Wednesday, March 10, 2010

Cut Off

Columbia City Council gives FPA a monopoly

on St. Patrick's Day beer sales as insiders profit




By Paul Blake


Five Points has been designated a city park -- just for the 24 hours of St. Patrick's Day.

Proponents of the idea say it gives police more leeway to enforce rules associated with the St. Pat's in Five Points festival, such as restrictions on outdoor consumption of alcohol and liquor and possession of coolers and backpacks.

But some Five Points merchants who had planned to sell beer at their establishments during the popular festival claim the new resolution could affect -- if not shut down completely -- their beer sales.



"It seems like they are doing everything they can to prevent retailers from selling beer," said Krista Snyder, co-owner of Disorderly Conduct, a business in Five Points.  "I was told I could get fined and be held criminally liable if someone leaves my store with beer that day."


The controversy had its genesis on February 3. That day, the Five Points Association, a nonprofit organization that runs the St. Pat's in Five Points festival, lobbied for and won city council approval to designate the entire Five Points area a park for the day.   The resolution also gave Five Points Association the potentially lucrative control over beer sales by requiring establishments to serve beverages in containers purchased from the nonprofit group if patrons were to drink alcohol inside the festival.


Last year, prior to the city council's resolution requiring that "possession and consumption of alcoholic beverages shall be permitted only in containers provided by the Five Points Association,"  the FPA took in $7,500 from sales of cups, which sold for on average 25 cents per cup. Now that the city council has required businesses to purchase cups from the nonprofit organization in order to sell beer out their doors,  the association could earn far more than $7,500 in cup sales this year.


In short, City Council gave the Five Points Association a monopoly on beer sales during St. Pat's in Five Points, providing the nonprofit with a guaranteed cut of as much as $160,000 in beer sales revenue.


The new law could also mean cuts in profits for bars and businesses in Five Points -- an irony given Five Points Association's mission to promote and foster business in the area. In previous years, merchants in the festival zone obtained one-day permits to sell beer and alcohol. They were able to sell beverages in any type of plastic container out the door, and that meant sizable revenue spikes during the festival that attracts about 40,000 people to the area.


Because of the new law, the state Department of Revenue in a letter urged Snyder of Disorderly Conduct to return a one-day license it had already issued. The state agency wanted to give Snyder a restricted license following passage of the park designation. Snyder refused, and she is now letting other merchants know they may have a right to sell beer that day -- without having to buy cups from Five Points Association.



[caption id="attachment_1289" align="aligncenter" width="446" caption="A letter from the Department of Revenue threatening the owner of small business "Disorderly Conduct" with criminal prosecution if their patrons leave the establishment with alcohol into the festival area."][/caption]


Friction between Five Points business owners and the nonprofit whose mission is to promote business in the area is nothing new. In 2007, City Paper detailed a growing rift between Five Points business owners and the Five Points Association, particularly regarding St. Pat's in Five Points. In the article, City Paper described how former board member Duncan MacRae tried to block Groucho's owners Bruce Miller and Deric Baum out of the St. Pat's event by assembling portable toilets and a stage in the way of their business. Other merchants shared similar stories, and many retailers protested by shutting down the day of the festival.


Merrit McHaffie, Executive Director of the Five Points Association, said the park designation and her organization's control over beer sales will bolster safety during the festival. Police weren't able to enforce some rules in previous years, she said, and the park designation and cup requirement will provide police with greater authority to write tickets for a number of violations, not all of which pertain to beer sales.


As for selling cups it is unclear what the Association will do on the day of the festival.  The festival organizers are claiming ignorance to what will be enforced that day.   "We were not asking anyone to buy them this year, but if a bar/restaurant wants to, they can,"  McHaffie wrote in an email to City Paper.  McHaffie responded with more ambiguity on the question of enforcing the "containers provided by the Five Points Association" in the new park designation resolution and passed the buck on questions to the Department of Revenue.



Outgoing president of the Five Points Association, Don McCallister, told City Paper, "I would say that the answer is yes--we cannot require them to use our cups, but would very much like to see beverages in plastic for safety reasons."   Although McCallister has admitted privately that he is powerless over the St. Pats In Five Points committee that organizes the festival.


But particularly relevant to Five Points Association's monopoly over beer sales is the nonprofit's close relationship to city government. In fact, due to receiving nearly 50 percent of its operating capital from taxpayers, Five Points Association is a quasi-public agency.


During the one-year period from April 2008 to March 2009, Five Points Association received $280,000 in taxpayer funding from the city's hospitality tax fund.

That money goes largely unchecked by city officials. Despite the fact that City Paper has reported how the Five Points Association has paid tens of thousands of dollars in "commissions" to board members and associates in conjunction with the annual St. Pat's in Five Points -- money that would not be available were it not for taxpayer funding -- the City of Columbia still does not require a certified audit of the organization.


In short, the city doesn't know how exactly Five Points Association spends $280,000 in taxpayer funds.


What's more, one FPA board member, Richard Burts, chairs the city's Hospitality Tax Advisory Committee at the same time he sits on the board of Five Points Association -- an apparent conflict of interest.


(Burts maintains no such conflict exists, since he recuses himself from votes pertaining to Five Points Association.)


Absent oversight by public officials, City Paper has attempted to audit the festival annually until the city implements a better process to account for how taxpayer money is spent. That hasn't always been an easy process for the paper.


Five Points Association failed to disclose commission payouts for the 2009 festival when City Paper requested such information in March of that year. More recently, City Paper requested a list of all vendors and consulting contractors and money paid to those entities for St. Pat's in Five Points. According to the state open records law, Five Points Association has until March 19 to provide City Paper with those records. At deadline, the organization had not yet provided those records.


Those records are important because the commission on beer sales in years past was 18 percent. That commission has meant  sizable amounts of money for people connected to Five Points Association. Last year, board member Kelly Glynn took in $4,570 in beer sales commissions after paying $2,750 in expenses -- giving her a profit of $1,820 for the festival. Glynn owns Village Idiot Pizza and Pub with her husband Brian, who formerly worked for Budweiser.


Not surprisingly, Glynn controls the beer order this year and stands to take in even more money in Five Points Association commissions. On March 7, at training for event volunteers, Glynn downplayed the significance of the beer contract when talking to City Paper. She said her business had to bid for the contract and compensation is on a sliding scale maxing out at 8 percent -- significantly lower than in previous years.


But even with a lower percentage, Glynn still stands to earn a healthy commission check. Last year, when Glynn's commission was $4,570, St. Pat's in Five Points had low attendance numbers and low beer sales figures due to rain. This year, weather permitting, Glynn stands to make an estimated $9,000 after expenses.  (Assuming beer sales are around $150,000 and expenses are similar to last year.)


Yet she isn't necessarily the greatest beneficiary of St. Pat's in Five Points. That distinction goes to Skip Anderson, the executive director of operations for the Columbia Blowfish who organizes a mostly volunteer staff for the St. Patrick's Day Festival. In previous years, Anderson received a percentage of wristband sales. Records show as much as $28,000 in wristband commissions were paid out in previous years.  Anderson denies ever making that much and last year he received $8,000 for his action on the wristband sales.


"No, it is not percentage based," Anderson told City Paper. "I'm just here to

help out and see what happens, man."


City Paper's interview with Anderson came to a halt when Duncan MacRae, the co-owner of Yesterday's and a co-founder of St. Pat's in Five Points, interrupted.



"Get off my ass," MacRae said.


Also benefiting financially from St. Pat's in Five Points is Jack Van Loan, the economic development director for Five Points Association.


Van Loan receives what can only be described as an Act of God Bonus. If St. Pat in Five Points isn't rained out, Van Loan receives $5,000.

St. Pat's in Five Points, for the record, is supposed to benefits charities. For the 2008 festival, which had expenses totaling $353,970, Five Points Association gave $39,500 to charity.


In other words, the City of Columbia kicks in $280,000 in taxpayer money to help put on a festival to benefit charities. That festival, in turn, generates about $40,000 for those charities -- making for a negative 88.5 percent

return on taxpayer investment.


Mayoral candidate Kirkman Finlay III told City Paper in 2007: "Three hundred thousand dollars in taxpayer money seems an inefficient way to give $30,000 to charity."



talkback@columbiacitypaper.com

6 comments:

  1. Ohh Snap! You done pissed off some peoples! Love you CCP!

    ReplyDelete
  2. Shame, shame, shameMarch 12, 2010 at 5:12 AM

    This group needs to stop being so self serving. I am a former merchant in that area and can tell you that the few in their little group will be trash talking any one that points out the truth like this. Get ready.
    Nice job on exposing this stuff.

    ReplyDelete
  3. The COR has been "trash talking" and of course they are on the list receiving the charity money.

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  4. Don't forget that the festival was founded and run by charities for 20 years and the FPA used their political connections to force the charity organizers out in 2003. Since then the city has dumped hundreds of thousands of dollars into the festival and the amount of money going to local charities has dwindled dramatically.

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  5. Just come on down to Charleston.....we have beer!!!

    ReplyDelete
  6. Yeah and charging $14 bucks a person ($12 in advance - big discount, ha) is rediculous! Greedy people!

    ReplyDelete