Pennington County commissioners took the first step Tuesday toward holding an auction to issue its lone remaining liquor license.

The commission stopped short of lifting its self-imposed moratorium on issuing liquor licenses and ordering an auction of its last available license.

Instead, it directed deputy state's attorney Jay Alderman to draft a revision of the county's liquor-license ordinance to give the commission the option to auction licenses.

The other method of selling a liquor license is by the first-come, first-served basis. That could be done, Alderman said, by setting a date for the moratorium to be lifted; then, the first completed application to be received at the courthouse would be the first processed.

Commissioner Ethan Schmidt said he was concerned that an auction could be prejudicial against rural areas of the county because a high-priced license would likely have to be placed near Rapid City to be profitable.

Commissioners Jim Kjerstad and Gale Holbrook said they favored an auction. Kjerstad said he believed an auction would be a fairer process.

Holbrook said an auction would also give the county an idea of how much liquor licenses are worth.

In an auction, the commission likely would set the minimum bids, according to deputy county auditor Vicki Wolf.

The county's current liquor-license ordinance requires the county to charge $250,000 for licenses that are used for businesses near Rapid City and $25,000 for licenses used near smaller cities in the county.

The commission voted unanimously to direct Alderman to rewrite the ordinance to give it the option of using auctions to sell liquor licenses. The language should make clear the county can reject any and all bids, commissioners said.

The county has a total of 18 liquor licenses, including the one that is currently available, according to County Auditor Julie Pearson.

Last year, before the current liquor ordinance was revised, the county sold six liquor licenses. One license, used near Hill City, sold for $5,000, as required under the ordinance at that time. Each of the other five sold for $125,000 because the businesses were closer to Rapid City, Pearson said.

Revenue from liquor-license sales goes to the county's general fund, Wolf said.

Meanwhile, two of the county's current licenses, one held by Sharaf Properties LLC and another by Atlantis LLC, both off Interstate 90's Exit 61, likely will be annexed into Rapid City, Wolf said. The licenses will be transferred into the city, and as a result, the county will be allocated two liquor licenses to replace those, she said.

Meanwhile, county officials are waiting to see how a new state law creating another type of liquor license will affect county business when it takes effect July 1.

SB126, signed into law by Gov. Mike Rounds, allows cities and counties to issue an unlimited number of liquor licenses to full-service restaurants that derive most of their business from the restaurant.

Attorney Alderman said the state Revenue Department hasn't yet finalized rules for administering the new law.

Contact Steve Miller at 394-8417 or steve.miller@rapidcityjournal.com