Coon Rapids to revisit prepay at gas stations

Coon Rapids' pay-before-you-pump ordinance may have eliminated drive-off thefts at gas stations, but it has also siphoned off sales, some station owners complain.

Under mounting pressure from owners who cite a precipitous drop in sales of gasoline and convenience store items, the City Council will examine the effects of the prepay ordinance six months after it was enacted.

Business owners are hopeful that two new City Council members sworn into office in January will join the other two "no" votes on the seven-member council, leading to either repealing or revising the ordinance.

The city's prepay ordinance is the first in the state to require prepayment for all gasoline purchases unless the business owner recognizes the customer. The City Council approved the prepay ordinance by a 5-2 vote in February 2012 after intense debate.

Its passage wipes out nearly 500 gasoline thefts a year, according to the police chief.

It's also wiped out a substantial amount of business, some gas station owners say. "The ordinance has been pretty devastating," said Stephen Linn, CEO of the Linn Companies, which operates a Holiday station in Coon Rapids. "It's been devastating to our customers. It's been a significant inconvenience to them. ... We've seen a significant percentage decrease in customer counts, gasoline sales volume and inside sales volume."

More than 80 percent of customers use credit cards to pay for gasoline at Linn's station. Still, 40 percent go inside to settle up versus paying at the pump, Linn explained. Customers choose to pay inside to use coupons or buy a cup of coffee, a doughnut or a gallon of milk. Customers forced to prepay are less likely to buy convenience store items, he said.

"If you have two transactions, you pay two transaction fees," Linn said.

Prepay customers, who are forced to estimate how much it takes to fill their tanks, buy one less gallon of gasoline, on average, Linn said.

And then there are the customers who just keep driving and buy gas in neighboring cities.

Linn and other owners have shared sales numbers with council members and city staff. He declined to disclose specific sales numbers to the Star Tribune, but said the percentage drop in sales is in the double digits.

The City Council has directed staff to gather data for review at a March 20 council workshop.

New Coon Rapids Council Member and retired Police Chief Steve Wells said the prepay ordinance was a hot-button issue on the campaign trail. Wells and Council Member Ron Manning were sworn into office in January

"It was the number one thing on people's minds. ... I said I would not have voted for it," Wells said. "I will have an open mind in March. At this point in time, I have not changed my position that I would not be in favor of it."

Manning did not return a call for comment. Jerry Koch, who along with Mayor Tim Howe voted against the prepay ordinance, said he supports repeal.

"It's been so patently unfair to our businesses and to our citizens," Koch said. "People just want to go to the gas station, get their cup of coffee, their doughnut, pay for it and go to work. It's a real pain. I hear it all the time from people complaining. You know what's worse? The people who don't buy gas here anymore."

But the city's police chief said the prepay ordinance eliminates nearly 500 drive-off gasoline thefts each year, freeing up police to investigate burglaries and other serious crimes.

Wise said the department has focused more resources on investigating burglaries, which have dropped from 170 in 2011 to 117 in 2012. Several factors account for that drop, he said.

"We can make a fair case that the work of the police department can influence that rate," Wise said.

Linn said he understands that 500 gas thefts a year sounds high, but divide it between the city's more than two dozen filling stations, and it averages to less than two drive-off thefts a month per station. Linn said he and other owners often pursue drive-offs with collections efforts and civil court action before calling police.

Still, Council Member Ben Johnson said the high number of gas drive-off thefts hurt the city's reputation by inflating its crime rate.

"Compared to other communities, we looked terrible," Johnson said.

"There are business issues on one side of the issue, in my mind. The broader community impact is on the other side of the issue," Johnson said.

At least one council member who originally supported the prepay ordinance said his vote is now in play.

"Things have changed. The legislation that was passed providing a civil remedy makes it less important now," said Coon Rapids Council Member Bruce Sanders. "I am not going to commit to repealing or not at this point, [but] I am leaning closer toward that depending on the information I receive at the workshop."