EDC Board recommends Council reduce alcohol permitting fees



Although prefacing a discussion with an admission of a potential conflict of interest, two members of the City’s Economic Development Corp. Board of Directors cast votes Tuesday to recommend the City Council reduce or remove a permitting fee required from establishments that sell alcoholic beverages in Liberty Hill.

EDC Board President Frank Spinosa and Director John Johnston, both of whom acknowledged they have businesses that sell alcoholic beverages, said they disagreed with the Council’s decision last fall to begin enforcing an ordinance requiring a permitting fee.

State law allows cities to charge those establishments that sell alcohol a fee up to half the fee charged by the Texas Alcoholic Beverage Commission. The city fee, which is the maximum allowed, is payable at the same time businesses pay for a state licensing permit.

“I have a lot of knowledge and friends in the (alcoholic) beverage business,” said Spinosa. “I may have to recuse myself, but because we are an advisory board, I don’t think it’s necessary. We aren’t the decision-makers, we just make recommendations to city council.”

After a lengthy discussion, the EDC Board voted unanimously to recommend the Council consider reducing or eliminating the fee altogether.

Johnston, owner of Dahlia Cafe in Liberty Hill, said his business pays the state about $3,000 every two years for licensing. Paying the City’s fee will cost an additional $1,500.

“I knew we would have TABC fees, but didn’t know about the City (fee),” Johnston said. He estimated that less than 10 percent of Dahlia’s business is alcohol sales, yet the cost of permitting has increased.

Spinosa said restaurants and bars will pass along the added costs to customers, who may choose to take their business elsewhere, thereby reducing sales tax revenues to the City.

“This effects 10-12 businesses here, including restaurants, liquor stores, convenience stores. Why penalize a few?” said Johnston, adding that if the City needs more money, “it’s better to increase the sales tax.”

Deputy City Secretary Rachel Austin told the Board that most cities require an alcohol permitting fee and those fees vary. She said the revenue goes into a city’s General Fund to pay for city operations.

“In our embryonic stage of development, a fee of half what the state fees are is too much,” said Spinosa. “We have businesses on the borderline now. I don’t know how they are hanging on.”

Johnston said he thought the fee was implemented by the City Council to help offset the costs of former City Manager Manuel De La Rosa’s salary.

“I think the tax on establishments selling alcohol was an idea by Manny to justify his salary,” he said. “I’d like to see the Council rescind it.”

“This is a straight-up money grab,” added Spinosa.

Director Valerie Zapien, who also serves as President of the Liberty Hill Chamber of Commerce, said she believed representatives of the churches would not agree that the City should reduce permitting fees for businesses selling alcohol.

“This is a religious community and if the churches were here, they would be against making it easier to sell alcohol,” she said.  “And, you guys (Spinosa, Johnston) have to watch out because of the conflicts you have.”

Director Brian Butler, owner of CatTrax Rentals, disagreed with Mrs. Zapien’s suggestion that churches would disapprove.

“I am active in my church, and I disagree. We aren’t promoting it (alcohol use),” Butler said.

“This isn’t a puritanical society,” Spinosa added.

Spinosa said that while the meeting agenda noted he had requested the item, it was Johnston who had made the request.

“I’d just like to add that this goes to the overall attitude of the council toward businesses here,” said Johnston, adding that fees and ordinances were hurting the business community.

The City’s Code of Ethics and Conduct, which was adopted last year by the current City Council, requires that appointees serving on boards and commissions complete an affidavit identifying possible conflicts of interest and then refrain from all discussions and votes on related issues.

As of press time Wednesday, City Secretary Tammy Kirk said no appointees had filed the required reports.

In other business Tuesday, the EDC Board discussed, but took no action, on a proposal to eliminate any future city manager and/or city council members from serving on the EDC Board.

Spinosa, who brought the item forward, said that having elected officials and city employees on the Board “stymies the ability of the Board to act on its own.”

“In the past, we had three to four council members on them (city committees),” he said. “In this case (EDC), we had the city manager as the (EDC) executive director. When we can’t do anything but make recommendations (to Council).”

After some discussion, directors agreed to take no action on the proposal until city council elections May 12.

The Board also saw financial reports showing about $509,000 in EDC funds on hand.

During the public comments portion of the meeting, Council member Jack Harkrider, who is also a candidate for Mayor, requested that the EDC Board consider recommending to Council that an executive director be hired for the EDC.

“I know you have funds for this,” he said. “It’s necessary to have someone responsible to conduct all the EDC projects.”

Before his resignation in April, a portion of the City Manager’s salary was paid by EDC funds. Before resigning, De La Rosa stated repeatedly that he did not have the time to fill the functions of an economic development director.

Also Tuesday, the Board agreed to meet with Kirk Clennan, director of Economic Development for the City of Leander. Spinosa said Clennan had offered to consult with the EDC Board, and the panel agreed to meet with him at 9 a.m. May 11 at a location to be announced. The meeting will be open to the public and will be posted by the City of Liberty Hill.

“He (Clennan) is willing to help us with anything because he thinks if a big company comes in, it will help all three cities (Liberty Hill, Leander and Cedar Park),” Spinosa said. “Sooner or later, we are going to get a big box store in the city limits (Liberty Hill).”

While Board members agreed that the discussion with Clennan would be a good opportunity to gather ideas, Mrs. Zapien cautioned against sharing information about Liberty Hill that might give the City of Leander a competitive edge in its efforts to attract business to that city.

“They don’t need to know anything negative about Liberty Hill,” she said.

Mrs. Zapien also suggested that the Board develop a “clear scope” of the things that would be discussed with Clennan. However, other Board members said they did not believe that was necessary.

EDC Board members Cathy Cantrell and Jimmy Oliver were not present Tuesday.

Tuesday’s meeting was the first time the EDC Board has met since November 2011.