We don't need no stinkin' liquor license reforms

[Rail Paul]

The Bergen Record has a a follow up to its article about the big real estate developers directing the state to change its restrictive and archaic rules on restaurant liquor licenses. The NJ Restaurant Association, long a foe of change, has agreed apparently that some changes may be necessary. But, quite reasonably, it argues that people who bought expensive licenses shouldn't have that value eroded.

 

Senator Paul Sarlo notes he was able to pass a law giving special permit (state) licenses to a redevelopment zone in his district. But the holder of a Teterboro license (the only holder?) complains his license is now worth less. For the record, Sarlo opposes reform, believing the current system works fine. (my observation: fine for him)

 

Montclair's mayor, who is also a real estate developer, suggests that towns designated as regional centers (Montclair, Ridgewood, Summit, Morristown, Westfield, etc) should be given extra licenses. These low cost licenses would be auctioned off, providing money for the town.

 

I don't know how this works in a place like Montclair, where 25% of the current licenses are inactive, being stockpiled for future use. Maybe requiring that new licenses be given only when all current licenses have been in use for two years or more would be a better idea. And that doesn't resolve how the Pig & Prince with its nearly million dollar license benefits when a place across the street gets a $250,000 license. Or whether somebody who has seen the value of their asset surge has any right for protection of their asset.

 

 

http://www.northjersey.com/news/business/new-push-on-liquor-licenses-1.1072832?page=all

[E.L.A.]

The Bergen Record has a a follow up to its article about the big real estate developers directing the state to change its restrictive and archaic rules on restaurant liquor licenses. The NJ Restaurant Association, long a foe of change, has agreed apparently that some changes may be necessary. But, quite reasonably, it argues that people who bought expensive licenses shouldn't have that value eroded.

 

Senator Paul Sarlo notes he was able to pass a law giving special permit (state) licenses to a redevelopment zone in his district. But the holder of a Teterboro license (the only holder?) complains his license is now worth less. For the record, Sarlo opposes reform, believing the current system works fine. (my observation: fine for him)

 

Montclair's mayor, who is also a real estate developer, suggests that towns designated as regional centers (Montclair, Ridgewood, Summit, Morristown, Westfield, etc) should be given extra licenses. These low cost licenses would be auctioned off, providing money for the town.

 

I don't know how this works in a place like Montclair, where 25% of the current licenses are inactive, being stockpiled for future use. Maybe requiring that new licenses be given only when all current licenses have been in use for two years or more would be a better idea. And that doesn't resolve how the Pig & Prince with its nearly million dollar license benefits when a place across the street gets a $250,000 license. Or whether somebody who has seen the value of their asset surge has any right for protection of their asset.

 

 

http://www.northjersey.com/news/business/new-push-on-liquor-licenses-1.1072832?page=all

 

Very good article -- and thank you for posting it.

[Anthony Bonner]

It amuses me that existing license holders think they are entitled to be compensated.

 

I guess the Times thinks Google should pay them for destroying their business?

[balex]

Yes exactly -- "But, quite reasonably, it argues that people who bought expensive licenses shouldn't have that value eroded."

Um, no.

[Rail Paul]

Yes exactly -- "But, quite reasonably, it argues that people who bought expensive licenses shouldn't have that value eroded."

Um, no.

 

Quite reasonably, from the perspective of the restaurant association. Which represents the owners of the current licenses.

 

As one poster mentioned on the other thread, this is a classic monopoly, no different than taxi medallions. The value of the asset is largely due to its government mandated shortage.

 

If licenses could be obtained easily, Senator Sarlo's special powers to conjure licenses wouldn't be worth much. And the Cheesecake Factory wouldn't have had to pay $2.3 million for a scarce Millburn-Short HIlls town license.

[Rail Paul]

The Bergen Record reports that changes are underway.

 

I've heard that the powers are considering two major changes. One would be a wine and beer license for restaurants with under 25-30 seats, no bar facility. The other would be some kind of a "mall license" which towns / counties could issue outside the usual quota.

 

The developers have directed the legislature to change the law, so the real question is what changes will actually be made? Having some way to compensate people who paid two million for their license would be high on the list. Or people like McLoone (Boathouse in West orange) or Demetri (De Novo) who received nearly free government licenses.

 

http://www.northjersey.com/news/business/n-j-liquor-license-reform-brewing-for-new-year-1.1174900

[Suzanne F]

 

Yes exactly -- "But, quite reasonably, it argues that people who bought expensive licenses shouldn't have that value eroded."

Um, no.

 

Quite reasonably, from the perspective of the restaurant association. Which represents the owners of the current licenses.

 

As one poster mentioned on the other thread, this is a classic monopoly, no different than taxi medallions. The value of the asset is largely due to its government mandated shortage.

 

If licenses could be obtained easily, Senator Sarlo's special powers to conjure licenses wouldn't be worth much. And the Cheesecake Factory wouldn't have had to pay $2.3 million for a scarce Millburn-Short HIlls town license.

 

But wasn't it recently reported that the value (or price?) of medallions is down? Due to incursions by Uber and such.

[Rail Paul]

NYC taxi owners are also upset that they have to convert to accessible cabs for wheel chairs, etc. And the new green outer borough cabs are cutting in on Manhattan business, even though they're not supposed to be.

[Sneakeater]

 

 

Yes exactly -- "But, quite reasonably, it argues that people who bought expensive licenses shouldn't have that value eroded."

Um, no.

Quite reasonably, from the perspective of the restaurant association. Which represents the owners of the current licenses.

 

As one poster mentioned on the other thread, this is a classic monopoly, no different than taxi medallions. The value of the asset is largely due to its government mandated shortage.

 

If licenses could be obtained easily, Senator Sarlo's special powers to conjure licenses wouldn't be worth much. And the Cheesecake Factory wouldn't have had to pay $2.3 million for a scarce Millburn-Short HIlls town license.

 

But wasn't it recently reported that the value (or price?) of medallions is down? Due to incursions by Uber and such.

 

All that proves is that it's no longer really a monopoly (as long as the government allows Uber et al. to operate).

 

There's no similar way to compete with licensed bars and restaurants without a license. (Well, there is: home dining clubs. But they don't have nearly the impact of Uber et al.)

[E.L.A.]

I never saw this as a monopoly -- which by definition, to me, has always been the "exclusive" attainment, possession, control, etc. I guess that some can see this as a monopoly by those who have the licenses; however, there is a price -- there is an economic barrier to entry. This might not be the traditional monopoly -- electricity, gas, water, back in the day -- but there has to be a medium here.

 

If one selected Montclair, and wanted to open a restaurant and buy a license -- buy the license. If there is a license being "hoarded" and not actively being used, and it's not actively for sale -- I get that. Why not debate that Montclair is not "feasible" for that buyer? Why not look elsewhere? It's a futile discussion. However, regardless of what that person (the "hoarder") paid -- they shouldn't be damaged or hurt. They should be governed, but I am not in favor of a wide and far changing law that takes a license worth $1mm today and makes it worthless tomorrow. Put a time-frame or deadline on it, implement some set of parameters, do something -- but I for one am not in favor of saying, hey, unlimited licenses, it's the wild west, or now a license costs $200 or the cost of a filing fee. No, I am not in favor of that.

 

The extremism runs both ways. I think change is needed, but this is still capitalism, and while a "monopoly" can damage that, so can extreme "anti-trust" laws (at least those to the extent deal with monopolies).

[E.L.A.]

The Bergen Record reports that changes are underway.

 

I've heard that the powers are considering two major changes. One would be a wine and beer license for restaurants with under 25-30 seats, no bar facility. The other would be some kind of a "mall license" which towns / counties could issue outside the usual quota.

 

The developers have directed the legislature to change the law, so the real question is what changes will actually be made? Having some way to compensate people who paid two million for their license would be high on the list. Or people like McLoone (Boathouse in West orange) or Demetri (De Novo) who received nearly free government licenses.

 

http://www.northjersey.com/news/business/n-j-liquor-license-reform-brewing-for-new-year-1.1174900

 

I am glad changes are underway. I think more than those two mentioned are needed, but at the same time, I don't think extremism is the answer. I am not familiar with the "free government licenses" so I can't speak to that. While hoarding a license is a problem -- I don't see it being much different than seats on the major exchanges (NYSE, AMEX, CBOE et al). Do people hoard them? I don't know, but one major difference is that they actively lease them. There is a marketplace -- and while there may never be a "free market" or a truly "efficient market" -- when you have capitalism, there has to be an element of supply/demand and willing buyer, willing seller, and so on.

 

I don't think there is a perfect answer. I just know change could certainly help, but if extreme it might hurt too.

[E.L.A.]

NYC taxi owners are also upset that they have to convert to accessible cabs for wheel chairs, etc. And the new green outer borough cabs are cutting in on Manhattan business, even though they're not supposed to be.

 

Agreed.

[E.L.A.]

 

 

Yes exactly -- "But, quite reasonably, it argues that people who bought expensive licenses shouldn't have that value eroded."

Um, no.

 

Quite reasonably, from the perspective of the restaurant association. Which represents the owners of the current licenses.

 

As one poster mentioned on the other thread, this is a classic monopoly, no different than taxi medallions. The value of the asset is largely due to its government mandated shortage.

 

If licenses could be obtained easily, Senator Sarlo's special powers to conjure licenses wouldn't be worth much. And the Cheesecake Factory wouldn't have had to pay $2.3 million for a scarce Millburn-Short HIlls town license.

 

But wasn't it recently reported that the value (or price?) of medallions is down? Due to incursions by Uber and such.

 

 

I think many people consider the medallion situation as a free market so to speak. I don't think everyone agrees. There is an active, trading market, whether you or others believe it's efficient, inefficient, fair, whatever, I don't know.

[Anthony Bonner]

Its actually the opposite of capitalism.

[E.L.A.]

I don't see it that way at all, but that's OK. We can agree to disagree.

 

I've now heard there are additional changes being "added" -- and while I don't know the mechanics of the legislature and how they go about adding or whatever, like I said, I do think changes are needed here.