Plans to change liquor license rules split Balto. Co. businesses
Possible reforms meant to spur economic development
Tony Petronelli, co-owner of Vito's Cafe says he can't afford a liquor license under the current system. (Kim Hairston, Baltimore Sun / October 19, 2011)
Vito's doesn't have a license to pour.
Co-owner Tony Petronelli has wanted one for years, but none has been available. The county limits the number in his area, and other license holders sell them at a premium. When his phone rang a few months ago, someone wanted more than $300,000 for a license.
"That's a lot of money before you get your return," said Petronelli, who came to Baltimore in 1974 from the southeastern Italian city of Bari and owns the restaurant with his brother, Vito.
Petronelli is among Baltimore County restaurant owners who say the county's strict liquor regulations have driven license prices so high they can't afford to buy one from an existing holder. The county is considering ways to make it easier for restaurants to get liquor licenses as a way of spurring economic development, but some license holders are worried that such changes would cause their investments to lose value.
For decades, the county has issued liquor licenses based on the population of each of its 15 election districts — it can issue one for every 2,500 people. Ten other counties in Maryland also tie the number of licenses issued to population.
Holders pay the county $1,500 a year for a license. When no licenses are available from the county, a restaurant owner must buy one from an existing license holder, who can set the price, which often depends on demand. In most cases, the licenses can't be transferred between districts, but lawmakers have made exceptions.
The system has meant entrepreneurs in growth areas can't find affordable licenses. Only one district, home to the Liberty Road corridor, has any licenses available from the county. And in one district in the eastern part of the county, there are about 80 more licenses than the population law would normally allow, because license holders were grandfathered in as population shrank.
Twenty miles south of Vito's, Ships Cafe owner Jim Andrews in Catonsville paid $150,000 in 2002 to buy a license for his restaurant and crab house. To him, changing the system seems unfair to people who have paid such a high price for their licenses.
"They should go through the same process that we had to go through," said Andrews, who owns the restaurant with his wife, Sharon. The more licenses that are available, the more it will hurt existing businesses, he said, because there are only so many customers.
"You can take a 16-inch pizza pie," he said. "You keep dividing that pizza up, the pieces get smaller and smaller and smaller."
Others argue that the county should be concerned with economic development, not with protecting the interests of people who can already serve alcohol.
The current system uses government restrictions to stifle competition and preserve profits for license holders, said Keith Scott, president and CEO of the Baltimore County Chamber of Commerce and a member of the task force formed by County Executive Kevin Kamenetz to study the issue.
"You have a small group of people trying to control the economic development for a county of 800,000-plus people," he said.
At the task force's most recent meeting, members discussed several ways to gradually change the system, including a proposal to systematically phase out population requirements and allow for more licenses. The group's discussions are focused on restaurants, rather than bars and liquor stores.
The group also examined how to transfer licenses from the eastern part of the county to other parts and the possibility of creating a few more limited service bar licenses per year. Another proposal was eliminating population rules by 2031 to make licenses countywide instead of specific to an election district.
The task force has been meeting regularly since August and plans to submit recommendations to Kamenetz by Nov. 15. Any changes would have to be approved by state lawmakers.
Many license holders are "very apprehensive" about any change, said Jack Milani, legislative co-chairman for the Baltimore County Licensed Beverage Association and a member of the task force.
"If it looks like [the county is] going to push hard, then we're going to push hard to make it gradual," Milani said. "You can't undo 50-some years of rules quickly."
Those rules make sense when looked at from a historical standpoint, said David Mister, general counsel for the beverage association. For many years after Prohibition, he said, the chief concern was to limit drinking.
"The problem is that alcoholic beverages and the regulation of them was never designed to be an economic development tool," said Mister, who also sits on the task force.
But Kamenetz administration officials said that today, the restaurant sector can help revitalize local economies and that restaurants often need to sell liquor to compete.
"Restaurants help create an atmosphere of vibrancy in communities," said Dan Gundersen, executive director of the county's Department of Economic Development and co-chairman of the task force. "These are the places that we go to take our family, to enjoy the fellowship of friends, to do business."
Mike Mohler, administrator of the county liquor board and co-chairman of the task force, pointed to Frederick Road in Catonsville as an example of the revitalization that restaurants can spark.
There, restaurateur Sean Dunworth said he has "tried every which way" to get a license he can afford. He owns both Regions and Catonsville Gourmet and said a liquor license could help boost business at Regions, the smaller of the two.
"We are simply trying to buy pair some wine with fine food," Dunworth said. "But unless you have a hundred thousand bucks, that's not going to happen."
Restaurant owners can only make so much profit from food, and wholesale prices are rising, so serving alcohol can help, he said.
Petronelli, of Vito's Cafe, said some customers love his BYOB policy. Others, especially those from out of town who are in the area for business, walk out the door when they learn they can't order a drink with their meal.
"You go to an Italian restaurant," he said, "you want to have beer, you want to have wine."
Some of the task force's proposals are "low-hanging fruit" that most agree on, Mohler said. The group plans to recommend increasing the number of licenses a person or corporation can hold, and doing away with a requirement that people seeking restaurant liquor licenses must get 10 signatures from residents who live within a mile of the business. They also will suggest that license holders can be residents of anywhere in Maryland, rather than only Baltimore County.
"These are easy fixes," Mohler said.