By Joshua Burd
In no uncertain terms, Assemblyman John Burzichelli said his bill to change New Jersey’s liquor license laws was a work in progress — one that involved a long list of stakeholders.
“This is not an easy thing to do,” Burzichelli, a Democrat based in Gloucester County, said last week during a hearing in Trenton. “This is changing things that have been around for a long time. So my thought is, by progress today, all of the interested parties will continue to talk to me because they know something is happening.”
In all likelihood, those discussions will continue for quite some time.
While the proposal has broad support from the state’s commercial real estate sector, municipalities and many top business groups, it faces opposition from liquor store owners and large restaurant groups that already hold licenses. Others, who support the spirit of the bill, say it still needs to be tweaked when it comes to aspects such as the pricing of the new specialized licenses and the compensation structure for existing license holders.
James Talerico, senior director of development for The Briad Restaurant Group, was among those who voiced their concerns at last week’s hearing.
“While we understand that you want to fix the antiquated liquor license law that’s been in front of us for decades now, we feel that certain aspects of that amendment are flawed,” said Talerico, whose company is based in Livingston.
For instance, he noted that cost of the new licenses, which would permit table service only, would be capped at $10,000. That’s a far cry from the six-figure prices that existing license holders have paid under the current system.
Talerico added that the legislation’s structure for compensating existing license holders “needs to be looked at more intensely,” largely because it involves conducting an appraisal on the value of their license. Records of liquor license transactions are scarce, he told lawmakers, making it difficult to perform such an appraisal.
He also called for the tax credit under the law to go toward the individual owner, rather than the restaurant or entity that operates the business.
“If you are going to credit a company for expanding liquor licenses, there has to be a better way to credit the people who have invested so much money into those,” Talerico said, later adding: “While we understand development is necessary and expansion is necessary like some of the other states, we feel that the way that this amendment has gone about it needs to be adjusted pretty heavily.”
The measure, A3494, was released from the Assembly Oversight, Reform and Federal Relations Committee on May 17 and subsequently referred to the Assembly Appropriations Committee. Among other changes, the proposal would allow municipalities to issue a new type of liquor license to smaller restaurants, which would permit service at tables but not at a bar, along with another form of the license that allows for only beer and wine service.
The licenses would be significantly more affordable, but would be subject to annual renewals.
As a tradeoff to existing license holders, the bill calls for providing tax credits to certain businesses that have paid market value for their licenses and are concerned that their investment might be devalued. Owners of the restricted licenses would be prohibited from selling or transferring them, according to the legislation.
During the hearing last week, the New Jersey League of Municipalities echoed the sentiments of many real estate executives who spoke: The steep price of licenses has held back the creation of new restaurants owned by smaller entrepreneurs, which can anchor mixed-use projects that bring foot traffic and revitalize downtowns.
For instance, Fanwood Mayor Colleen Mahr said her borough has attracted new mixed-use development in recent years, thanks in part to its train station and its downtown. But the community has only three liquor licenses, which has created a barrier to additional growth.
Mahr believes that to be a similar struggle elsewhere in New Jersey.
“When you look at the 565 municipalities, a large majority of them are like Fanwood, where they are under 10,000 and are working very hard to create a vibrant downtown,” said Mahr, second vice president with the League of Municipalities. “And we are seeing that the absence of liquor licenses has created a big challenge — an impediment, really — for economic development in some of our communities.”
Still, other stakeholders raised concerns about Burizchelli’s bill and said there were other ways to expand the pool of licenses with less damage to existing holders. Bob Wagner, who owns Braddock’s Tavern in Medford, pointed to recent legal action by the township against an investor with two so-called pocket licenses that had been inactive for a decade.
Wagner cited a statistic that found that 1,200 of New Jersey’s existing 9,000 plenary liquor retail licenses are inactive. Rather than create new specialized permits, Wagner said the state should begin by activating those pocket licenses, which would invite new investment while holding new owners to the same high standard as existing holders.
“When you invest all of your money in a liquor license that cost you $750,000 or $300,000 or $400,000, you’ve got to run your business the proper way by law — and that’s what we do,” said Wagner, who is also a director with the New Jersey Restaurant & Hospitality Association. “And all I’m saying is that there’s a lot of pocket licenses out there that should be used.”
Burzichelli, who seemingly has a firm grasp on all of those concerns, said he plans to “bring interested parties together and we’ll see how we proceed to the next step.”
“The idea here is to get something right because there’s an economy waiting to happen,” he said, noting that advancing the bill would “keep all parties’ attention on the ball.”
“This is, I think, a very sound approach addressing a real issue looking to unlock economy,” Burzichelli added. “We have studies that say there’s a lot of money out there for the state if these businesses can be brought around, but we also have to be mindful and we’ve got to take care of the people that have licenses in a very fair way.
“Balancing those two is not easy, but we can get there.”
