Editor's Note: This version has been updated with the Wilmington City Council's decision on the Land Development Code change proposal.

Seth Thompson expects to need a 2,500- to 3,000-square-foot building for a new craft distillery, he said Monday.

Thompson and partner Alex Posey plan to start off with a vodka line at their new business, High Tide Distillery, before moving to gin, bourbon and rum.

While they wanted to open the distillery in Wilmington, a decision city officials made Tuesday could mean the partners look elsewhere.

Before they moved forward with their business plan, they were hoping the Wilmington City Council would approve a Land Development Code change at its meeting Tuesday night that would allow craft distilleries, as well as other artisan businesses such as wineries, chocolatiers and coffee roasteries, to be located in a wider variety of districts than currently permitted.

“We feel like they will make the right decision,” Thompson said Monday of Wilmington City Council members. “Once we get approval, we’re going to finalize our location.”

But after the council voted 4 to 2 Tuesday to delay making any further decisions on the change until a meeting in May, Thompson said he was not happy, feeling like the process has dragged on after a similar measure was held previously at a meeting in February.

"This is a typical situation where growth is stalled unnecessarily. Wilmington's first distillery may be relocated to a neighboring community that is more accepting...and those phone calls have been made to us," Thompson said in an email Thursday.

Councilwoman Laura Padget, who made the motion Tuesday to hold off on making a decision about the change until May, said she wanted to make sure any change still looks after the needs of residents in mixed use districts.

"I want these facilities to exist. I think this is a great way to address it, to look at all artisan-type production facilities and make them an amenity and enhancement to the city and to those districts, but at the same time, I don't want it to get to where the existing uses and existing residents find that they are taken over with these facilities. . . I'm concerned that there's insufficient limitations to the effect that they could have on a particular neighborhood," Padgett said Tuesday night.

Phil Prete, senior city planner, told Padgett that businesses such as night clubs and restaurants are currently not prohibited from establishing outdoor gathering places in the districts concerned, including mixed use zones. 

"What we tried to do is look at other uses that were already allowed in those districts that would have a similar level of impact and tried to treat them similarly," Prete said, explaining the city staff's reasoning in coming up with the wording for the proposed change.

Councilman Kevin O'Grady said he didn't think the definition of "artisan" facility in the resolution was very good because "all it addresses is size [under 25,000 square feet]. . . That doesn't tell me anything about what they'r egoing to do inside it."

Mayor Bill Saffo and Councilman Charlie Rivenbark voted against the motion to continue the issue until May.

Without the change, Thompson would be limited to opening a craft distillery in an industrial zone or possibly an urban mixed-use district. The restrictions don’t take into account the smaller size and different business model of craft distilleries as opposed to large manufacturers, according to Thompson and city planning documents.  

“While smaller artisan producers catering to walk-up customers would be out of place in the city's industrial districts, they can become an attraction and economic catalyst in commercial and mixed-use districts,” wrote city manager Sterling Cheatham in a letter to city officials on the proposed changes.

The amendment resolution continued to May addresses concerns officials had about whether a previous proposed change, which concerned craft distilleries only, might conflict with Alcoholic Beverage Control requirements.

Cheatham wrote, “Staff believes this [broader] approach does not conflict with ABC regulations and avoids having to return with a new amendment every time someone has a new business idea ...”

In the letter that accompanied Tuesday’s agenda, Cheathamwrote that the staff recommended passing the ordinance, which would add artisan food and beverage producers as a permitted use in the Community Business (CB), Regional Business (RB), Central Business (CBD), Commercial Services (CS), Mixed Use (MX), Riverfront Mixed Use (RFMU), and Urban Mixed Use (UMX) districts.

Discussing a potential location for High Tide Distillery on Monday, Thompson said the distillery's address might not necessarily be downtown.

“Our building location will be primarily for production; however, we will be offering distillery tours as well as a small retail section,” he said.

In September, the City Council adopted an ordinance that defines several classes of breweries and where they are allowed. Like Wilmington’s growing craft brewery industry, plans for a craft distillery in the Port City are indicative of a nationwide trend, according to industry experts. In 2008, the number of craft distillers in the U.S. was 109, increasing to 425 by 2013, according to an article in the winter edition of Distiller, a publication of the American Distilling Institute.