Newport liquor store dispute headed for Appeals Court action

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A business owner whose liquor license was rejected by the city of Newport is suing to overturn the denial and claims he was turned down to protect an existing liquor store.

Stephen Linn, owner of Woodbury-based The Linn Companies, is appealing the Newport City Council’s July decision to reject his application for an off-sale liquor license. City officials said their decision was based on the proposed store’s proximity to the city’s only other full-fledged liquor store.

Linn alleges the city “acted in a manner that was fraudulent, arbitrary, capricious, subjective, unreasonable, lacking in substantial evidence, and/or in violation of Minnesota law” when it denied his application for an off-sale liquor license, in the suit filed last month with the Minnesota Court of Appeals. The appeal also claims the city unlawfully protected an existing business, Newport Liquor, and prevented market competition.

“It’s unfortunate,” Linn said in an interview recently. “We intended to operate another quality business in Newport and create additional jobs in Newport. And, at this point, that has been denied.”

Linn said he is seeking a decision from the court that would overturn the council’s 4-1 vote on July 19 to deny his license application. He needed it to allow Linn Companies to obtain an off-sale license for the proposed store.

The liquor store Linn planned would occupy vacant retail space he owns on Hastings Avenue. The site sits roughly 500 feet from Newport Liquor, one of only two businesses with an off-sale liquor license in the city. Red Rock Saloon, on the west side of U.S. Highway 61, also holds an off-sale license.

City code allows the council to issue up to five off-sale licenses.

Newport officials have said the decision to deny the license was made out of concern for Newport Liquor and a desire for more diverse retail options along that stretch of Hastings Avenue. A second liquor store so near the city’s lone full-fledged off-sale business could endanger the existing liquor store’s existence, the city stated in findings of fact on the case approved by the City Council at a meeting earlier this month.

It “is not in the best interest of the citizens of the City of Newport” for Newport Liquor to close, the findings read.

“By trying to protect one business owner at the expense of another, we believe that the City Council treated Mr. Linn unfairly and illegally and that’s what we intend to prove,” said David Gates, an attorney for Linn.

Newport Mayor Tim Geraghty, who supported the vote to deny Linn a license, declined to comment on the appeal, citing the ongoing litigation.

“I’ll stand by our decision, I guess,” he said in an interview.

In the findings passed by the council, the city also states it “finds no fault whatsoever with [Linn’s] personal character or his financial background.” That comes after City Council member Tom Ingemann accused Linn during a public meeting of intimidating the owners of Newport Liquor in an effort to persuade them to move their business into his vacant retail space.

Linn has repeatedly denied that charge and said recently he had no personal contact with the liquor store’s owners.

Newport City Administrator Brian Anderson also declined to comment on the city’s response to the suit, saying the findings of fact “speak for themselves.”

It may be several months before the Appeals Court decides Linn’s case.

Bad for business?

The appeal comes as Geraghty, Ingemann and council member Bill Sumner, who sided with him in rejecting Linn’s request, are seeking re-election this fall with a message that there is a newfound business-friendly attitude at Newport City Hall.

Linn, whose company owns 27 commercial businesses and properties across the Twin Cities, said Newport is the most difficult municipal government with which he has dealt.

“It’s a difficult city. We have a very good site in the city, but the city—at all—isn’t business friendly,” he said recently. “The current City Council have no interest in helping businesses in any fashion, only in protecting existing businesses.”

Geraghty, a former mayor and longtime council member, campaigned for mayor in 2008 on a platform of improving the city’s rapport with Newport business owners. He declined to respond to Linn’s claims that his problem is representative of the city’s posture toward businesses.

Council member Steven Gallagher, who is running against Geraghty for mayor in November, was the lone vote in support of Linn’s license. He said the city should allow the market to determine whether two liquor stores can survive in the city.

Gallagher declined comment on Linn’s appeal, though said he “understand[s] where a business owner would pursue all options available to them.”

Scott Wente contributed to this story.

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