Posts about Liquor Moratoriums

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.

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.