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26 <br /> MEMORANDUM <br /> DATE: November 4, 2002 <br /> TO: Mike Mornson, City Manager <br /> FROM: Roger Larson, Finance Director <br /> ITEM: STONEHOUSE INSURANCE RENEWAL <br /> In early April, the City went out for bids to renew the dram shop insurance for the <br /> Stonehouse Bar& Grill. From a competitive bidding prospective, the results are not <br /> good news. A review is as follows: <br /> 1) United States Liability Insurance—Declined to quote due to loss history. <br /> 2) Lexington Insurance Company—Declined to quote due to loss history. <br /> 3) Scottsdale Insurance Company—Declined to quote due to loss history. <br /> 4) Minnesota Joint Underwriting Association- $72,075 ($48,060 increase) <br /> In addition, State Farm Insurance contacted the City to quote, but withdrew because of <br /> the sales to food ratio at the Stonehouse (80% liquor, 20% food) did not fit State Farm's <br /> requirement that liquor sales can not exceed 35% of sales. <br /> This leaves the quote from the Minnesota Joint Underwriting Association at$72,075 as <br /> the sole choice for the City in 2003. <br /> At our 2002 and 2003 goal setting and strategic planning meetings, staff discussed <br /> concerns that increased costs for dram shop insurance, could significantly impact the <br /> Stonehouse's ability to remain profitable. <br /> A review of the 2002 Profit and Loss and estimated 2003 P &L with the insurance <br /> increase is as follows: <br /> 2002 2003 <br /> Profit from Operations $ 8,507 ($19,450) <br /> Other Income $43,569* $46,875 <br /> Total Income $52,076 $27,425 <br /> *Video Games $ 9,300 <br /> ATM $11,000 <br /> Check Cashing $10,500 <br /> Pull-Tab Rent $10,800 <br /> Other Misc. $ 1,969 <br />