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Erik Burgess, Published February 19 2014

Owner of Sidestreet in downtown Fargo to negotiate liquor license with flood buyout

FARGO – The owner of a downtown bar who is losing his building to a flood wall hopes to gain a new liquor license through the flood buyout negotiation.

And while city officials seemed eager to help the Sidestreet Grille and Pub, it could mean creating another liquor license allowing unrestricted on-sale, a class of license that has historically been limited by the city.

“Somehow we need to make this work because we’re shutting them down, quite honestly,” City Commissioner Brad Wimmer said at a liquor board meeting Wednesday.

When construction of the Second Street flood wall begins, likely this summer, Sidestreet will be demolished. Spirit Properties, which runs the restaurant and the attached Howard Johnson hotel, has plans to open a new Sidestreet location elsewhere downtown, but they would need a new liquor license.

Kevin Hall, president of Spirit Properties, told the city’s liquor board that he would use the price of the new liquor license in the negotiation for buying out his restaurant.

“We really believe that if we’re required to pay (for) the license, then as part of the compensation for demolishing and (removing) our current facility, we’d have to negotiate that with the city as purchaser,” he said.

Sidestreet and Howard Johnson currently share a Class ABH liquor license, which allows unrestricted on-sale and off-sale but requires that the establishment have at least 100 hotel beds.

Hall wants a Class A license for the new Sidestreet location so the hotel could keep the ABH, but the city only has eight Class A licenses, and it’s been that way for more than a decade, said City Auditor Steve Sprague.

“I think the bigger issue is, do we change the cap on the A licenses?” Sprague asked the liquor board.

A Class A license has a $115,000 up-front fee and allows on-sale with no food sale requirements. The board didn’t come to a conclusion Wednesday, only saying they’d continue to work with Hall.

One issue the city has with Class A licenses is that they become the personal property of the owner once purchased. Because of this, city officials say that Class A licenses are likely worth more than double their original price on the open market.

Police Chief Keith Ternes said if they give a Class A license to Sidestreet, they need to look at adding a clause to that particular license so that it eventually comes back to the city.

Wimmer asked Hall what he was expecting to pay for the new license.

“We didn’t specifically discuss fee structure,” Hall said. “If it’s cleaner to pay the fee structure and deal with that in the negotiation of taking our building, we can clearly do that.”

After the meeting, Sprague said he would expect that Hall would be asked by the liquor board to pay the full price.

“Now, if he writes us a check and he can negotiate some or all of that into his buyout price, more power to him,” Sprague said. “I’m not involved in those negotiations, so I don’t know what things are up for grabs.”

Hall said he expects Sidestreet to be acquired soon. Because the flood wall is considered part of the flood diversion project, his property is being purchased by the Diversion Authority through the Cass County Joint Water Resource District.

Hall said he wants to be set up in a new facility before the old location is demolished. He said the new Sidestreet will be in the “downtown area” but wouldn’t specify where.

Readers can reach Forum reporter Erik Burgess at (701) 241-5518