Liquor store is a guarded success

Posted: Monday, January 03, 2011

ANCHORAGE — “Jailhouse Liquor” is a hit.

The first liquor store in Kotzebue in more than 20 years — the nickname comes from its proximity to the city slammer — is making nearly twice as much money as expected and is on pace to bring $600,000 a year into city coffers.

“I got told one day that I was the most popular guy in Kotzebue,” said store manager Tryson Ferguson, whose biggest sellers are 30-packs of Budweiser cans and $21.60 bottles of R&R whiskey.

The Kotzebue city manager calls the store a “grand experiment.” Created by voters, it’s owned and operated by the city. The government also runs a new distribution center, which tracks and taxes all legal alcohol shipped into the so-called “damp” community of more than 3,200 people in Northwest Alaska.

The new alcohol center is taking in about a quarter million dollars a month before expenses, Ferguson said.

It’s too soon to say what the store means for life in Kotzebue, where bars have been outlawed for a generation, or surrounding villages. Police numbers show no major increase in many categories of alcohol-related offenses within the city. But some see evidence of more alcohol abuse.

“Before it opened up there was a lot of fear. Fear about what might happen and things getting out of control,” said Chad Nordlum, a 36-year-old village planner for the Kotzebue-based Northwest Arctic Borough, who has shopped at the store. “It’s actually been more mellow than you might expect.”

One thing is for sure. Business is brisk, and other cities that wrestle with alcohol policy, as well as alcohol regulators, are watching Kotzebue to see what happens next.

Opened Aug. 25, the liquor store and shipping site are expected to make about $340,000 in profit by the end of 2010, city officials say.

The money comes from sales, $50 permits customers must buy in order to purchase alcohol and the $25 you pay every time you pick up any orders from Anchorage or Fairbanks.

Money from the alcohol site flows into city coffers, which pay for government services like police, road work and building upkeep.

“That’s additional city projects. Additional donations to local nonprofits,” said Ryan Cope, the finance director. Kotzebue’s aching for a new fire truck, for example — the current rig’s ladder might not reach the roof of the town’s newest hotel.

Exactly how the extra money will be used will be decided when the city writes Kotzebue’s more than $6 million annual spending plan in the spring, said city attorney Joe Evans.

Already, some Kotzebue residents are eyeing the alcohol revenue as a way to slash the local 6 percent sales tax.

“If the liquor store revenue numbers show that the city could still operate efficiently with a reduced sales tax, I intend to start a petition to get the question on the ballot,” said Alvin Werneke, who recently created an online survey asking people if they favored repealing or cutting the tax.

Most called for lower taxes.

The store is an old public works garage that shares a wall with the jail. One customer made an orange “Jailhouse Liquor” T-shirt, Cope said, and some residents have taken to the name.

On opening day, the store made about $8,000, said Ferguson, who handed out key chains and Anheuser-Busch T-shirts as people waited in line. The city expected the initial rush of customers to die down.

Instead, people collectively spend as much as $9,000 on any given Monday, Tuesday or Wednesday, Ferguson said. That’s more than $1 per day for every person in the borough.

“We basically sold all of the Budweiser within a month,” said the finance director.

In a state fighting alcohol abuse and where modern-day prohibition is common in many rural villages, Kotzebue’s approach is a potential blueprint for other small towns and hubs.

The idea is to make alcohol easier to legally buy in your community in exchange for tighter control over shipments and a steady source of cash to run local government or fund social-service programs.

Kotzebue voters freed the city to open and operate a liquor store and distribution site, and one day a bar, in October 2009.

Ferguson suspects that the store is driving down bootlegging prices, leaving people with more money for necessities.

When you visit Kotzebue these days, you see more people staggering around town after the store opens at 3 p.m., said Josephine Thomas.

She recently began working as a temporary police officer for Buckland, which was busy preparing for a weekend Christmas celebration of Eskimo games.

“I sure would close it right now because of our young kids now that are going to be graduating ... for them to have the liquor store in Kotzebue, I think it will be pretty hard on them,” Thomas said.

Of the more than 1,000 people who bought permits to use the liquor store and distribution site, hundreds live outside of Kotzebue, according to the city.

Ferguson, the store manager, couldn’t say exactly where the out-of-towners are from. Some are summer workers visiting Kotzebue for the season. Some are certainly villagers from surrounding towns.

Since the store opened, the Maniilaq emergency shelter in Kotzebue has seen no obvious change in women seeking shelter, rape victims or people calling for help because a family member has been drinking, said crisis advocate Nancy Moulton.

In October, the number of alcohol-related emergency room visits rose, from 24 in 2009 to 32 in 2010. That according to the Maniilaq Health Center, the hospital for Kotzebue and 11 surrounding villages.

Locally, city police report little or no change in many alcohol-related crimes in three months following the August opening. Reports of under-age drinking, sexual assault and fights, remained steady for September through October, compared with the year before.

Drunken driving doubled, however, and calls for “intoxicated persons” rose more than 25 percent over the three-month period, according to the police department.

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