By Joshua Burd
A bill that would create new specialized, lower-cost liquor licenses and likely provide a boost to New Jersey’s commercial real estate sector has cleared another hurdle in the Legislature.
On Monday, the Assembly Appropriations Committee voted to advance the bill with several amendments from an earlier version. Those changes include requiring municipalities to create special restaurant districts in which they would issue the licenses — which would allow for service at tables but not at a bar — while expanding access for smaller restaurants.
The measure, A3494, can now be considered by the full Assembly.
“Encouraging economic growth and development with every possible resource is our goal here,” said Assemblyman John Burzichelli, who has co-sponsored the bill with Assemblyman Raj Mukherji. “We have not taken this endeavor lightly, but something has to happen so that New Jersey can begin to meet the needs of today’s marketplace.
“Updating a system created nearly 70 years ago is a critical step to that end.”
The state’s real estate industry has long pushed for the reform as a way to spur mixed-use development, revive struggling downtowns and fill vacant retail space. Liquor licenses can go for six figures or more in many towns, due in part to decades-old limits on the number of licenses that local governments can issue, making it cost-prohibitive for smaller restaurateurs.
A3494 calls for creating two new licenses that would be significantly more affordable, but would be subject to annual renewals. The first is a restricted restaurant permit that allows the holder to sell beer, wine and hard liquor, while the second is a restricted beer and wine permit that allows the holder to sell only beer and wine by the bottle or can.
Under the proposal, municipalities would create an ordinance to opt in and to establish where and how many permits they issue within their borders. Only restaurants between 800 and 4,500 square feet would be eligible, while those operators would not be allowed to have a bar area for customers and could only provide table service in connection with the sale of food.
The bill also calls for an important tradeoff — providing tax credits for “the qualified loss in value” to certain businesses that have paid market price for traditional consumption licenses. The tax credit is meant to ease concerns that their investment might be devalued, but many existing license holders and restaurant groups continue to oppose the legislation.
Critics and supporters were on hand Monday as the Assembly committee discussed several amendments to measure. For instance, the bill would now require the permits to be issued within a defined “restaurant district” that aligns with other areas that towns typically target under the state’s land use laws. Those include areas such as an Urban Enterprise Zone, a special improvement district, a transit-oriented development or an area in need of redevelopment.
George Jacobs, the president of Jacobs Enterprises, said the geographic restriction was an improvement to the bill and will drive the new permits to locations that have already been studied extensively by municipalities.
“These are areas that have nothing to do with restaurants or liquor that the municipality has already determined is in need of government assistance,” said Jacobs, a developer and commercial property owner, who is the New Jersey government relations chairman for the International Council of Shopping Centers.
“This is just another tool in that toolkit to get our towns redeveloped,” he added. “We can see what that’s done in Morristown or Hoboken … I think by doing this you’ve buttressed already-established municipal goals.”
The amended legislation sets the initial fee and annual renewal fee for the special restricted restaurant license at $7,500 for restaurants that take up between 800 and 2,000 square feet and $10,000 for a restaurant between 2,001 and 4,500 square feet. The fees for the restricted beer and wine permit for restaurants within those same ranges are $3,000 and $5,000, respectively.
Owners of the restricted licenses would be prohibited from selling or transferring them, according to the legislation. The bill also would require municipalities to control the hours that restricted license holders can operate and other guidelines.
A piece of each initial fee and renewal fee would go toward helping the state offset the cost of the tax credits for existing license holders. Burzichelli also noted Monday that lawmakers have taken pains to hear the concerns of the food and beverage industry over six years of working on the legislation, although opponents continued to voiced their concerns during a committee hearing in Trenton.
For instance, stakeholders raised alarm that the availability of smaller permits would hurt BYOB restaurants and create a strain on law enforcement. More than anything, restaurant owners said they would be hit hard by the potential loss of value of their investment.
“My main concern, like everyone else on my side of the table here, is my retirement,” said Marco Giancarli, owner of River Rock Restaurant & Marina Bar in Brick. “I paid $600,000 and I cannot see any way where this license will not be devalued by allowing so many more, cheaper licenses to be put out there.”
The bill’s sponsors noted that New Jersey has only 9,000 liquor licenses in circulation, far below the more than 16,000 and 51,000 licenses in Pennsylvania and New York, respectively. Nearly 2,000 of the licenses in New Jersey are lying dormant and unused due not having a site or licensed premises, or they are being held by investors as a so-called pocket license, which the sponsors plan to address in separate legislation.
The Assembly Appropriations Committee voted 7-3 to advance the bill, with one abstention.