HomeMy WebLinkAboutAgenda - 03-07-2017 - 4-a - Alcoholic Beverage Control (ABC) Board Update Presentation 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: March 7, 2017
Action Agenda
Item No. 4-a
SUBJECT: Alcoholic Beverage Control (ABC) Board Update Presentation
DEPARTMENT: Board of Commissioners
ATTACHMENT(S): INFORMATION CONTACT:
March 1, 2017 Update from ABC General Clerk's Office, 245-2130
Manager Tony Dubois Travis Myren, 245-2300
ABC Board Information Sheet Gary Donaldson, 245-2450
January 31, 2017 and October 14, 2016
Petition Follow-up Memos from Staff
Alcoholic Beverage Control Board —
Benchmarking — June 30, 2015
PURPOSE: To receive a brief presentation from representatives of the Orange County
Alcoholic Beverage Control (ABC) Board and to provide any feedback or questions.
BACKGROUND: The ABC Board provides an annual update to the Board of Commissioners at
the beginning of each calendar year. Gregg Jarvies, Chair of the Orange County Alcoholic
Beverage Control (ABC) Board, and Ron McCoy, Orange County ABC Finance Officer, will
provide a brief presentation on ABC Board activities and operations and will respond to any
questions.
A petition was filed in the fall of 2016 that asked staff to evaluate the level of the ABC Board's
annual contribution to the County. Under North Carolina General Statute 18B-701, the ABC
Board is required to distribute its entire net income after deducting amounts required for law
enforcement and education and retaining proper working capital, to the General Fund of the
County, which represents a financial benefit to the County.
The Finance and Administrative Services Department issued a response to the petition in
January indicating that the current contribution to the County was lower than the contributions in
surrounding counties. As a result, the County has requested an increase to its annual payment.
County staff have had several discussions with ABC Board staff regarding the level at which an
increase could be sustained. The ABC Board will be considering this request during its retreat
on March 21, 2017.
FINANCIAL IMPACT: There is no financial impact associated with receiving the presentation.
SOCIAL JUSTICE IMPACT: There is no Orange County Social Justice impact associated with
receiving this presentation.
RECOMMENDATION(S): The Manager recommends that the Board receive the presentation
and provide any questions or comments.
2
COUNTY OF ORANGE
ALCOHOLIC It EVERAGE CONTROL It OARD
601 VALLEY FORGE RD
EIILLSBOROT7GEI,NORTH CAROLINA 27278
919-732-3432
FAX: 919-732-5829
ocabc @mindspring.com
GREGG JARVIES,Chair Board Members
KEITH BAGBY,Vice Chair JANE COUSINS
TONY DUBOIS,General Manager JAMEZETTA BEDFORD
MIKE LASSITER
March 1, 2017
Orange County Board of County Commissioners
In the current fiscal year a distribution of$400,000 is being made to the Orange County General
fund. The board also set aside $ 48,333 to contribute to the Board Retiree Health Care Plan. The
board funded local Alcohol Law Enforcement agencies $149,000 which is triple the statutory
minimum. The board also increased the amount available for community Alcohol Education and
Rehabilitation grants for schools and local community organizations to $209,150 which is also
triple the statutory minimum. The distributions from the board for fiscal year 2016-17 total
$806,483.
The board is currently working on the following projects.
• Adjusting Living wage to match the county's increase in 2017
• Moving our Village Plaza store to a new location in Ram's Plaza in June
• Upgrading all of our point of Sale cash register equipment
• Purchasing a piece of property in Hillsborough for a future store relocation
• A Complete remodel and temporary relocation of the Carrboro store in 2018
Sincerely,
Tony DuBois
Orange County ABC
General Manager
ocabc @mindspring.com
3
THE ORANGE COUNTY ABC BOARD
• The Orange County ABC Board is a local, independent political subdivision of the state operating
under the auspices and oversight of the North Carolina Alcoholic Beverage Control Commission.
It transacts business as a corporate body and is not considered a public authority under G.S. 159-
7(b)(10).
♦ The Orange County ABC Board operates eight retail stores (six properties owned, two leased)
and has a total of forty-seven employees.
• The ABC system in Orange County receives no County funding. All operations are fully funded
by annual revenues of its retail stores.
• Orange County ABC employees are not county employees. Their employment is managed by the
ABC general manager. Employee compensation is funded totally through local ABC revenues.
Employee benefits, including medical, dental and disability insurance, local government
retirement contributions and matches to 401-K programs are established by the Orange County
ABC Board of Directors and funded totally through ABC revenues.
• Unlike private retail businesses local ABC boards cannot increase operating revenues or profits
through independent strategies. Liquor prices are established by the state ABC Commission and
are consistent throughout all ABC stores in the state. ABC systems cannot advertise, offer items
for sale or in any way promote their business to the public.
• Construction of new stores, improvements to existing stores, capital purchases, technological
upgrades, and employee salaries, benefits and training must all be paid for through existing store
revenues.
♦ In FY 2015-16 the ABC Board of Directors adopted a living wage of$12.76 for all employees
and indicated its commitment to continued adherence to the Orange County living wage
standards.
• The ABC Board is required by statute to annually contribute to local law enforcement five
percent (5%) of gross receipts after primary distributions. In the past five years that benchmark
would have resulted in a total distribution to law enforcement of $282,984. However, in that
same five-year period the Board has actually contributed an average of 12.3% to local law
enforcement agencies for a total distribution of$665,000.
• The ABC Board is required by statute to annually contribute to local alcohol rehabilitation and
education programs seven percent (7%) of gross receipts after primary distributions. In the past
five years that benchmark would have resulted in a total distribution to such programs of
$368,197. However, in that same five-year period the Board has actually contributed an average
of 12.3%for a total distribution of$680,644.
• In the past five years the ABC Board has contributed$2.25 million to Orange County.
• Contributions to the County and to Orange County ABC partners in the past five years total$3.59
million.
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ORANGH COUNTY
NORTH....1 CAR . LI NA
FINANCE and ADMINISTRATIVE SERVICES
Gary Donaldson,CTP,Chief Financial Officer I gdonaldson @orangecountync.gov I 200 S.Cameron Street,Hillsborough,NC 27278 I 919.245.2453
Memorandum
TO: Chairman Mark Dorosin
FROM: Gary Donaldson, Chief Financial Officer
DATE: January 31, 2017
RE: Petition Response for Increased Alcohol Beverage Control Board Funding to the County
Please find enclosed my response to the petition you made on November 15, 2016 regarding a process to obtain
increased ABC funding. Your petition was precipitated by a benchmarking analysis that indicated that the County
is receiving ABC funding well below 15 other peer counties (see attachment). The benchmark analysis indicated
that the County receives only 39% of ABC after profit distribution as compared to the peer North Carolina county
average of 82%.
On December 7, 2016, a follow-up meeting was held with the ABC General Manager and ABC Finance Director
to determine a funding plan which would increase the County's share to the benchmark average of 82%. The
County has requested additional funding of$150,000 for FY2017-18, and phased-in after profit distribution over
the next four fiscal years of 50%, 60%, 70%, and 80%,respectively.
The ABC General Manager will inform the ABC Board of this County funding request, and follow-up with the
County on a decision no later than March-April 2017 to coincide with the FY 2017-18 Budget Development
process.
Below is a five year history of ABC distributions:
2012 2013 2014 2015 2016
Fiscal Year
ABC Distributions
Law Enforcement Expenses $120,000 $125,000 $155,000 $130,000 $135,000
Alcohol Education Expenses 105,000 130,000 145,000 156,550 144,094
Local 400,000 400,000 400,000 400,000 400,000
Total $ 625,000 $ 655,000 $700,000 $ 686,550 $ 679,094
Please let me know if you need any additional information.
Thank you
cc: Orange County Board of County Commissioners
Orange County Grrverrrrrrerrt I www.orangecountync.gov 1 919.732.8181
5
NOR'1"I....1 CAROLINA
NA
FINANCE andADMINISTRATIVE SERVICES
Gary Donaldson,CTP,Chief Financial Officer I gdonaldson @orangecountync.gov I 200 S.Cameron Street,Hillsborough,NC 27278 I 919.245.2453
Memorandum
TO: Commissioner Mark Dorosin
FROM: Gary Donaldson, Chief Financial Officer
DATE: October 14, 2016
RE: Petition Response on ABC Board Funding to the County
At the September 6, 2016 Board of County Commissioner meeting your petition request was for financial
information pertaining to the Alcoholic Beverage Control(ABC)Board funding to the County's General Fund.
This petition response is supported by two exhibits which illustrate a five year financial summary of the ABC
Boards financial performance and ABC benchmarking with 15 other ABC Boards.
Exhibit 1: Orange County ABC Board Five Year Statement of Revenues,Expenses and Changes in Net
Position
The last column on Exhibit 1 provides a five year average of revenues, expenses, and operating income
performance; as noted Net Sales (Revenues)experienced an average annual growth rate of 5.9%while Operating
Expenses experienced an average annual growth rate of 3.8% from fiscal years 2012 through 2016.
Net income has experienced an average annual growth rate of 11.4%between fiscal years 2012 through 2016. The
ABC strong financial performance has resulted in the net position increasing to $7,805,267 as of June 30, 2016.
The ABC Board has utilized 64% of their net position to cash finance the majority of their capital projects
including construction of a new store#3 this past fiscal year. The cash on hand remaining after these capital
investments is $2,450,028 as of June 30, 2016.
The ABC capital funding strategy indicated above was confirmed at a meeting with the ABC General Manager,
ABC Finance Director,ABC Board Chair,myself, and Deputy County Manager Myren.
Exhibit 2: Alcoholic Beverage Control Board Benchmarking among 16 Jurisdictions
Exhibit 2 provides a comparison of the Orange County ABC distribution of income after accounting for net
profits with 15 other jurisdictions. This benchmarking comparison is sourced to the fiscal year 2015 audited
financial reports of the 16 benchmarked jurisdictions.
As noted in Exhibit 2, the Orange County ABC Board distribution after profit to the County is 39% as compared
to the benchmark average of 82%for the other 15 jurisdictions for fiscal year 2015. The Orange County ABC
Distribution is as follows:
Law Enforcement $130,000
Alcohol Education $156,550
Local $400,000
Total $686,550
Oranges County Government I www.orangecountync.gov 1 919.732.8181
6
In conclusion, the figure entitled Orange County Benchmark Average in Exhibit 2 is a normalized figure which
represents the fiscal year 2015 profit before distribution multiplied by the other 15 jurisdictions average total
distribution to their respective governments.
All of the financial information in this petition is sourced to ABC audited financial reports. Please let me know if
you need any additional information.
Thank you
cc: Orange County Board of County Commissioners
Orange County Government I www.orangecountync.gov I 919.732.8181
7
EXHIBIT 2
Alcoholic Beverage Control Board-Benchmarking
As of June 30, 2015
1 2 3 4 5 6 7 8
Orange Alamance Asheville Albemarle Boone Cateret Catawba Craven
Profit Before Distributions $ 1,780,957 $ 660,978 $ 2,938,100 $ 262,344 $ 683,225 $ 1,461,150 $ 1,346,676 $ 985,057
Profit as Percent of
Income 9.77% 5.8% 10.54% 9.71% 12.07% 11.54% 7.81% 10.63%
Statutory Distributions
Law Enforcement $ 130,000 $ 27,067 $ 302,861 $ 9,274 $ 26,198 $ 36,974 $ 42,985 $ 36,142
Alcohol Education $ 156,550 $ 23,684 $ 153,500 $ 12,983 $ 62,875 $ - $ 37,575 $ 5,650
Local $ 400,000 $ 444,982 $ 1,993,392 $ 190,000 $ 475,000 $ 1,255,644 $ 908,648 $ 943,265
Total Distributions $ 686,550 $ 495,733 $ 2,449,753 $ 212,257 $ 564,073 $ 1,292,618 $ 989,208 $ 985,057
Total Distribution as %
of Profit 39% 75% 83% 81% 83% 88% 73% 100%
Benchmark Average $ 1,454,952
8
9 10 11 12 13 14 15 16
Dare Durham Greensboro High Point Wake Mecklenburg New Hanover Pitt
$ 2,325,481 $ 3,506,570 $ 4,642,898 $ 1,803,513 $ 18,896,153 $ 18,397,670 $ 5,876,901 $ 2,096,667
14.88% 11.15% 11.03% 11.15% 17.05% 14.10% 15.24% 12.11%
$ 180,671 $ 286,483 $ 298,591 $ 101,818 $ 830,659 $ 1,929,069 $ 511,001 $ 291,419
$ 94,980 $ 175,075 $ 172,045 $ 50,000 $ 4,771,600 $ 4,281,940 $ - $ 120,135
$ 1,747,896 $ 2,000,000 $ 3,742,262 $ 1,410,242 $ 8,363,651 $ 8,481,561 $ 3,702,096 $ 1,300,000
$ 2,023,547 $ 2,461,558 $ 4,212,898 $ 1,562,060 $ 13,965,910 $ 14,692,570 $ 4,213,097 $ 1,711,554
Total
Distribution
Average
87% 70% 91% 87% 74% 80% 72% 82% 82%
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EXHIBIT 2
Alcoholic Beverage Control Board - Benchmarking
As of June 30,2015
1 2 3 4 5 6 7 8
Orange Alamance Asheville Albemarle Boone Cateret Catawba Craven
Profit Before Distributions $ 1,780,957 $ 660,978 $ 2,938,100 $ 262,344 $ 683,225 $ 1,461,150 $ 1,346,676 $ 985,057
Profit as Percent of
Income 9.77% 5.8% 10.54% 9.71% 12.07% 11.54% 7.81% 10.63%
Statutory Distributions
Law Enforcement $ 130,000 $ 27,067 $ 302,861 $ 9,274 $ 26,198 $ 36,974 $ 42,985 $ 36,142
Alcohol Education $ 156,550 $ 23,684 $ 153,500 $ 12,983 $ 62,875 $ - $ 37,575 $ 5,650
Local $ 400,000 $ 444,982 $ 1,993,392 $ 190,000 $ 475,000 $ 1,255,644 $ 908,648 $ 943,265
Total Distributions $ 686,550 $ 495,733 $ 2,449,753 $ 212,257 $ 564,073 $ 1,292,618 $ 989,208 $ 985,057
Total Distribution as %
of Profit 39% 75% 83% 81% 83% 88% 73% 100%
Benchmark Average $ 1,454,952
8
9 10 11 12 13 14 15 16
Dare Durham Greensboro High Point Wake Mecklenburg New Hanover Pitt
$ 2,325,481 $ 3,506,570 $ 4,642,898 $ 1,803,513 $ 18,896,153 $ 18,397,670 $ 5,876,901 $ 2,096,667
14.88% 11.15% 11.03% 11.15% 17.05% 14.10% 15.24% 12.11%
$ 180,671 $ 286,483 $ 298,591 $ 101,818 $ 830,659 $ 1,929,069 $ 511,001 $ 291,419
$ 94,980 $ 175,075 $ 172,045 $ 50,000 $ 4,771,600 $ 4,281,940 $ - $ 120,135
$ 1,747,896 $ 2,000,000 $ 3,742,262 $ 1,410,242 $ 8,363,651 $ 8,481,561 $ 3,702,096 $ 1,300,000
$ 2,023,547 $ 2,461,558 $ 4,212,898 $ 1,562,060 $ 13,965,910 $ 14,692,570 $ 4,213,097 $ 1,711,554
Total
Distribution
Average
87% 70% 91% 87% 74% 80% 72% 82% 82%