By Michael G. McGuinness
Many New Jersey towns are struggling to reinvent themselves. Savvy mayors know they must offer safe and affordable places to live and access to transit, recreation and cultural, dining and drinking establishments in order to attract the younger demographic that is critical to their survival.
Their ability to achieve this is greatly impeded by our state’s liquor license laws, which are the most archaic and restrictive in the country. Restaurants have proven to be desirable anchors for redevelopment projects and magnets for other businesses. However, with few licenses available, smaller local establishments are having their chances of success diminished or are being shut out, thereby stifling competition, development and consumer choice.
Recently, I spoke with NAIOP New Jersey’s government affairs consultant, Anthony Pizzutillo of Pizzutillo Public Affairs LLC, about why reforming New Jersey’s liquor laws is vital not only to the commercial real estate industry, but to our state’s ability to attract and retain investors, employers and jobs.
Michael McGuinness: Why is the issue of liquor license reform so important right now?
Anthony Pizzutillo: The issue is not about reforming liquor laws — it’s about the commercial real estate community responding to the market. It so happens that restaurants are drivers for economic redevelopment across the country. In New Jersey, this national trend is being inhibited by prohibition-era laws that highly regulate and restrict the issuance of liquor licenses, many of which come with price tags that can top $1 million. We need to modernize the laws in order to capitalize on this opportunity.
MM: We in the industry feel that restaurants with liquor licenses are a necessary component to encouraging any revitalization effort — be it in a downtown area, suburban shopping center or a mixed-use project like Bell Works in Holmdel. Often, restaurants in combination with food stores and/or fitness centers are great anchors for these projects.
AP: That’s very true if you want your town or center to be a draw for employers and private investors. Providing amenities that appeal to a younger generation is key. We need to make sure there are fewer obstacles to accomplishing this.
MM: The ability to obtain a license to serve alcohol is certainly different outside of our state. During a recent fact-finding trip to Delaware, I learned that it’s a fraction of the cost to open a restaurant there. New legislation that has been proposed by Assemblyman John Burzichelli (D-Gloucester) seems to offer a reasonable approach to stimulating economic growth here in New Jersey.
AP: The proposed law would create opportunity for small restaurants as well as protect existing liquor license holders. It proposes the issuance of liquor permits to establishments where patrons must be seated at a table for service. The new law does not cover standing bars or places where liquor can be purchased and carried out.
Unlike licenses, these permits must be purchased annually. They are not transferrable and their value cannot increase unless the law is changed. The bill also allows municipalities to decide if they want to participate or not, and they can use zoning as a means of controlling where and how many permits are issued.
MM: This is a perfect model for communities that are focused on revitalization, and I’m sure the mayors of those towns understand this. Yet there has been strong opposition from bar owners and some restaurant owners. Why is that?
AP: Many objectors want to protect the status quo. Bar owners are fearful that their existing licenses will be devalued or that increased competition will hurt their businesses. Assemblyman Burzichelli has identified a specific niche for creating this transformation — small restaurants with table service only — so this bill does not pose a threat to bars and taverns. It also includes a fair compensation scheme that pays out to aggrieved parties who can prove a qualified loss in revenue due to a competitive facility.
MM: What is the bill’s current status in the Assembly?
AP: It was introduced in the last legislative session and is going through a very deliberate process of discussion and refinement. Assemblyman Burzichelli is carefully reaching out to stakeholders for input and ensuring that everyone’s voice is heard. His intention is to have it pass as soon as practicable.
MM: The Office of Legislative Services has certified that, even taking into consideration the economic impact of the worst-case scenario of compensation, the enactment of this law would be a net benefit in terms of revenue to local and state governments.
AP: It makes good economic sense. Right now the cost is insurmountable for a startup restaurateur to purchase a liquor license. This change will spur the creativity that drives new business development and job creation for young people by offering a more affordable option for what amounts to an annual permit. If you ever wanted to see a pro-small business bill, this is it.
MM: Local leaders need to update antiquated zoning, develop their centers with affordably priced housing options and invest in their public infrastructure. This timely bill is a modest but important part of this bigger picture, and it is long overdue.
Michael McGuinness is CEO of NAIOP New Jersey and has guided the commercial real estate development association’s progress since he joined the staff in 1997. In addition to overseeing daily operations, programs and staff, McGuinness directs the chapter’s legislative activities and manages the Developers Political Action Committee (DPAC).