex answer.

“I would start off by saying that, in my opinion, under current law, that would be the most foolish and financially detrimental decision that this city could make,” Devich told Patch.

 are among the highest for state municipal liquor stores, along with stores in Edina and Lakeville, according to Devich. The city will net more than $500,000 this year.

“If the City of Richfield were to sell the liquor operations, that would all go away and we would offset that with property tax dollars,” Devich said.

Some may argue that if the city were to sell its operation to a private owner, the city would have profits of that sale to put into other investments. However, Devich stressed that a city is restricted on the scope of its investments and that cash from a sale would soon dry up. 

Finally, if the city were to sell its stores, its ability to manage competition would cease to exist. Of course, some would argue that this is precisely the greatest indictment against municipal liquor stores—that governments have no business managing or stifling competition.

“Even if one private owner bought all four Richfield Municipal Liquor Stores,” Devich began. “There is nothing to prevent another private store from opening up across the street from one of the stores—as long as they met [all the city’s] requirements.”

jeff kocur December 15, 2011 at 03:45 AM
According to the city's website, Richfield is 7 square miles, and Richfield is blessed to have a lot of that dedicated as parkland. Property taxes are complex and multi-faceted. Only a small portion actually goes to the city. That $2,000 you are seeing on property tax statements also includes taxes for the school, for the county, for the regional transit district, for the regional wastewater district and for other metropolitan council taxes. When I lived in Richfield, the potholes were paved over the day after I called, the police responded within minutes when I needed them, the water department came out at 10:00 on a Friday night to unclog our street's sewage line, and the streets were always plowed curb to curb within hours of a snowfall. I have never received better services from a city. If you think Richfield's plowing is bad, you should try driving through any Minneapolis intersection after a snowstorm. You get what you pay for, and I always appreciated Richfield's services.
Caitlin Burgess December 15, 2011 at 03:50 AM
I think that she meant in terms of actual residential property that is deemed single family housing, there is only 2 square miles. The 7 square miles would include all commercial properties, roads, etc. But yes, as I wrote earlier. The city does definitely not get all the money from property taxes. I knew schools and the county for sure, but couldn't remember the others. Thanks for clarifying.
jeff kocur December 15, 2011 at 03:54 AM
Caitlin: Virginia, Pennsylvania & Utah are the states that I know of which only allow state operated liquor stores. I know that Beer and Wine is sold in grocery stores in Virginia, but Liquor is only sold in ABC stores.
jeff kocur December 15, 2011 at 03:57 AM
You raise the issue of competition here: "Of course, some would argue that this is precisely the greatest indictment against municipal liquor stores—that governments have no business managing or stifling competition."
Caitlin Burgess December 15, 2011 at 04:17 AM
Very interesting. Thanks Jeff.

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