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Boston to formally ask legislature for control over local liquor licenses
By adamg on Wed, 12/18/2013 - 2:21pm
The city council today voted 12-1 to ask the legislature to lift the current state cap on liquor licenses in Boston and return control of the Boston Licensing Board to the mayor.
Only Councilor Bill Linehan (South Boston, South End, Chinatown) voted against at-large Councilor Ayanna Pressley's proposal.
The home-rule petition to go to the legislature would not only give Boston control back over liquor licenses, but would require the licensing board to "make distribution of licenses a priority in Main Street districts, urban renewal areas, empowerment zones and municipal harbor plan areas." Over the past two to three years, licenses have increasingly become concentrated downtown and along the waterfront as well heeled national chains offer up to $300,000 for licenses on the open market.
Under Pressley's plan, at least one member of the board would have to represent "an empowerment zone, urban renewal, district or main street district." Her measure would maintain the current state limits on the number of package-store licenses in the city.
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Comments
Did Linehan explain why he
Did Linehan explain why he doesn't want Boston to be in charge of its own alcohol licenses, the way Cambridge is? Is it just a reflex anti-change the way things are, or did he detail his opposition?
Agreed
Would love to hear why he voted against that. Does not make much sense.
Wow Wu
I can't believe Councilor Wu abandoned El Presidente elect Linehan in his progressive fight against booze proliferation.
Wu isn't on the Council yet
Wu isn't on the Council yet so she did not vote on this. Still, this was an issue she campaigned heavily on. And the guy she is elevating to power opposes it. Would love to hear his reasoning.
Hey, Wu...
The guy who thinks the city should defer to the state on how to handle our licensing is your champion.
Congratulations.
Hooray, Council!
You guys aren't always useful, but this time you done good!
Now, could the mass media please make this a BFD so more people in the city realize the licensing board is actually run by the governor and not the city? That the history of it is rooted in the Brahmin control of the city from Beacon Hill? That it's absurd and needs to end.
The state isn't going to care about this petition from the city unless there's pressure felt.
A much more important change
would be to create nontransferrable licenses that are relatively easy to get. You want to run a restaurant or bar, instead of scrounging up a half million dollars to buy a license on the secondary market, you just apply for a license, you get one, and you operate your restaurant and bar. When you're done operating your restaurant or bar, your license (for which you didn't pay anything other than the application fee) expires; the next owner can apply for a license, too. Just like most licenses for most businesses.
B-but then where's the
B-but then where's the opportunity for graft?!
It's in the Details
Join the police or fire department. You can get all the graft, sorry detail pay, that you want.
This is exactly how it works
This is exactly how it works in Brookline.
Disqualified
Linehan just disqualified himself from any rational consideration of him as president of the city council.
The great sucking sound of the moneyed downtown restaurants is killing neighborhood joints as they get priced out of the market for licenses. And neighborhoods are where the voters live.
Boston isn't just for tourists. Up with liquor licenses, down with Linehan.
I'm still waiting for an explanation why he voted against
Several reporters were there (I wasn't, alas), but none have yet to give his side.
However, just hazarding a guess here, he's probably going to say South Boston has enough liquor licenses. He also hates 2 a.m. closing times.
So do I
I think they should be allowed to stay open all night if they want.
The list of things Linehan
The list of things Linehan hates is long and pretty much includes everything thats happened since 1950 and everyone who is not irish.
And no sooner do I write that then ...
Garrett Quinn tweets Linehan said his no vote was out of concern for current license holders, who could see the value of their licenses diminished with more licenses being issued.
Boo freaking hoo
Rent-seeking behavior with public goods should not be granted an eternal free pass.
Councilman
QuimbyLinehan shows which side his bread is buttered on by giving that excuse.Yes, license values should diminish. This is not a negative side effect, it is a desirable social goal.
Indeed
Times 20.
Cab medallions and liquor licenses are artificial markets propped up by skulduggery.
Bingo
Guess it's pretty clear now where he gets his campaign financing. Why would he care about the price of a license diminishing? What a dope.
So its a anti-change the way
So its a anti-change the way things are vote.
The system is broken, even he seems to agree if thats his main opposition to it, and his plan is "On track, stay the course. Thousand points of light."
Linehan has a point. Holders
Linehan has a point. Holders of existing licenses because of state laws had to pay hundreds of thousands of dollars. Now the city council is asking that the law should be changed in a way that will drive down the value of licenses. If the law is changed the only equitable thing to do is to reimburse existing license holders for the deprecation of their property. It seems only fair to do that.
Tough Situation
The solution to this problem is probably not going to be a win-win for everyone, but by doing nothing to try and fix it the majority loses.
Not quite. Every investment
Not quite. Every investment has risk.
Disagree
When the value of your investment derives (in part) from a government-imposed scarcity, the risk is the government will lift that regulation and end the artificial scarcity.
Regardless, Linehan here is siding with the monied few over the drinking millions, which wins no points in my book.
Yes but there's a fair way to do this
Issue bonds to reimburse them cost plus a rate of inflation - build that cost into all the medallions/licenses whatever and then spread it across a new open unlimited system and let supply and demand dictate (and zoning in the case of restaurants/bars).
Remember - a lot of these people are small businesses - you can't just pull the rug out from under them like that - give them back what they paid - then make everyone amortize that cost as part of the new fee.
Right, Stevil.
While I don't believe the Councilman actually had these small business people that you speak of in mind, you are exactly right in that there has to be some consideration for existing license holders, and that it need not be so acrimonious.
As for the F-the-existing-licensees crowd here, we'll be sure to remind you of your position that when your local municipality changes the zoning around your home lopping a couple of hundred thousand dollars off its value - or tries to change the rules about where your kids can go to school with the same effect.
It doesn't matter that they
It doesn't matter that they're small businesses. The license is a sunk cost, and sunk costs don't ultimately affect the decision-making process of those businesses at all. If they're not making money with each drink that they sell now that they're open, then they're going to close regardless of what the liquor license is worth. If they're making enough that they can pay back any loans that they may already have, then devaluing liquor licenses doesn't change that math one bit.
There will certainly be effects from this change (if the state allows it), and some of them might be bad for some existing license owners. It could certainly make the bars compete with each other more if more licenses are issued. But the notion that this will cause immediate hardship to existing license holders is just nonsense.
- Your friendly local economist
Can I have your house when you're done with it?
So you take out a $300k mortgage and government makes some kind of decision like changing the zoning to industrial - such that your land becomes worthless under the zoning law. That's fair. I believe there are laws that classify that as a "taking" - and there are similar laws regarding pulling these kinds of licenses.
A lot of the loans to buy these licenses are collateralized against the license. What happens when the bank comes and says, no collateral, pay it back or maybe your interest rate just goes up substantially because the loan is now unsecured?
Like it or not - this is a business transaction. As my business consultant friend likes to say - the bell can't go ding-ding. It has to go ding-dong. If government starts screwing local business owners you're going to have a lot of people concerned about what comes next.
I'm not talking reimbursing "theoretical costs". Kind of like the Madoff issue - only provable losses - if you bought your license last month for $300k - you get your 300k if you bought it 20 years ago for $50k - that's what you get - plus an allowance for inflation. You start giving your local businesses the middle finger for playing by your rules when it's not their fault that this was a stupid rule to begin with - you're not going to have local businesses. On the other hand - if they thought they were going to get rich buying and selling these artificially inflated pieces of paper - they don't get that either.
As SP points out below - some 20-30 years from now - the bonds are paid off and to his point the value reverts to a more open market/permitting level - so it goes away slowly - I agree with him, but I just don't think you can screw hundreds of restaurants along the way for something that wasn't their fault - the government made the problem in the first place.
Easier fair way to do it
The easier fair way to do it is just to increase the number of licenses slowly, and at such a rate that the value of the current license depreciates to a token amount over maybe two decades.
Nobody needs compensation for their expected losses, and the government doesn't need to replicate the expensive special monopoly privilege in another fashion.
And remember where Linehan
And remember where Linehan represents - not just Southie, but also the waterfront, where a lot of those expensive licenses are. So one of his two bases (the developers in the waterfront) will stand to lose large investments if this went through. That's my reading.
Screw that.
A license derives its value from an artificial scarcity created by the government. The government made no explicit or implicit promise to continue creating the artificial scarcity. Anyone who bought a license did so at his or her own risk, knowing full well that the government could, at any time, begin issuing more licenses. People speculate on licenses; the government is under no obligation to make them whole if they bet wrong.
What they bought
They bought the ability to sell booze sooner than anyone without $300k extra around when they opened their restaurant.
Cab medallion
Cab medallion reform next?? Or am I just hoping for too much now...
We actually need
cab medallion elimination, not reform.
nice!
Wu tried to co-opt this issue from pressley so I say way to go councilor pressley! bill linehan you are an ignorant dinosaur
ABCC
If or when Boston controls its liquor licenses they, like all municipalities, must defer to the ABCC. The ABCC is the final arbiter and signs off on all local decisions.
Additionally I suspect that Boston will only be able to increase their "pouring or on premise" licenses. Although Cambridge ( and Plymouth) decide for themselves how many pouring licenses they want they have a state wide limit on their non-pouring licenses.
I'd argue that alcohol outlet density has been shown to correlate with many adverse secondary effects. like. DUI's and other offenses that are the result of alcohol abuse. Alcohol is not an ordinary commodity. It is a drug that contributes to many crimes and tragedies. Sexual assaults, domestic violence, etc...
Please insist that the vast public health and substance abuse prevention data and research is included in the debate.
You're conflating two problems:
Which is precisely what they're asking for.
In which "alcohol outlet" is a packie, right? A package store is different from a pouring license.
What most of the neighborhood restaurants want is either a beer/wine licence, or a full service license. The first, like Stone Hearth Pizza in Allston, is so Gramps can have a glass of wine while dining with his grandkids (see also Johnny's Lunchionette in Newton Centre). The second is what Mike's in Davis Square went for, and has morphed from where college kids get beer with their pizza or Gramps takes the kids to an early dinner -- into a sports bar. Gak.
Boston is right; they need to have the cap lifted and more control over these licenses; I suspect that there will be a lot more "beer & wine" licenses issued than full service bars -- well, outside of Back Bay and the Harborfront.
Classic Massachusetts
Classic Massachusetts politics... Why should Boston control its own economy and licensing? Why shouldn't the federal government be able to listen to our phone calls? Rand Paul 2016