Some Georgetown Perspectives on Liquor Moratoriums

Recently, a group has been formed of U St. residents and business to fight a possible liquor license moratorium along the newly bustling corridor. The move to impose a moratorium was so nascent that for a little while the media had no idea who was pushing for a moratorium in the first place. Despite the small size of the effort, the reaction has been swift and strong.

LeDroit Park blogger Eric Fidler weighed in yesterday with a list of reasons why a moratorium would be bad for the greater U St. neighborhood, including:

  • It makes no distinction between “good” establishments and “bad” establishments
  • A moratorium on liquor license is in effect a moratorium on new restaurants period
  • It will reduce the need to provide good customer experiences
  • It unfairly rewards current businesses over future businesses
  • It sets the cap at an arbitrary level
  • It doesn’t address the supposed problems put forward by those advocating for a moratorium (loud crowds, vandalism, etc.)
  • It’s difficult to administer

It’s probably useful to consider the Georgetown experience with the moratorium when considering if one would make sense for U St.

Georgetown has had a moratorium since 1989. Right now, only about 70 liquor licenses can be issued to Georgetown bars and restaurants (liquor stores and hotels are not subject to the moratorium). Here are some of the results attributed to the long standing moratorium:

  • Opening a new restaurant in Georgetown is more expensive than opening one elsewhere. On top of the higher rent, you need to purchase a liquor license on the secondary market from a license holder who no longer wants it. This has reportedly driven the cost of such licenses close to $100,000.
  • Georgetown restaurants are pretty boring. No new exciting restaurant has opened since Hook did, and it’s closed already.
  • Drunken revelry is only a problem in certain spots around the neighborhood.

So some of Fidler’s predictions have already come true in Georgetown. The moratorium cannot be waived for particularly “good” restaurants, the quality of the restaurants has not kept up with the dining renaissance seen in other neighborhoods, and the cap seems arbitrarily set.

Some of Fidler’s predictions for U St. have not come true for Georgetown. Restaurants have opened in Georgetown without obtaining a liquor license. They are more likely to cater to a lunch crowd, but a restaurant is a restaurant. And it isn’t really difficult to administer. The zone basically is everything south of Q St.

Also, it’s true that moratoriums don’t address the negative externalities of existing drinking establishments. But they do address the negative externalities of bars that haven’t yet opened. (And of course it also eliminates the positive externalities of those unopened bars and restaurants too!)

As for the aribtrariness of the cap. It may be arbitrary, but right now U St. has 107 licenses, over 50% more than Georgetown. Maybe it’s arbitrary, but it doesn’t seem likely that it’s low.

All that said, GM doesn’t think U St. should pursue a moratorium. New and interesting restaurants open there almost weekly. It would be like killing the goose that laid the golden egg to stop that now. GM thinks it would make sense for U St. to trust the market but verify with strong voluntary agreements that address hours and outdoor patios, etc.

Finally, it’s widely believed that moratoriums make existing licenses worth a lot more. And that appears to be mostly true. Last year when the city “released” seven new licenses into the Georgetown moratorium zone, they were quickly snapped up, in some cases by parties with only sketchy plans for actually opening. It was a land rush. The thing is, half those licenses have already been forfeited because they speculative plans simply fell through. At least a couple now sit in ABRA unclaimed. Supposedly the lack of cheap liquor licenses is a huge obstacle to new restaurants opening in Georgetown, but the longer the free licenses sit there, the more that conventional wisdom seems wrong.

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2 Comments

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2 responses to “Some Georgetown Perspectives on Liquor Moratoriums

  1. Jacques

    Whether or not the moratorium is good for the Georgetown restaurant scene as a whole, I think the situation would be improved if there was no way to squat on a liquor license.

    When any restaurant that closed, the property would have a 1-year (or even 6 month) period within which to open as a new business, after which the license would be returned to the ABC board, and not be allowed to be sold to another party.

    By eliminating the secondary market, such a move might bring down the cost of such liquor licenses, and it would also (in a way similar to the blighted/vacant property tax) disincent businesses from keeping properties empty of activity for any period of time.

  2. Carol Joynt

    The liquor license moratorium, while possibly well-itended as a means to limit honkytonks, cost Georgetown dearly as a dining destination for the metro area. The food scene went elsewhere and has thrived. What was left were some sub-par bars, a few of them honkytonk, that cater to underage drinkers. In other words, be careful what you try to administer.

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