Loophole threatened after liquor license ruling

THE BALTIMORE SUN

Outback Steakhouse would like to open another restaurant in Anne Arundel County, economic development officials say. So would T.G.I. Friday's.

But a county law limiting the number of liquor licenses per restaurant owner or corporation won't let them.

When the owners of Garry's Grill and Double T Diner faced the same problem, they found a way around the law - by slightly changing the name of their new restaurants and having different business partners hold the liquor licenses.

"There are nuances in the system that the locals know well that act as an impediment to the nationals," said Bill Badger, president and chief executive officer of the Anne Arundel Economic Development Corp.

Those laws, which some describe as a nod-and-wink system, may be in jeopardy after a recent court decision overturning a liquor license approval for a South County restaurateur. A judge found that Charles N. Bassford could not keep the license because he owned at least two other restaurants with liquor licenses. It didn't matter that the liquor license was in the name of a business partner, the judge said.

The Nov. 14 ruling threatens to close a loophole that local businesspeople exploited to open restaurants where chains could not.

"The impact of the judge's ruling is huge," Badger said. "For me, this is a wake-up call for us as a county. ... Isn't this the opportunity to say right now, 'These laws desperately need to be updated.'"

Badger said he intends to push for a county law that would allow a restaurant owner or corporation to have at least three liquor licenses in Anne Arundel - where the population grew nearly 15 percent during the 1990s.

'Protectionist county'

While neighboring jurisdictions have opened their doors to more chain restaurants, Anne Arundel's law permits two licenses per restaurant owner or corporation. And the second license is only given for restaurants opened in areas that the county is targeting for new development.

"Anne Arundel County can no longer afford to be a backwater protectionist county, protecting special interests at the expense of expanded consumer choice," said Del. John R. Leopold, a Pasadena Republican.

Richard Bittner, chairman of the Anne Arundel Board of License Commissioners, said he is trying to determine the impact of the judge's decision, but he sees no need to clear the way for more national chain restaurants.

The liquor board's role includes counterbalancing the inherent advantages held by chain restaurants, he said. He pointed to the Applebee's, Chili's and other national chain restaurants that dot Bel Air and line U.S. Route 301 through Waldorf .

"I don't think in Anne Arundel we want to look like that," he said.

Anne Arundel's Prohibition-era law grew out of a state law that serves as a shield of sorts against the proliferation of chains. The way many interpret state law, it allows a restaurant owner or corporation to have one liquor license per jurisdiction, state officials say. Many localities, though, have won changes to allow more.

Although Carroll County still has a one liquor license limit, Howard allows up to two, Baltimore City permits three and Baltimore County allows up to four.

Clauses

Until 2000, the liquor license limit in Anne Arundel was one. But a combination of two clauses in the law allowed local establishments to open extra locations while keeping the chains at bay.

Based on the liquor board's interpretation, the first clause allows a proprietor to own multiple liquor-licensed restaurants as long as the license holder is different for each restaurant. (That license holder is also required to be a county property owner with a financial stake in the restaurant.)

The second clause prevents two restaurants of the same name from each having a liquor license, which effectively limits national chains unwilling to alter their name.

Here's how the locally based Double T found a way around the one-license law:

An assistant hostess who reported that she owns a single $100 share of stock in the parent company holds the liquor license for the Double T in Pasadena, records show.

The Annapolis Double T license is in the name of the kitchen manager, who reported ownership of a $500 interest in a separate parent company, records show.

As for the names, the restaurant in Pasadena goes by Double T II.

Representatives of Double T could not be reached for comment.

Bittner of the county liquor board said that if the market were there for chain restaurants to make money, they would be willing to modify their names and find separate liquor license holders.

But he agrees that county residents want more restaurants. He served on the committee that helped bring about change in 2000.

Law change

After the committee's findings, the General Assembly passed a law that year allowing two liquor licenses per restaurant name or corporation in Anne Arundel County, as long as at least one fell within designated growth areas such as a Crofton mall, the Glen Burnie town center, the Baltimore-Washington International Airport area and Arundel Mills mall.

Eight restaurant owners and corporations - including Applebee's, T.G.I. Friday's, Ruby Tuesday and Outback - have secured second licenses.

Last year, Garry's Grill expanded as well. But it didn't do so within one of the designated areas. Instead it took the path of the Double T.

Different people hold the liquor licenses for the restaurants bearing Garry Anderson's name. And while the location in Severna Park goes by Garry's Grill, the Glen Burnie name is Garry's Grill at Quarterfield Station.

A representative of Garry's, William Chalmers, declined to comment.

Locals opposed

Leopold said it was a battle to win passage of the 2000 legislation, which was opposed by local restaurateurs.

"We have a lot of small-restaurant proprietors in this county," said Greg Phillips, past president of the county's Licensed Beverage Association, which represents liquor license holders. "To allow the chains to come in takes food off their table."

Phillips wasn't sure what to make of the recent ruling.

Decision overturned

Judge Paul A. Hackner of the county Circuit Court overturned the liquor board's April decision to issue a liquor license to Charles N. Bassford's waterfront restaurant in the southern Anne Arundel community of Galesville.

The judge said granting the restaurant a license let Bassford to have financial ties to more liquor-licensed establishments than allowed by law.

The judge said it made no difference that Bassford's business associate, William R. Woodfield Jr., had applied for the license.

For decades, the county liquor board has seen it differently - allowing business partners to hold liquor licenses for other shareholders, according to Bittner.

To Badger, the ruling is an opportunity. His nonprofit, county-funded agency embarked on a major campaign two years ago to lure more restaurants to Anne Arundel.

It's not uncommon, he said, for him to lose potential businesses near BWI to Columbia Gateway - a business community with an expansive restaurant park. Across from Northrop Grumman and the other businesses near the airport there is a Wendy's. That's it, Badger said.

"Constantly people are saying, 'We have international visitors here. We've got business executives. Where do I take them to lunch?'" he said.

Bittner wants to be cautious. "When you're talking about economic development and alcohol, you have to be extremely careful," he said.

So does Phillips, whose family has owned Frank's Den in Glen Burnie since 1958.

"I realize our county is growing," Phillips said. "I can understand where they're going to need more licenses, but I don't see where we need 50 Red Lobsters and 50 Ruby Tuesdays."

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