How can DC fix the liquor license process?
A number of businesses' recent tangles with DC's liquor license process has clearly shown the need for reform. The long saga of Hank's Oyster Bar in Dupont Circle clearly demonstrates the flaws as well as some strengths of the current system.
Back in 2005, Jamie Leeds wanted to open a restaurant on Q Street NW just east of 17th Street. However, a number of residents oppose new liquor licenses on 17th. They fear, rightly or wrongly, that 17th could become entirely filled with bars, making it much noisier and pushing out other types of retailers.
Leeds negotiated a Voluntary Agreement with ANC 2B, specifying some limits. However, other residents weren't satisfied and wanted even stricter limits, and the ANC pulled out of the process. Leeds reached an agreement with a second group, and then yet a third pushed for even more, effectively "moving the goalposts" and stopping the restaurant from opening.
The Alcoholic Beverage Commission (ABC) Board, which adjudicates liquor license decisions, kept telling Leeds to continue negotiating with residents, as she explained at the ABC Board hearing (page 164-165). Her savings running out, she felt she had no choice but to agree to all of the demands, and finally opened the restaurant.
Today, Hank's is a very popular establishment that is almost always bustling and fills its patio in good weather with a mix of people having a good time and not causing trouble. Leeds secured the rights to expand into the vacant adjacent townhouse, but again faced the obstacles of the liquor license process.
The VA limited Hank's seating capacity, and some of the residents involved in the original VA weren't interested in allowing expansion. The ANC, on the other hand, didn't object to the expansion, and had previously endorsed the idea of some lateral expansions on 17th. The ABC Board had even extended 17th Street's liquor license moratorium only on the condition that up to 3 existing businesses be allowed to expand.
But in the VA process, any group of residents can force a hearing. After a months-long process, Leeds secured permission from the ABC Board to terminate the VA. All she had left to do was go through one more ABC Board hearing to actually modify the liquor license for an expanded business, and all would be well as far as most neighborhood residents were concerned.
However, another wrinkle suddenly appeared. In Dupont, the ANC habitually negotiates a VA with businesses in residential areas to end outdoor seating at 11 pm weeknights and midnight weekends, though they can stay open later indoors. This is a reasonable balance between the needs of residents and businesses; establishments can keep selling food and alcohol, but need to move inside to cut down on noise. This had been part of Leeds' VA.
The placards Hank's posted for its license renewal included the previous 11 pm and midnight hours. But when the ABC Board terminated the VA, they said Hank's hours could automatically revert to the maximum legal hours of 2 am weekdays, 3 am weekends as in their original 2005 application, and Hank's attorney Andrew Kline started suggesting the restaurant might stay open later. This threatened to undermine the neighborhood consensus in favor of Hank's expansion and the support of all those who had defended Leeds.
To preserve this neighborhood policy, the ANC suddenly had to reverse course and "protest" the license. Now the ANC, formerly an ally, suddenly looked to be an opponent. Fortunately, Hank's agreed to keep its hours at the neighborhood standard, and the ANC expects to support that at a special meeting Wednesday.
What's wrong with this process? Fundamentally, it hasn't effectively handled this situation where most residents support the license or the change with some limited restrictions, while others want no change or no establishment in the first place.
Some think VAs should be abolished altogether. However, DC can help businesses secure their liquor licenses more smoothly without throwing out this tool which is often very useful. Here are some steps the DC Council and/or the ABC Board can take.
Combine hearings and speed them up. If it concludes soon, the entire Hank's process will have consumed an entire year and many, many hours of legal bills. Yet the current proposal is identical to the original one. It shouldn't take so long to make a change.
This process included a number of separate hearings on different segments of the process, such as first removing the VA and then making the change to the license itself. All of these steps could be condensed into a single step. The establishment can put up its required placards to notify neighbors of the proposal, give a reasonable amount of time for people to weigh in, and then have one hearing to listen to testimony and make a decision.
Don't wait for agreement before holding the hearing. The ABC Board back in 2005 hurt Leeds by delaying action on her application until all protesting residents could agree. The fact is that in many cases, there are a few people who won't go along with even an overwhelming consensus.
The board should schedule its hearing and encourage the applicant to work out agreements with others, but if they can't satisfy everyone, the hearing should happen and the board can judge protestants' arguments for themselves. To its credit, the ABC Board has been moving much faster in recent years.
Clearly limit the parameters of VAs. Hank's VA not only regulated hours of operation and seating, but also prohibited any lettering on umbrellas besides the restaurant's name, and demanded certain kinds of materials in tree boxes. These issues should be covered by historic preservation, if at all, not enforced by ABRA (the agency that enforces liquor licenses) and negotiated in the VA.
Elsewhere, some neighborhoods groups of residents or ANCs have asked for requirements that the owner attend certain meetings, join certain organizations, donate to certain local nonprofits, or not play certain kinds of music. ABRA should define a clear set of restrictions that VAs may or may not contain.
VAs are often very long. ABRA could create a very simple one-page form that has checkboxes and spaces to fill in specific parameters: hours inside and out, amount of sitting and standing capacity, whether amplified music can be played, etc. A fairly small write-in space can accommodate any other items, but the vast majority of VAs should be able to simply use this basic form.
Require more residents closer to an establishment to protest. Today, as few as 5 residents can file a protest, and they can live as far away as 600 feet (1.6 football fields). With Hank's, the lead protestants lived 280 feet away and others lived even farther, while two directly across the street spoke in support. Protests other than ones filed by the ANC should require a greater number of protestants from a more immediate radius.
Encourage ANCs to define neighborhood-wide principles for VAs. Today, an ANC has to formally "protest" every liquor license application if it wants to get a VA. This makes the process unnecessarily adversarial. It also has to make this decision on a case by case basis. New business owners often don't know ahead of time what the ANC will or won't protest.
Instead of having every decision made case by case, ABRA could work with ANCs to define a reasonable and general policy about which VA parameters they'd protest and which they wouldn't. This could become a sort of default VA. For example, in Dupont, the general principle could be that outdoor hours are limited to 11 and 12 north of N Street or New Hampshire Avenue, but not limited in the Golden Triangle.
Applicants would get this information when first contacting ABRA. They wouldn't have to follow it, but could know that if the application fits within these parameters, the ANC wouldn't protest and ABRA could move a license application more quickly. The ABC Board could make a point to be more deferential to applications that do comply with this general policy.
On the flip side, if an application doesn't conform to them, ABRA would automatically assume there needs to be a hearing and the Board could give that more scrutiny. Prospective restaurateurs would know what the ANC is probably going to support and what they probably would not, and could write a business plan with more confidence about what would get approval.
Of course, ANCs shouldn't be able to set up a guideline saying that there should be no establishments at all, and applicants could apply for anything they wanted just as they can now. But if an ANC sets up reasonable parameters and is willing to apply them broadly, the ABC Board should give that "great weight."
Require the board to consider residents' needs when terminating a VA. The current law is vague about how the ABC Board should weigh the impact on residents when canceling a VA, as in the case of Hank's and the late night hours. They are required to consider it when granting a license, but that language lies in a different section of the law than the part about removing VAs. The Council should clarify this.
In theory, the process DC has makes sense. An applicant must notify neighbors. Neighbors can then ask for a hearing. Before the hearing, they can come to an agreement, which ABRA will enforce. If they don't, the ABC Board decides what to do at the hearing. The local ANC gets a louder say than others, but still doesn't decide on its own.
The problems come not from this process but when it doesn't work properly. If the ABC Board doesn't listen to reasonable ANCs pushing for sensible compromises, or refuses to overrule unreasonable neighbors, or allows outrageous provisions in VAs, or if the process takes too long, it can hurt businesses and neighborhoods.
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