Problems continue to plague Hyde County’s two ABC stores, including Ocracoke

January 24, 2012 | Local News | By: Catherine Kozak

Liquor deliveries to Hyde County have been halted by the state, the second time in less than two years that unpaid bills have threatened to dry up the county’s booze supply at its only two stores – one on the mainland and another on Ocracoke.

“Things look bleak, in my opinion, for this system to remain open,” Michael Herring, chief administrator for the state ABC Commission, said Friday. “Somebody has to come to their rescue, and I don’t know who that is going to be this time.”

Herring suggested that the only choice the county may have is to merge with another ABC system such as Dare County’s.

Also on Friday, current Hyde County ABC Board Chairman Keith Parker-Lowe angrily denounced the state ABC Commission and defended the progress being made in the Hyde ABC system.

“They didn’t give a damn for Hyde County,” he said Friday. “All they want to do is give it to Dare County.”

A report provided to the Hyde County Board of Commissioners on Jan. 3 by Director of the ABC Board of Audit and Pricing Laurie Lee detailed nine issues of “great concern” in Hyde, including no apparent ABC budget, no schedule of meetings, price discrepancies, inventory mismanagement and about $80,000 in unpaid bills.

In early 2010, with the county owing about $100,000 to liquor suppliers, the state ABC stopped shipments to the county’s stores in Ocracoke and Swan Quarter until their bills could be paid.

The Hyde ABC Board sold its excess inventory to neighboring counties, sold its Swan Quarter ABC store to the county for $75,000, hired a new manager, and provided a new business plan to the state.

Four months later, just weeks before the busy tourist season began, the state resumed liquor shipments to Hyde County.

But the challenges did not end. The ABC Board chairman and two store managers quit, on top of the difficulties created by Hurricane Irene in August.

“Yes, I was under the impression that things have changed and were getting better,” Herring said. “But we have since discovered that things are not getting better.”

Lee said in a telephone interview that the commission became aware of Hyde’s latest problems in December, when vendors complained about unpaid bills. By law, liquor shipments must be paid within 30 days.

Parker-Lowe, a 25-year island resident who agreed to take over the volunteer post of county ABC Board chairman in March, said that Hyde ABC was losing money “hand and foot” in 2010 and early 2011. But between July and December 2011, the system made a net profit of $97,000.

“That’s the first time in 20 years they’ve made a profit,” he said. “We changed the operation and started cleaning up. . . . I will tell you that the two general managers we’ve had did a sorry-ass job.”

Although he concedes it has been difficult to change the “culture” of the Hyde ABC system, he said he believes its fiscal woes reflect management that has been “inept,” not corrupt.

Not only are both stores now making money, Parker-Lowe said, the Swan Quarter store has doubled the amount of money it was making over the previous year; the county system’s gross sales in July reached $100,000 — also a first. And December’s sales of $38,000 exceeded those of any other year.

Parker-Lowe, who is a senior manager for a software company, blamed much of the inventory problem and the unmet bills on the hurricane, which tore up the highway on Hatteras Island and crippled tourism on Ocracoke.

He said the ABC Commission in Raleigh did not seem to appreciate the extraordinary duress the storm created.

“We didn’t have any renters here for six weeks,” he said. “They don’t have a concept of what goes on in a hurricane.”

A liquor shipment in mid-August created much-unused inventory, Parker-Lowe said. But most of the excess has now been sold, and the $100,000 past due in September has since been paid down to about $45,000.

No attempt, he said, was made by the state ABC Commission to discuss the recent problems before Lee showed up at the commissioners meeting this month.

“We’ve corrected every issue they’ve brought,” he said. “I think the debt can be taken care of within the month.”

The finance officer required by new state rules was hired this month. But the board is still seeking volunteers to fill seats.

“There’s lots of churn on the board,” Parker-Lowe said. “There’s now two on the board and two additional ones who never show up.”

As far as the state is concerned, Herring said that his office is waiting to hear from Hyde how it intends to pay off the bill. If it can’t, he said the state would have no choice but to close the ABC stores and sell the inventory. The county could reopen liquor stores after it submitted a new business plan to the state that met with the Commission’s approval.

Barring that, the county also has the option to partner with another county’s ABC system. Although the state can force a system to close over unpaid bills, he said, it can’t force a merger based on a system’s performance. A recent state study concluded that it was not in the best interest of the state for the ABC systems to become private enterprises.

Herring said that the commission is mindful of the challenges that Hyde faces.

“We’ve tried to help them the best that we could,” he said. “We don’t have monies that we can throw toward them to help them stay solvent.”

But Parker-Lowe said that the “looseness” in the way the Hyde system was run has been tightened and is continuing to be tightened. He added that the Commission has hardly been on the phone offering helpful advice to the Hyde ABC Board on the current crisis.

“No thanks to them,” Parker-Lowe said, “we’re going to get through it.”