Watertown approves lease with Santo Tequila, clears liquor-license transfers for event center

The City of Watertown on July 7 approved a lease for the Watertown Municipal Events Center with Santo Tequila, South Dakota LLC and simultaneously approved transfers of retail liquor and video lottery licenses from WR Capital (doing business as Minerva's) to the Santo Tequila entity.

City Attorney Lisa Carico told the council that after WR Hospitality — the prior operator — terminated its lease, staff approached Santo Tequila because scheduled events made an immediate operator necessary. "Rather than them pay us rent, they retain the revenue but then would be responsible for a lot of those day-to-day maintenance issues," Carico said, describing the recommended lease terms.

The lease shifts routine maintenance and most utility costs to the tenant; the city will continue to pay for major capital items if they are within the city's budget (Carico cited examples such as roof replacement and large equipment). Revenue from the performance theater will be split 50/50 between the city and the tenant and the city will dedicate its share to performance-theater improvements such as sound and lighting. The lease allows termination for cause with 30 days' notice and a 180-day termination without cause to allow a transition, Carico said. She also said Santo Tequila plans to offer employment to existing event-center staff "as long as they're willing."

Councilman Shutti moved to approve the lease; Councilman Bueller seconded. The roll call vote recorded Peters, Shutti, Tupper, Bueller, Pauline and Juran as voting aye and the motion carried. Finance Officer Bob Zine confirmed the related liquor-license items had published notice and paid fees before council consideration.

Council members also approved two related license transfers for the event center. Councilman Tupper moved to approve the transfer of the retail liquor license and video lottery license from WR Capital to Santo Tequila; the council voted to approve the transfer. A second transfer — a retail malt beverage and South Dakota farm wine license with video lottery to Santo Tequila at the same location — was approved in a separate motion.

The city manager and staff said the lease was intended to secure continued operation of the events center while limiting ongoing operational burdens on the city. No amendments to the lease were recorded during the council discussion and council members praised staff work on the negotiations.

The council did not open a separate public hearing for the lease; public testimony for the related license items was also closed before council action.

What the council approved: a lease assigning day-to-day maintenance and utilities to Santo Tequila, a 50/50 split of performance theater revenue with city-directed funds for theater improvements, a 30-day termination for default, and a 180-day termination without cause. The council also approved the liquor and related license transfers from WR Capital (Minerva's) to Santo Tequila for the event-center location.