Is more merrier when it comes to bar licenses?
Tucked into Gov. Deval Patrick's $100 million economic development bill filed in April is a proposal to lift the state cap on liquor licenses and turn their control over to cities and towns, a move that could make development of new restaurants a more seamless process.
State law dictates that municipalities can issue one liquor license per 1,000 residents, so a restaurant or bar looking for one must verify that licenses are available before choosing new locations.
If all licenses are in use, a city or town will sometimes petition the state Legislature for additional licenses, but that process can take months or even years. Meanwhile, developers could bring their projects elsewhere.
This predicament impacts cities and towns across the state, said Jonathan Cosco, senior deputy general counsel for the state's Executive Office of Housing and Economic Development.
“I think recent experience has demonstrated to us that this is an important way to help eliminate obstacles to important economic projects,” Cosco said, adding that major retail development projects requiring restaurants as anchoring tenants are often bogged down by the process of pursuing more liquor licenses through the Legislature.
“People are trying to make business decisions in real time,” Cosco said. “This process doesn't fit into that.”
Cities pushing for years
Many mayors would like nothing more than to see this process, known as a “home-rule” petition, become defunct through Patrick's new proposal, and many have been advocating for such a change for years, according to Marlborough Mayor Arthur Vigeant.
Vigeant hasn't faced the issue in his city, because Marlborough was one of 25 that opted out of the state cap system in the mid-1980s. At the time, the Legislature gave cities and towns a short window to opt out, Vigeant said. But he isn't sure why Marlborough made that decision while other communities chose to continue with business as usual.
Vigeant recognized the advantage Marlborough enjoys in controlling the number of liquor licenses issued.
“We can make decisions faster,” Vigeant said.
Franklin also opted out, and today, that allows councilors to regulate licensing in a way that makes sense, Town Administrator Jeffrey Nutting said.
There's no limit on the number of licenses Franklin will issue (Worcester and Sturbridge also are not limited), according to Nutting, though he noted that Franklin, like all municipalities, is still subject to state regulations governing licenses for liquor stores. Nutting said the town keeps the restaurant and bar scene in check by requiring all establishments to serve food.
“We don't want bar rooms,” Nutting said.
Franklin generates about $500,000 annually in meals tax money. He predicted Patrick's proposal, if successful, will be a boon for other cities and towns.
Leominster Mayor Dean Mazzarella is dubious about the odds of success for Patrick's proposal. But he said this is probably the best shot cities and towns have to gain control.
In Leominster, there is always demand for more liquor licenses, Mazzarella said, adding that he'd jump at the chance to testify on the proposal, which was scheduled to be reviewed in a legislative committee hearing May 29, along with the bill's other provisions.
On the other hand, the industry may be split on the issue. Because liquor licenses in Massachusetts are a hot commodity, they carry a value, even though state statute determines they're not assets, according to Cosco. “
“We're not taking away any existing rights,” Cosco said.
That may be true, but according to city leaders, there is some pushback from business owners who paid big bucks for their liquor licenses.
Gardner Mayor Mark Hawke said that in his city, there's an underground market for liquor licenses, which fetch in the neighborhood of $50,000 each, and licensees may feel their assets are being devalued if the cap is lifted. But Hawke was unmoved.
“I'm saying it's not an asset of the business and it shouldn't be,” Hawke said. 'Anyone should be able to come in and go through the vetting process.”
Bob Luz, president and CEO of the Massachusetts Restaurant Association, based in Southborough, walks the line between wanting business growth and preserving the assets of existing business owners. Despite the fact that state law says liquor licenses are not assets, Luz agreed that low supply due to state caps has created a premium for them.
Luz said licenses in Boston can sell for close to $400,000; sales between $100,000 and $250,000 are more common. Many restaurant owners post licenses as collateral when they need a loan, and removing state limitations will devalue them, according to Luz.
But he doesn't oppose Patrick's proposed change outright.
“I think (Patrick) is right, we just need to figure (it) out … so it doesn't hurt people in the long run,” Luz said.
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