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New Jersey: New Round of Debate set on N.J.’s Liquor Licenses

From left, Nicole Torres of Cliffside Park, Anna Montenegro of Oakland, Christian Guzman of Hasbrouck Heights and Samantha Perez of Little Ferry at Miller's Ale House in Paramus on Sunday.   Proponents of an overhaul of New Jersey’s liquor-license laws are expecting to gain some traction this year after decades of proposals and legislation kicking around unsuccessfully.


Assemblyman John Burzichelli, D-Gloucester, has been circulating a rough draft of a bill that would update the state’s liquor laws. He’s been talking about the issue with “select groups” of stakeholders, including restaurant owners and real estate developers. In New Jersey, liquor licenses range from $50,000 to more than $2 million, which critics say is putting a damper on economic development.


Advocates say a change in the laws – which could include issuing more licenses – would spur restaurant openings throughout the Garden State and boost redevelopment projects in ailing urban and suburban downtowns.


Burzichelli, chairman of the Assembly Appropriations Committee, said he hoped to have a final draft of his legislation introduced next month. Calling his bill a work in progress, he declined to discuss it in detail. But he did say that it will address the main issue that has stymied liquor-law change in the past: finding a way to protect and compensate current license holders who fear a change would devalue their licenses.


“It’s my intention to take the subject up in earnest in mid-September,” Burzichelli said. “It’s very clear to me that the world surrounding liquor licenses has changed dramatically. We’ve gone from a society that used to see liquor as a-shot-and-a-beer joint on the corner. We’ve evolved into a society of casual dining and white-tablecloth dining where liquor complements the experience but doesn’t drive the experience.”


Those who hold licenses and those interested in obtaining licenses “recognize that something new has to be struck,” he said.


Even the longtime opponent of any change in the laws, the New Jersey Restaurant Association, appears to be reexamining the issue.


“There has been a lot of talk about liquor-license reform, and I think the industry as a whole understands that, which is a huge break from maybe even where they were five or 10 years ago on the issue,” said Marylou Halvorsen, the association’s president. “But we just want to be cautious, because once you make a drastic change you really can’t go backwards.”


Those who favor changing liquor regulations maintain that a confluence of factors may have created a tipping point that will result in an updating of the laws, which date to the 1940s.


Financially struggling municipalities, bound by state-mandated caps on budget increases, are eager to increase their tax bases, often through redevelopment, proponents of liquor-license change say. The real estate industry contends that residential projects have to offer not just housing but also lifestyle offerings, like retailers and restaurants, to attract millennial and empty-nest refugees as tenants. New restaurants need liquor licenses, and the meager number doled out to towns based on population under the old liquor laws is insufficient.


Skeptics say that liquor-law legislation will continue to founder, despite the optimism expressed by advocates of change. The critics of a license overhaul include a number of North Jersey restaurateurs. Many of them paid top dollar to obtain their licenses and remain vehemently opposed to the issuance of more licenses, arguing that the value of theirs would erode and national restaurant chains would flood the state, hurting local mom-and-pop operations.


Halvorsen cautioned that her restaurant association would only entertain supporting a bill that takes into account and protects current license holders. She said the bill would have to be fair to all would-be license holders and not favor one group, such as developers.


Paramus Mayor Richard LaBarbiera said that current laws, which allocate a liquor license for every 3,000 people in a town, are outmoded and need to be examined. Paramus has 28,000 residents, but as a shopping mecca sees 250,000 visitors a day, he said. Malls, like the Bergen Town Center and the Westfield Garden State Plaza, have become home to restaurant-bars, including Miller’s Ale House, Zinburger and Papa Razzi.


“I think society in general, and the needs of the shopper and the eater, may have outgrown the current rules and should probably be looked at,” LaBarbiera said.


The dearth of licenses creates bidding wars, driving up their prices so that only some large national chains can afford them, he said.


The New Jersey chapter of NAIOP, a commercial real estate trade group, is lobbying for change in liquor laws, as a spur to redevelopment.


“Without this help and this much-needed change, municipalities will continue to miss the boat and be unable to capture the opportunities resulting from changing demographics, market conditions and technology,” NAIOP Chief Executive Officer Michael McGuinness said. Today’s rental tenants want stores and eateries nearby, he said.


Attorney Ted Zangari, who represents restaurant owners large and small, called New Jersey’s liquor licensing “a silly anachronism that just continues to hobble our ability to grow this state’s economy.” And now not only the private sector but also the public one is complaining, he said.


Four years ago at a New Jersey League of Municipalities meeting, Zangari said, he took part in a debate on liquor laws. The session, attended by municipal officials from throughout the state, was packed with hundreds of attendees and there was a line out the door of people who wanted to speak at the microphone and complain about the laws.


“These were public-sector people who were ticked off at the system,” Zangari said.


But some multi- and single-restaurant owners disagree with him, and contend that developers are supporting a license overhaul to drum up restaurant tenants for their vacant buildings. Ed Doherty, chairman of Allendale-based Doherty Enterprises Inc., owns about 50 restaurants in New Jersey, including Applebee’s. He has paid anywhere from $50,000 to $800,000 for a liquor license, and makes the judgment on whether to obtain them based on what he thinks a location can do in volume, what he’s paying in rent and his cost to build-out the space.


“It’s a cost of doing business,” Doherty said.


Issuing more liquor licenses will result in a glut of national chains opening outlets in the Garden State and create competition for the eateries already here that paid a premium for their licenses, said Doherty and Jack Koumbis, who owns the Assembly Steakhouse in Englewood Cliffs. His liquor license is worth about $400,000 and he doesn’t want it to decrease in value.


Zangari has no sympathy for restaurateurs who have had their licenses for years, saw their value skyrocket and now are worried they will lose value.


“I’m sorry, the structure was never set up to allow someone over time to accrete value and build up a fortune in a license,” he said.


Bill Kapas, whose real estate brokerage firm specializes in restaurants, disputed what developers say about the shortage and high cost of liquor licenses derailing would-be mom-and-pop operators.


“I think that’s a fabrication of the developers,” Kapas said. “If somebody is truly a motivated buyer, they’ll find something that works for them.”


The restaurateur has to be patient and flexible, with a list of towns as possible locations, he said. Now a person may be paying a bit of a premium for a liquor license, but in exchange is perhaps seeing less competition from chains, Kapas said.