Costco Wholesale's $23.2 million retail development in west Little Rock is scheduled to open on July 21, but whether the membership warehouse will be able to sell liquor remains unsettled.
The transfer of a permit to sell liquor such as vodka, whiskey and rum at the Costco at 16901 Chenal Parkway was denied by Doralee Chandler, the director of the Alcohol Beverage Control Division, after Sen. Kim Hammer, R-Benton, objected.
"Director Chandler denied the retail liquor permit based on opposition expressed by an elected public official," Scott Hardin, a spokesman for the state Department of Finance and Administration, where Chandler's agency is housed, said in an email. "ABC's Director is required by statute to deny an application or take it to a hearing if any member of a governing body (representing the area in which the permit will locate) expresses opposition.
"Attorneys representing Costco appealed the denial. This will result in a hearing before the ABC Board at the Board's June meeting."
The meeting is set for June 16.
"Following questions and testimony, the board may uphold Director Chandler's denial or overturn it, awarding the permit to Costco," Hardin said. "A determination will be made the day of the meeting.
"If the denial is overturned, Costco would have the permit for the opening date."
Costco already has received conditional approval for a permit to sell beer and wine in the main store, he said.
By contrast, the retail liquor transfer, if it is approved, would allow Costco to sell liquor in store separate from the main Costco operation but on the same property, Hardin said.
The transfer is in the name of Nicholas Kelley, executive vice president and partner with with Kelley Commercial, the commercial real estate firm. The retail liquor permit most recently was held by Stagecoach Wine & Spirits. State law allows only a limited number of retail liquor stores per county, one for every 7,500 people, according to Hardin.
The 30-acre development includes $21.4 million of work for the 165,000-square-foot membership store and associated on-site improvements, as well as $1.8 million for a gas station.
Costco's building and parking would take up about 21 acres with the balance available for developing six lots for separate businesses on the site.
Costco purchased the property in October for $12.7 million from KRS Parcel 8, a limited liability company connected to Whisenhunt Investments.
Hammer outlined his objection in a letter to Chandler dated May 12, pointing out that his Senate District 33 includes a portion of Pulaski County and the Costco property.
"I am familiar with the area and know there are any number of alcoholic beverage outlets in the immediate vicinity, including at least three retail liquor stores," Hammer wrote. "It appears the public is currently being well served and theirs needs are being adequately met by these existing businesses."
He also pointed out there might be a day care within 1,000 feet of the Costco liquor store. The Costco application noted its liquor store was within 1,100 feet of a church and 4,100 feet of a school.
The emergence of the Costco liquor store represents a threat to not only nearby independent liquor stores but independents throughout the region, according to Clark Trim, the owner of Colonial Wine & Spirits and a member of United Beverage Retailers of Arkansas.
Trim said his store took a 20% to 25% hit when Sam's Club, another membership warehouse, began selling wine from its store on Bowman Road in Little Rock about three years ago. Trim expects to take a lesser hit on wine when Costco opens but an equal hit on spirits.
He doesn't know about other independents, but Trim said his store can compete on selection and service. It carries 12,000 products and will carry customers' purchase to their vehicles.
Still, Trim questions whether he can continue to employ up to three dozen people.
"I truly am worried," he said.
In separate letters to Chandler, Little Rock Mayor Frank Scott Jr. and Vice Mayor Lance Hines, who represents the area on the Little Rock Board of Directors, supported Costco's application.
"I believe competition makes markets stronger and that the mayor's job is to make Little Rock the strongest most desirable market in the region," Scott wrote. "If government picks winners and losers by moving to protect some businesses from competition, we will not improve or grow to reach our potential."
Hines agreed.
"Whether the competitor is large or small, no existing business owner ever wants a new competitor to move in their territory, but competition is at the heart of American Capitalism," he said. "It spawns growth, drives innovation and strengthens markets."