An ordinance establishing additional liquor license opportunities for brewpubs, craft distillers and wineries was approved Tuesday, July 13, by the Mount Carroll City Council.

For several months the city council has been discussing the possibility of creating Brew Pub, Craft Distiller and Winery liquor license classifications. City Attorney Timothy Zollinger first presented his ordinance amendment to the council several meetings ago.

This ordinance amends the city's Code Ordinances, creating a Class A-5 liquor license for a brew pub (or craft brewer), craft distiller or winery. Under this classification, businesses approved by the city for such a license would pay $2,000 for the initial license. The annual renewal fee would be $1,000.

Before the council began to discuss the ordinance, Ald. Mike Risko made a motion to table the matter until after a presentation listed on the agenda by Nathaniel Hsieh, which passed with Ald. Joe Grim casting the lone no vote.

Ald. Grim said later in the meeting that while Hsieh's project may be "tied" to the council's decision on the ordinance, the council's decision should not be "tied" on Hsieh's proposal.

"I see this as more of an opportunity for anyone else," said Grim. "Just because we have it on the books doesn't mean that...we have to use it."

Nathaniel Hsieh of Credallion Corp., doing business as Sam's Donkey, attended the meeting regarding the possibility of him operating a distillery producing a Chinese liquor called baijiu at the old public school building, 300 S. Main St. He said that Credallion Corp took over the high school property in 2019, but Ald. Risko noted that Hsieh purchased the property in 2015, under the business name Tritent, with the intent of opening a Chinese academy.

"It's a name game," Risko said, adding that nothing has happened with the property since then.

Risko said he called the state about Credallion and was told the company was "not in good standing." Hsieh said that was due to him not filing the correct annual reports and fees with the state. He said that as of July 13 he had rectified the issue and was now in good standing.

Hsieh discussed his experience as a lawyer as well as several enterprises he has pursued over the past 20 years, offering explanations on why some of them failed. He spoke of the EB5 federal immigration program that allowed him to receive funding for several of his ventures. Risko questioned the program and what revenue Hsieh may have made off of it.

Mayor Carl Bates and Ald. Grim said the focus of the meeting was not Hsieh's past ventures, but his current proposal for a distillery. Grim said the real question is whether the council's opinion of Hsieh has changed and do they support his project.

"My answer to that would be no," said Grim.

Hsieh said he and one other person have spent much of 2021 working on the former school building, trying to fix a lot of the problems with the structure. He said many of the copper wires and pipes have been stripped and he hoped to have electricity back up and running by this week.

Hsieh said his plan is to use the property to distill baijiu, which he described as a traditional Chinese liquor equivalent to vodka or Kentucky moonshine. He anticipates exporting 80 or 90 percent of the finished product to China, with the rest going to Chinatowns across the United States. He said he has received a TTB license, which he said grants him an export license.

City Attorney Zollinger posed questions regarding whether or not Hsieh has the infrastructure for manufacturing the liquor and how he plans to address the extensive damage that is on the north section of the building. Hsieh said they been working on tiles and other issues with the building and he received a $40,000 quote a while ago for the gym roof in the north section of the building.

Zollinger said the area is zoned residential, not manufacturing, and asked Hsieh if he would be submitting a request for re-zoning. Hsieh indicated he thought the property was grandfathered in and would not require rezoning. Zollinger explained that because the school was built before the residential area around it, it was "grandfathered in" for a school.

"If you want to open a manufacturing facility, you would have to ask for the zoning," Zollinger said.

Mayor Bates indicated that addressing the zoning issue would be Hsieh's first step. Audience member Sharon Larsen voiced concerns about the council even entertaining Hsieh's proposal. However, Mayor Bates said it is an issue brought in front of the council and must be considered.

Zollinger said every property owner has the legal right to request a zoning change and "has a right to the process." Once a request is submitted, a public hearing on the matter would be scheduled. Then it would be up to the city to either approve or deny this request.

"It looks like deja vu all over again," said Risko, noting the mayor had previously spoken to Hsieh about the city potentially purchasing the property as a location for William J. Davis Community Center. Risko said the cost of demolition that Hsieh gave the city has increased from $400,000 to $600,000, and now, “all of a sudden Hsieh has this plan for a distillery.”

Hsieh said he gave that $400,000 cost in 2019 and nothing happened. The amount has increased and he has since heard the city has contracted with a company on a feasibility study and site plan for the community center and his property is just one of a few being considered. He asked where this leaves him as a businessman, saying he wants to see someone use the property.

"I personally hate to see the whole building torn down," Hsieh said.

Ald. Grim suggested the city and Zollinger give Hsieh the necessary zoning information and City Clerk Lisa Lewis told Hsieh he could fill out a rezoning request at City Hall.

Grim later made a motion, which was unanimously approved, to remove the liquor license ordinance from the table. Initially, Ald. Doug Bergren and Ald. Risko voted no, until it was explained the motion was simply to allow the council to discuss the matter. They then changed their votes to yes.

Grim spoke more about how having these new liquor license classification will benefit the community by potentially encouraging craft brewers and distillers into the area.

In the public comment portion of the meeting, Larsen and Bev Kilpatrick said they were concerned about the city even considering Hsieh's proposal for a distillery, especially in an area that includes four churches.

"To me, you have to consider it," Mayor Bates said, with Zollinger reiterating that Hsieh has a legal right to go through the rezoning process.