Board begins policy review on annexation, capped licenses and conditional approvals

Fargo Liquor Control staff initiated a policy discussion on how annexation affects liquor licenses and what procedures the city should use when an existing licensed business is brought into city limits.

Steve told the board a common scenario is a developer seeking to build a gas station and convenience store with an off-sale bottle shop on land outside the city that could later be annexed. "If they have a license and they come into the city, and now we don't have a license available, what do we do with that business?" Steve asked, summarizing the problem and noting Fargo ties the number of capped licenses to population thresholds.

The board reviewed options including doing nothing, modifying ordinances to add licenses, allowing the next available license when population thresholds are reached, creating conditional licenses, or eliminating caps for off-sale licenses. Steve summarized neighboring cities’ approaches: Grand Forks and West Fargo handle annexation by application processes; Minot’s ordinance allows automatic granting after annexation in some cases; Bismarck requires purchase or bidding for a private license. Steve said the city currently adds a new capped license for every 10,000 people (noting a recent increase when population hit about 130,000).

Commissioners emphasized balancing fairness to existing city license-holders with the needs of businesses seeking to locate in newly annexed areas. One commissioner suggested restricting a granted license to remain at its location for a specified period to reduce speculation. Local business representatives urged deeper discussion before any ordinance changes: "I would recommend some kind of working meeting to discuss all this before we get back to," Dustin Mitts said, urging a stakeholder session to examine complexities and unintended consequences.

The board directed staff to set up a working meeting with industry stakeholders, staff and interested commissioners to explore options and report back at a future liquor control board meeting. No ordinance changes were decided at this meeting; the item was informational and will return for additional discussion and potential recommendations to the City Commission.

The conversation reviewed procedural and practical constraints — county permitting steps, fees, and whether fees or time-in-business should affect treatment after annexation — and asked staff to draft possible ordinance language for later consideration.