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HomeMy WebLinkAbout5620 - ADMIN Resolution - City Council - 1976/10/08I . / RESOLUTION NO. 5620 A RESOLUTION RELATING TO THE APPLICATION OF WDK ENTERPRISES, INC. FOR AN ON -SALE AND SUNDAY SALE INTOXICATING LIQUOR LICENSE BE IT RESOLVED by the City Council of the City of St. Louis Park as follows: Findings 1. WDK Enterprises, Inc. has applied for an on -sale and Sunday sale intoxicating liquor license for the Royal Court, a night club which is located in the Knollwood Plaza Shopping Center. '' 2. Wallace Day Kisling is the sole shareholder of the applicant, and is its president, secretary and treasurer. The applicant is a new corporation that has been organized by Mr. Kisling for the purpose of operating the.Royal Court. It has no prior his;:ory of business operations. It was capitalized with $1,000.00. 3. The Royal Court has been closed for about one and a half years. The prior operator, a George Boosalis, operated the Royal Court for approximately three years before abandon- ing it with reported substantial losses. Subsequent to the public hearing the exact amount of these losses for the last 19 months of operations was confirmed to be in the sum of $67,855.00. 4. Previously the Royal Court was operated by Black Steer, Inc. This operator is understood to have sustained com- parable losses, during the period of its operations. although the exact figures have not been obtained. 5. Prior to that time the Royal Court was operated for -a short period of time by another group that tried to operate it successfully but also failed. 6. The Royal Court was originally established in 1968 by two wealthy businessmen. They lost large sums of money in attempting to make the Royal Court successful, before finally giving up on the location and disposing of their interest. During this time the Royal Court was operated on a much larger scale in an attempt to become successful, later the size of the operation was reduced. Losses of/the Royal Court during this original period reportedly were in excess of $500,000.00. 7. The history of the Royal -Court shows that any chance of a successful' operation is going to require a substantial financial hacking that will allow time to reverse Lite prior pattern of business losses. It will also require well-planned and sophisticated management and record-keeping. 8. Mr. Kisling states that he has had no prior experi- ence in operating a night club. (He owned, at one time, a Pizza Villa restaurant. His experience with liquor consists of employment for a short period of time by a friend who oper- ated a 3.2 beer parlor.) 9. As evidence of his financial capability to success- . filly re-establish the Royal Court 4r. Kisling produced for the city certain records and info. ..cion. a. Based upon the "Statement of Financial Conditions" furnished by Mr. Kisling, Mr. Kisling's principal asset of value is his interest in Jewelart, Inc. Other than his interest in Jewelart, Inc., Mr. Kisling's net assets total approximately $2,264.00. b. The tax returns of Mr. Kisling indicate that his earnings in 1974 were $8,718.00 and in 1975 were $11,865.00. His sole source of income was from Jewelart, Inc. Mr. Kisling has not indicated any further source of income other than Jewelart, Inc. and the business WDK Enterprises, Inc. He has shown monthly obligations of approximately $1,960.00 per month. c. In 1974 on gross sales of $83,479.00, Jewelart, Inc. showed net profit of $8,718.00 with no salary to Mr. Kisling. For the period from June 1, 1975 to May 31, 1976, Jewelart, Inc. had gross sales of $89,299.00 and yet its records show profits suddenly increasing to permit a $30,000.00 salary to Mr. Kisling. The same records show all other salaries of the business for the year of only $832.00, although Mr. Kisling supposedly no longer spends a substantial portion of his time at the business. d. The "Statement of Operation" for Jewelart, Inc. for the 12 -month period ending May 31, 1976, which was furnished -2- 5420 by Mr. Kisling indicates a profit from operations sufficient to provide Mr. Kisling with an annual salary of $30,000.00. However, the Balance Sheet of Jewelart, Inc. for that same 12 -month period indicates that the salary was never paid and that Jewelart, Inc. does not generate cash or receivables suf- ficient to pay such a salary. This is evidenced by the fact that the Balance Sheet shows that the salary is still owing but the corporation has no assets other than inventory with which to pay the salary. If profits were'as indicated there should have been additional cash or receivables.. e. The "Statement of Operations" for Jewelart, Inc. indicates total expenditures of $56,210.00 for the 12 -month ISeriod ending May 31, 1976, yet a review of the corporate bank statements for eight of the twelve months indicates an average of approximately $6,400.00 worth of expenditures per month for a total of $76,800.00 for the full 12 -month period. f. In early August, 1976, Mr. Kisling represented that he would furnish the city with a copy of the Jewelart, Inc. 1975 corporate tax return for the year ending May 31, 1976, when this return was filed on August 15, 1976. This was never done by him. 9. Mr. Kisling indicated that his financial backing con- sists of a loan of $10,000.00 from his mother to start up the Royal Court. He also states that his attorney has arranged for a bank loan of $10,000.00. Mr. Kisling also states that he can obtain further loans of up to $10,000.00 from gaming machine interests if he will put in gaming machines. He states that he does not intend to install gaming machines. 10. Mr. Kisling is described by a reference supplied by Mr. Kisling as having a tendency to financially over -extend hixself. . 11. When asked to provide information regarding his plans for operating the facility, Mr. Kisling indicated he intended to provide entertainment in the main dining room and also in- tended to provide a dance band in the dancing area. 12. When initially interviewee, Mr. Kisling did indicate that he had already selected people to work for him as chef, hostess and head bartender, but when asked to identify such individuals, Mr. Kisling responded in a manner which indicated that he was not totally familiar with all of these persons. At the public hearing he indicated that he was not in a posi- tion to reveal the names of persons presently in other employ- ment. -3- -.- 13. The information supplied by Mr. Kisling does not show adequate financia] backing or an experience and manage- ment ability adequate to successfully operate the Royal Court. Granting of the application would be contrary to law, the Ordinance Code, and City Resolutions, and would not be in the public interest. 14. The inadequacy of financing relates to public safety, whether the applicant will be a partner in law enforcement with the city. A weak financial situation in a business operation may lead to violations of law to attract customers, or may lead to individuals with financing extracting demands from the licen- see that would not be in the public interest./ The police report of the use of a controlled substance by the applicant shows a lack of respect for the law. 15. These items, along with the complete investigative report, led to these findings. Conclusion The application of WDK Enterprises, Inc. is denied. Adopted by the City Council October 8, , 1976. President Pr -Tem Attest: Reviewed for Administration: Reviewed as to form and legality: City Attorney -4- 5-(72.o