Two weeks ago, the Current dug into the story about how ABRA is considering adding two more liquor licenses to the Georgetown Moratorium. One of the bigger issues that stem from the moratorium is the issue of liquor licenses held in safe keeping. Which got GM wondering, who’s holding on to those anyway?
Quick background: There is a moratorium on new liquor licenses for Georgetown. Thus, ABRA cannot issue any new licenses for bars or restaurants in Georgetown (hotels aren’t subject to the moratorium). They can, however, buy licenses from people or entities that already have one.
This legislated scarcity has reportedly pushed the going rate of a liquor license in Georgetown up to $70,000. As the Current reported, the most recent five year moratorium period is coming up, and ABRA is proposing to add two more licenses to the total. The stated reason for these two new licenses is, in the words of ANC Commissioner Bill Starels, to “dampen the bidding wars.”
But who are they bidding to? An active restaurant or bar isn’t likely to sell its liquor license, so any new establishment must look to the defunct restaurants and bars that are still holding on to their inactive licenses (known as licenses held in safe keeping).
According to a chart obtained by GM, those defunct restaurants and bars are as follow:
| License Holder | Restaurant | Type | |||
| Chez Mama-San, Inc. | Chez Mama-San | Retailer CR 01 | 1039 | 33RD | |
| Cherches, LLC | Grace Bamboo | Retailer CR 01 | 3206 | GRACE | |
| Enriqueta’s Inc | Enriqueta’s | Retailer CR 01 | 2811 | M | |
| Georgetown Renaissance Inc | GeorgetownRenaissance | Retailer CH 02 | 3300 | M | |
| Saigon Inn Inc | Saigon Inn | Retailer CR 01 | 2928 | M | |
| Eastbanc, Inc. | no t/a | Retailer CR 01 | 3033 | M | |
| Bangkok Inc | Machu Picchu Restaurant | Retailer CR 01 | 3263 | M | |
| Fatoush, Inc. | Royalty Bar & Grill | Retailer CR 01 | 3277 | M | |
| GeorgetownRenaissance, LLC | Pending/Safekeeping | Retailer CR 01 | 3307 – 3311 | M | |
| The Samurai, Inc. | Benihana | Retailer CR 02 | 3222 | M | |
| “g” Town | Lazio | Retailer CR 02 | 3263 | M | |
| Newday Llc | Nathan’s | Retailer CT 02 | 3150 | M | |
| Dylan’s Café, Inc. | Hunan Peking | Retailer DR 01 | 3251 | PROSP | |
| The Wine Room, L.L.C. | The Wine Room | Retailer CR 02 | 1065 | WISC |
GM knows this list is slightly out of date in at least one case. Nathan’s license is now held by the owners of the building, the Heon family. He has also heard that they converted the license to a restaurant license from a tavern license, although that would make little sense to do so.
Why would it make little sense to do that? Because there’s a mini-moratorium on tavern licenses too. So long as there are six tavern licenses in Georgetown, no other tavern license may be issued (or, more relevantly, no restaurant license may be converted to a tavern license). Right now there are more than six tavern licenses in Georgetown (not even counting Nathans):
- Chadwicks
- Champion’s
- Garrett’s
- Modern Lounge
- The Saloun
- Rhino Bar
- Third Edition
Having a tavern license is more valuable than a restaurant license since taverns do not have to receive a certain percentage of their money from food. The two new licenses will have to be restaurant licenses.
Reading through the list of licenses in safe keeping is a bit of a time machine. Some of those restaurants have been closed for a long time. Yet they still remain unused. It seems to GM to be a market failure when you have fourteen licenses sitting unused yet too expensive to find a willing buyer. The two new licenses will be issued on a first come first serve basis (which is a terrible way to do it, if you ask GM) so hopefully they will actually be put to use. But GM can’t foresee how the two new licenses will solve the market failure that is the other fourteen licenses. Maybe a use-it-or-lose-it policy needs to be enacted in order to get these licenses back into active use at a reasonable price.
The Georgetown Metropolitan 
Isn’t it true that in cases like Nathan’s that the license is being used to sweeten a deal for a sale or a lease? In that example, it’s not really a market failure because the holder could lose a lot of potential revenue by selling off the license.
I believe that in most cases the license is held by the restaurateur, not the land lord. In some cases they are the same person/entity, but not most. Once a bar or restaurant goes under, they normally take the license with them. In the Nathans case, the land lords took the license as a result of a dispute over back rent, etc.
As for the other licenses held in safe keeping, most of the properties are occupied either by a retailer or another restaurant with its own license. I think the addresses in the list simply indicate that that’s where the restaurant was. I don’t think it means that the building owner owns the license.
My guess is that they are holding on to them because they’re potentially worth up to $70,000 (although some dispute that that is the market rate) yet only cost a few thousand dollars each year to renew. If it’s not technically a market failure, it is at least a serious market distortion.
Most of the addresses of the defunct licenses have been taken over by retail shops, leaving few spaces for restaurants or taverns, thus the licenses are pretty much dormant. The city ought to confiscate them outright. And declare them null and void. Either that or we go back to the days when the Crazy Horse, Apple Pie, Cellar Door, Whiskey-A-Go-Go, Nathans, Paul Mall, Tramps, The Saloon, Old Mac’s, and a host of other places ruled the roost around here.
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