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Developer with a background in bartending gets OK to buy $600,000 liquor license for $3-million restaurant in his $600-million Seaport project
By adamg on Thu, 08/01/2024 - 2:33pm
As Boston officials await word on whether the legislature will give last-second approval to more than 250 liquor licenses for the city, the Boston Licensing Board today approved plans by developer John Hynes IV to pay $600,000 for the liquor license of a defunct downtown bar to use it as an enticement to bring in somebody to run the restaurant he wants to have in his 18-story, $600-million Seaport office and life-sciences building.
With liquor licenses in short supply - and expensive - in Boston, it's become increasingly common for developers to purchase licenses on the open market, which they then use to lure in world-class chefs who might not have six figures worth of cash lying around just for a liquor license.
Earlier this year, the board approved a similar license purchase by the developers of the two-building complex along and atop the turnpike on Massachusetts Ave. between Boylston and Newbury Streets. Today, the board approved a deal between them and Nikolaos Tsoulos, a New York chef, to open what his lawyer called "a classic Greek concept" of a restaurant there, to be called AVRA.
Licensing board rules require liquor licenses to have a formal manager listed on them, so Hynes's deal to buy the liquor license of the former Silvertone on Bromfield Street included having him designated the official manager.
Hynes's attorney, Stephen Miller emphasized at a hearing yesterday that Hynes will not actually work as a restaurant manager, although he said he does have the required background and knowledge of local and state liquor laws, in part from a stint working as a bartender and waiter before he got into the family real-estate business full time. He also meets the other requirements of being a US citizen and a resident of the Commonwealth.
Miller said Hynes will eventually return to the licensing board with a management agreement with a local restaurant concern to actually run the restaurant - into which he said Hynes is pouring $3 million to build out a space suitable for some fine dining.
He said his client has already "talked to some of the premier companies in and around Boston" about the space at the 10 World Trade project at 401 Congress St..
At the hearing, nobody spoke against the proposed license sale, which will also need sign off from the state Alcoholic Beverages Control Commission.
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Suggestion for Restaurant Name
Tres Cher
SYVR??
SYVR??
Great-grandson of Mayor John Hynes
Acting Mayor for part of 1947, elected mayor from 1950-1960
A bet
The liquor licenses that are owned by folks who don't run a bar go without notice. They put only the initial purchase into the license. Then the restauranteur has the job that is in effect paying rent for use of the license. If the restauranteur winds up bankrupt the liquor license owner simply puts it out for use by another restauranteur.
This is part of the defect of the liquor license system. The license should always return to the city for reissue of a bar or restaurant shuts down. When anyone without skin in the game owns th license they can just regurgitate the license.
What is the tax situation for this kind of ownership? As an asset does the owner get to depreciate the asset thereby reducing their tax liability? 1 level of reducing taxes.
If the use of the liquor license is listed as an expense then that is a double decrease on income taxes.
But then that is the reality for all business related rentals. The owner depreciates against taxes and the renter expenses against income.
Even for residential rentals the owner depreciates against their taxes and the rentor reduces their taxable income based on rents paid.
Granted that the owner of a residential rental then has to put back those depreciations when they sell. Don't know if the same applies to owning a liquor license.
Anyone with experience care to weigh in?
raise
if they build the thing for that much money and buy the license then they obviously have skin in the game?
Healthy capitalism like they
Healthy capitalism like they taught you in middle school: Investors and lenders put up money. You use the money to rent space, buy stoves, refrigerators, tables, chinaware, etc, all of which add value to your new restaurant. The investors and lenders, having contributed value, get some of the profits.
Late-stage capitalism: The government, serving the interests of investors and lenders, requires you to put up large amounts of money to buy a liquor license, which adds absolutely no intrinsic value to your restaurant. Investors and lenders put up the money which you use to buy the liquor license. Having contributed absolutely no value to your business, they nevertheless get some of the profits.
Bravo hope it works. It
Bravo hope it works. It would be great if Chambers, Boch, Fish, Ramirez and the recently showcased players mentioned in Boston Business Journal could bring back filled commercial real estate. Boston needs commercial tenants with cash flow to spend. So many vacant storefronts now. Oh. Wait. The embarrassing and crumbling MBTA and it's Grade F transit system is in the way.