Posts about Liquor Licenses

The crowd was as diverse as the community, with life-long residents and newcomers alike speaking in opposition to the moratorium. Fewer than 10 people spoke in support of the moratorium. Comments were impassioned, but civil.

According to the meeting announcement from the ANCs,

The moratorium, as proposed, would seek to prohibit all future liquor licenses with the exception of full service grocery stores, it seeks to cap CT and CN licenses as well, and has been requested to be a 5-year moratorium. The boundaries of the moratorium as proposed and filed with ABRA, extend 1800 feet in either direction from Ben's Chili Bowl. This goes north to Clifton Street, south to R Street, east to just before Georgia Avenue. between 7th and 8th streets, and west to just west of 16th Street. overlapping New Hampshire Avenue. NW.

The community discussed a liquor license moratorium for the neighborhood in 2009, when a committee of residents studied the "ARTS" zoning overlay for 14th and U streets and made recommendations to modify it. There were 8 public meetings, and the 27 area ANC commissioners advised increasing the number of liquor licenses in the area.

Moratorium brings harm in Adams Morgan

Business leaders in Adams Morgan are now preparing for an upcoming March 2014 review of the moratorium in their community. A major nightlife destination, Adams Morgan is often invoked as a sort of boogeyman for policy impacting commercial districts, a warning of what might happen on U Street if something is not done to curb issues of noise, trash and crime.

But along 18th Street, the heart of Adams Morgan, a moratorium means that the kinds of businesses that might actually mitigate some of these issues—like higher end restaurants—aren't able to move into vacant spaces unless they wish to purchase an existing liquor license, something that can cost up to $75,000 in the market the moratorium has created. In 2010, the Alcoholic Beverage Control board unanimously lifted a similar moratorium in Georgetown.

There are better solutions than a moratorium

Those of us who have served the U Street community understand that there are serious issues that need to be addressed as our commercial district continues to thrive. But a liquor license moratorium serves as a blunt instrument in a situation where more precision is needed.

There will certainly be cases when a proposed liquor establishment is not the right fit for the space it wishes to occupy. The community will often support an establishment but with certain caveats that can go in a legally-binding "settlement agreement," which serves as a rider to the liquor license. We already have tools to address these issues. But we also need to pursue long-term solutions to the other impacts when residents and businesses are situated so closely.

We should seek funding for hospitality initiatives that train and support business owners. We should support opportunities to create more daytime foot traffic that would support retailers such as offices or hotels. And we should come together around green initiatives that would reduce trash, noise and pollution.

A liquor license moratorium is not the solution to all of our problems. The community has spoken on this issue in the past as it did last night, and it's time to put it to rest so we can focus our attention on real solutions.

Real collaboration is what helped U Street begin to thrive more than 10 years ago and it is what will help us continue to grow in a way that fosters business growth while also making our neighborhood a great place to live.

They went through the official process to protest a liquor license, which allowed them to negotiate a "voluntary agreement" with Leeds specifying various restrictions. ANC 2B, a party to the protest, wanted a standard set of limitations that it asks of all alcohol-serving establishments in Dupont's residential areas, such as a closing time of 11 pm on weeknights and midnight on weekends, says Mike Silverstein, an ANC commissioner and now member of the ABC Board. Other protestants, however, asked for further restrictions.

Critics of VAs say that these are not really "voluntary," and defenders of Hank's have used this case as an example. The ABC Board granted motions to postpone its hearing over several months while neighbors pushed for more concessions. Leeds, meanwhile, was losing money quickly while she couldn't open Hank's, and, as she said in a later hearing (page 164-165), she had no choice but to give in.

Hank's ultimately opened, it became a big success, and many residents enjoyed its great seafood and delicious brunch indoors or out on the patio. In 2098 2009, 17th Street's liquor moratorium came up for renewal. The ABC Board extended it, but also included 2 "lateral expansions" for establishments to grow. At the time, most neighborhood leaders expressed an expectation, and hope, that the expansions would go to Hank's and to Komi. They did; Hank's expanded into the ground floor of the building next door and Komi opened up Little Serow in the basement next to its restaurant.

For Hank's, expanding also required rezoning the property next door as commercial, and changing its voluntary agreement, which limited the amount of outdoor seating. It secured the rezoning, and in November 2010, the ABC board granted a motion to terminate the VA.

ABC board makes a curious move

According to the law, the board can terminate a VA if 3 criteria (one with 2 prongs) are met:

(4) The Board may approve a request by fewer than all parties to amend or terminate a voluntary agreement for good cause shown if it makes each of the following findings based upon sworn evidence:

(A)(i) The applicant seeking the amendment has made a diligent effort to locate all other parties to the voluntary agreement; or

(ii) If non-applicant parties are located, the applicant has made a good-faith attempt to negotiate a mutually acceptable amendment to the voluntary agreement;

(B) The need for an amendment is either caused by circumstances beyond the control of the applicant or is due to a change in the neighborhood where the applicant's establishment is located; and

(C) The amendment or termination will not have an adverse impact on the neighborhood where the establishment is located as determined under § 25-313 or § 25-314, if applicable.

The board, with Brodsky in the lead, granted the termination, but made a strange legal choice. Instead of securing "sworn evidence" on all 4 parts of this test, it disregarded part A, and argued that it didn't need to find evidence for all of the prongs to grant a VA termination.

Silverstein recused himself from this decision since he had been involved in the original case, but notes that he argued against such a practice in some other, similar cases.

Leeds went ahead and expanded her patio, and residents have now been able to enjoy even more outdoor seating at Hank's.

Mallof and Reiffel appealed, and on May 17, the DC Court of Appeals agreed that the board needed to make a finding on all parts of the test, not just some of them.

The board moved quickly to schedule a hearing, which will happen this Wednesday, where people familiar with the situation expect they will find that Leeds met part A as well and grant her petition once again.

Hank's has to close half its patio

But in the meantime, someone complained to the Alcoholic Beverage Regulation Administration (ABRA), the agency that manages liquor licenses, that Hank's was using its whole patio, and on Friday, ABRA forced Hank's to shut down half the patio to comply with the old VA.

In an email to the neighborhood, Leeds wrote,

We have our hearing on these last two issues next Wednesday before the ABC Board. We are confident we will prevail, because we did try to work this out with those opposed to us back when we first sought termination of the VA, but they refused to meet. Also, since the Court of Appeals decision was reached, we offered to address their concerns with a more limited VA, but they insist we cut our outdoor occupancy by 25%, even though there have been no complaints. As for changes in the neighborhood, I am sure they are well known to you. Of course, it could take months for the Board to rule.

Last night, as a result of a complaint by the protesters, we were visited by ABC investigators. We were told we cannot use half of our patio seating area, because of the Court of Appeals decision. This happened before we even have had a hearing before the ABC Board.

The board often takes up to 90 days to issue a ruling, but in this case, they may rule more quickly, Silverstein suggested, especially since this decision only requires rehearing a small part of the original case.

What's wrong with the process?

Leeds and her attorney, Andrew Kline, are primarily pointing the finger at the law that any group of 5 residents can file a protest over a liquor license. Silverstein noted that a citizen task force is more comprehensively reviewing liquor license laws right now, and that group may recommend limiting how far away someone can live and still protest in order to ensure that protests come from immediate neighbors rather than people from blocks away.

However, Silverstein noted, voluntary agreements aren't necessarily bad. Dupont's, which set a neighborhood-wide standard for closing outdoor patios at 11 pm or midnight, just set a "level playing field" for all businesses in mixed-use parts of the neighborhood.

Silverstein also noted that the board has fixed some of the problems since 2009, such as the long timeline for approvals. Leeds suffered because she had to negotiate with residents for months while the board put off hearing after hearing. "Justice delayed is absolutely justice denied," said Silverstein, "and justice delayed is absolutely favoring the protestant over the applicant." Since then, he added, the board has significantly sped up the process to create a "rocket docket" where very few applications are pending for more than 90 days.

Since then, Brodsky also no longer chairs the board, having resigned in May 2011 the day before he was arrested for impersonating a police officer. That's little comfort to Leeds, who is paying the price for his and his fellow board members' actions, but the board can at least minimize the damage by making a quick ruling and getting Hank's patio fully open this week.

Georgetown has had a moratorium since 1989. Right now, only about 70 liquor licenses can be issued to Georgetown bars and restaurants. Liquor stores and hotels are not subject to the moratorium. Here are some of the results attributed to the long standing moratorium:

• Opening a new restaurant in Georgetown is more expensive than opening one elsewhere. On top of the higher rent, you need to purchase a liquor license on the secondary market from a license holder who no longer wants it. This has reportedly driven the cost of such licenses close to $100,000.
• Georgetown restaurants are pretty boring. No new exciting restaurant has opened since Hook did, and it's closed already.
• Drunken revelry is only a problem in certain spots around the neighborhood.

So some of Fidler's predictions have already come true in Georgetown. The moratorium cannot be waived for particularly "good" restaurants, the quality of the restaurants has not kept up with the dining renaissance seen in other neighborhoods, and the cap seems arbitrarily set.

Some of Fidler's predictions for U Street have not come true for Georgetown. Restaurants have opened in Georgetown without obtaining a liquor license. They are more likely to cater to a lunch crowd, but a restaurant is a restaurant. And it isn't really difficult to administer. The zone basically is everything south of Q Street.

Also, it's true that moratoriums don't address the negative externalities of existing drinking establishments. But they do address the negative externalities of bars that haven't yet opened. (And of course it also eliminates the positive externalities of those unopened bars and restaurants too!)

The cap may be arbitrary, but right now U Street has 107 licenses, over 50% more than Georgetown. Maybe it's arbitrary, but it doesn't seem likely that it's low.

All that said, U Street should not pursue a moratorium. New and interesting restaurants open there almost weekly. It would be like killing the goose that laid the golden egg to stop that now. It would make sense for U Street to trust the market but verify with strong voluntary agreements that address hours and outdoor patios, etc.

One criticism of moratoriums that Fidler did not mention, but should be pretty obvious from Georgetown's experience: they don't go away. Georgetown's has been renewed multiple times, and nobody seems to even make the case to let it expire. (To the ANC's credit, they did add seven new licenses to the cap last year, but that only brought us back to the level that existed in 1989).

Finally, many believe that moratoriums make existing licenses worth a lot more. And that appears to be mostly true. Last year, when the city "released" those seven new licenses into the Georgetown moratorium zone, they were quickly snapped up, in some cases by parties with only sketchy plans for actually opening. It was a land rush.

The thing is, half of those licenses have already been forfeited because the speculative plans simply fell through (or in one case the restaurant didn't want to comply with voluntary agreement restrictions). At least a couple now sit in ABRA unclaimed. Supposedly the lack of cheap liquor licenses is a huge obstacle to new restaurants opening in Georgetown, but the longer the free licenses sit there, the more that conventional wisdom seems wrong.

It makes no distinction between responsible businesses and rowdy businesses.

A moratorium fails to differentiate between businesses that are quiet and cause no trouble for their neighbors, like the Saloon, and those that cause raucous noise late into the night. ANCs and neighbors should protest irresponsible and disruptive businesses, but a moratorium is essentially a permanent, unconditional protest of all proposed restaurants and bars. Many new establishments are started by experienced restaurateurs whose previous businesses exist in harmony with their neighbors.

It's effectively a restaurant moratorium.

Restaurants make their money on alcohol and relatively little on food. This is why Shaw's Tavern, when dry, quickly shuttered. Prohibiting the issuance of new liquor licenses will essentially deny new restaurants the ability to earn enough to pay rent. A liquor license moratorium is a restaurant moratorium.

It will reduce customer service.

A moratorium will limit the supply of restaurants and bars even while demand rises. This means restaurant prices will face upward pressure, seating may become scarcer, and service quality will likely fall. The population of the census tract covering the eastern side of the U Street corridor grew by 86% from 2000 to 2010 and will continue to grow as more residential buildings come online. If you think finding a table is hard now, a moratorium will make it worse.

It unfairly "picks winners."

Placing a legislative cap on new business activity unfairly privileges incumbent businesses. To intervene so severely in the market as to artificially limit consumer choice means that current license holders will enjoy an oligopoly. This increased business, however, will not result from a restaurant's merit, but will result from the fact that consumers will face limited choices. A business owner's "merit" will simply be that he had the good luck open shop just before the regulatory door slammed shut behind him.

It's arbitrary.

There are currently 107 licenses within the proposed moratorium area. There is no definitive proof that the 107 number is too high, too low, or just right. Unfortunately, moratoria disregard nuance and set arbitrary numbers as permanent limits. Furthermore, it's arbitrary to propose that the moratorium be based on a perfect circle, that the circle have a 1,800-foot radius, and that the circle be centered on Ben's Next Door.

It will not resolve the stated problem.

Matters of crime, noise, and trash, which the City Paper reports as the main motivators for the moratorium's proponent, will not be resolved by a moratorium. Restricting the issuance of alcohol licenses will not reduce crime, will not reduce noise, and will not reduce trash. It will, however, result in longer wait times for table, higher prices, and lower service.

It's difficult to administer.

Laws should be simple to understand and administer. The proposed moratorium area is a circle and circles are harder to measure on land. In fact, we discovered this problem recently when measuring the distance between a liquor store and Cleveland Elementary School. Do you measure by the edge of the property line or by the edge or the building?

Certainly we have the technology today to determine this distance, but it takes time and skill to do it accurately. The technical challenge is a hurdle for business owners and citizens alike to understand the impact of the law. A listing of city blocks would be far easier to decipher and would cause less confusion than a circle.

Reject the moratorium.

Instead of swinging a legal sledgehammer to stop all future restaurants, good and bad, we should judge each application on its own merit. Restaurateurs who have proven records of being good neighbors should by all means receive licenses and less reputable restaurateurs should be denied. Please sign the petition and oppose the moratorium.

These restrictions make it difficult and expensive to run a bar, which encourages owners to locate in areas where there's already a bar scene with a guaranteed customer base. Hence, there are lots of bars in Bethesda and relatively few elsewhere. Yelp counts 25 bars in downtown Bethesda and just 9 bars in downtown Silver Spring, including Babe's Sports Bar, which closed earlier this month. And both pale in comparison to Clarendon, which with 44 bars has the highest number of any neighborhood outside the District.

This hurts bars in other parts of Montgomery County, who lose customers just by not being where all of the other bars are. It's especially hard for bars like Piratz Tavern. Though I've enjoyed myself thoroughly each time I went there, I can safely assume that not everyone wants to go to a bar and drink grog and sing sea shanties.

Piratz was a niche business, like a Korean restaurant or a record store, reliant on a small portion of the general public for their customer base. Niche businesses need a lot of people coming to the area to ensure that enough of them want what you're selling. That requires a high population density, like in the Akibahara "geek ghetto" in Tokyo, or a concentration of businesses serving a niche population, like Annandale, whose 900 businesses catering to Koreans make it a destination for Greater Washington's Korean community.

When you have a lot of people coming to your area, niche businesses can thrive. But in Silver Spring, where the bar scene and thus the pool of potential customers is very small, anything too unusual will get squeezed out.

Successful nightlife districts offer visitors lots of choices for dinner, drinks, and entertainment options. That's why Joe Englert purposely opened several unique venues at once along H Street NE in the District. He provided lots of reasons for lots of different kinds of people to come there, drumming up a substantial bar scene in a short period of time and helping to revitalize the neighborhood, which in turn produced more bars and restaurants.

Silver Spring could do the same if Montgomery County made it easier to open a bar here. Making the area a bigger nightlife destination could draw business to existing bars while encouraging new bars to open. It could also provide enough customers for niche bars like Piratz Tavern. Not only that, but it could also make the area safer, getting people on the streets at night when the sidewalks are normally empty.

Piratz Tavern didn't just fail because it was a pirate-themed bar. It failed because there aren't enough bars, pirate-themed or otherwise, to create a critical mass of bargoers in Silver Spring. Unless things change, the new Corporate Bar & Grill will struggle as well.

Megan McArdle and Matthew Yglesias blame the government. Yglesias says that there's plenty of demand for bars and lots of vacant storefronts, but ABRA policies are "a sign to would-be entrepreneurs everywhere that their potential investments are much riskier than a superficial read of market conditions would suggest." McArdle says,

Punishing a restaurant owner for a liquor license violation with an open-ended maybe-we'll-give-you-a-license-maybe-we-won't delay is equivalent to giving someone the death penalty for a parking violation. Moreover, it punishes the neighbors and the employees right along with the owner.

Their arguments, though, ignore management's responsibility for the pickle they're in, and instead push the idea that the city should turn a blind eye to the situation rather than acknowledge any infractions. McArdle, Yglesias, a number of City Paper commenters, and others seem to believe we should simply let bygones be bygones and give Shaw's its license.

We'd like to see Shaw's obtain a liquor license. The building it occupies was vacant for years, and was an eyesore on Florida Avenue. Today, it's a handsome façade on the edge of the Shaw and LeDroit Park neighborhoods. And there's no doubt the restaurant struggled to stay open without a license. But the fact remains that the ownership is solely at fault for the delayed licensing.

To gain insight to the liquor licensing process, we spoke with Matt Ashburn, who owns Capital City Diner in the Trinidad neighborhood. Ashburn has had extensive experience dealing with city agencies to get his restaurant up and running. He's not afraid to speak his mind regarding problems that come from dealing with the city, but has nothing bad to say about ABRA.

Ashburn says they are the most professional, straightforward city agency he has dealt with, and challenged us to find one more customer-friendly. He described the agency as one that's "run like a business," and that the process to obtain a "stipulated" liquor license, which is the temporary license that an establishment can get if there is no community protest, is quite fast and simple.

ABRA employees are available to walk you through the process if you need help, and the 20-page application form (PDF) is only that long because of the helpful, step-by-step instructions embedded in it to make the process as simple as possible. Capital City Diner received its stipulated license by going before the local ANC (5B), requesting a letter of support, and then filing the application. The restaurant was able to legally serve beer after a 3-day turnaround.

Is Ashburn's experience typical or is ABRA's process an impediment? When it comes to fights with neighbors, Phil Lepanto has said ABRA is too reactive instead of proactive, and Natalie Avery argued ABRA needs to work to be more collaborative. But in this case, neighborhood opposition was not an issue.

Shaw's Tavern is located within ANC 2C. The minutes of their April meeting report a unanimous vote to provide a similar letter of support for the tavern.

It's not clear what happened between the April meeting, when the ANC gave their blessing for a stipulated license, and the July 16th "soft launch" that got Shaw's in hot water.

More than 3 months passed with no license, while Capital City Diner got one in just 3 days. What did the management do regarding the license in that 3 months? Why didn't they have a stipulated license as quickly as Capital City Diner did?

Since then, the ABC Board had a hearing on August 10th, with the understanding that a ruling would come down regarding the license within 90 days. In the end, we don't know how the ABC board will rule regarding the restaurant's liquor license.

If we had to hazard a guess, we'd wager that they'll be given a slap on the wrist and a license. All of the hand-wringing we're reading and writing about now could be a small bump on the road when looking back in a few months. But make no mistake, as chef John Cochran told Eater, "All I can tell you is that the alcohol board was making their decision and they had every right to take their time. Shaw's was in the wrong."

After over twenty years of experience dealing with moratorium zones, neither the City Council, local Advisory Neighborhood Commissions (ANCs), the Alcoholic Beverage Regulatory Administration, nor the Department of Transportation have moved to implement any rules or adjust fees to prepare for lifting any moratorium.

In 2009, when the East Dupont (17th Street) moratorium was last renewed, several members of the Alcoholic Beverage Control Board stressed that moratoriums were not designed to be a permanent solution to peace, order, and quiet, traffic and parking, and retail space issues. Board members implied that this last three-year extension of the Dupont East moratorium would likely be the last, and that the Dupont ANC should take other proactive steps to address noise, traffic, and economic development issues.

Below are some measures that city agencies, the Council, and the ANC could pursue to address the issues that led to the moratorium zone in the first place. This list is by no means exhaustive, and not all are politically (or financially) viable. But in Dupont, many would like to address the true issues that led to enacting these blanket moratoriums so that we are prepared when a moratorium is eventually, and inevitably, allowed to expire.

• Install additional Capital Bikeshare stations and personal racks to provide alternatives to cars, which produce traffic and parking issues.
  
• Direct the Homeland Security and Management Agency to study alternate emergency routes to reduce siren noise (if a re-designation would have no adverse effects on safety).
  
• Designate the main thoroughfare as a "No Buses" route to reduce heavy traffic and noise.
  
• Designate former moratorium zones as "retail incubation zones" and provide a tax credit for hard-goods retails or retail service providers, which would put non-licensed establishments on a more even financial footing with more profitable liquor-serving establishments.
  
• Increase the fees for endorsements (including entertainment endorsements, sidewalk cafe/summer garden) and overall license fees in post-moratorium zones. Utilize the revenue for additional ABRA inspectors. Post-moratorium fees could gradually reset to the normal fee after five years or so.
  
• Increase the fees for outdoor cafes in post-moratorium zones. Increased fees could go to more inspectors, or to install additional bike racks or other alternative transportation measures, such as spaces for Zipcars. Post-moratorium fees could gradually reset.

The East Dupont (17th Street) moratorium zone could be an excellent test case for addressing noise, traffic, and economic development issues through these and other measures in the absence of a moratorium. We're seeking input on these initiatives, and suggestions for additional activities that could take place at the council, ANC, and agency levels.

If successful, similar plans could be instituted in other moratorium zones around the city, bringing retail diversity, quieter streets, and consumer choices while addressing actual problems without a one-size-fits-all moratorium approach.