As first reported by the Washington Business Journal yesterday, the ABC board is about to release four liquor licenses into the Georgetown moratorium zone. And one of them will be the coveted tavern licenses. But we’ve been down this path recently, and the result may leave many disappointed.
The heart of Georgetown is covered by a moratorium on new liquor licenses. There can be no more than 68 in total, including the inactive licenses being held “in safe keeping”. This moratorium has been in place since 1989, and it doesn’t look like it’s going to be removed any time soon.
There are benefits and drawbacks to the moratorium (that GM has written about here). But the primary impact is that if you want to open a new restaurant in Georgetown, you have to buy one of the inactive licenses on the secondary market. GM has heard from establishments that paid around $90,000 to buy one. This is a significant disincentive for new restaurants in Georgetown.
The Last Gold Rush
Several years ago when the moratorium was being renewed, ABRA and the ANC worked together to make seven new licenses available. This was an acknowledgement of the problem described above. It was hoped that quality restaurants would take the opportunity to snatch up the virtually free licenses.
In June of 2010, ABRA released seven new liquor licenses into the Georgetown moratorium zone. This move was done to inject some life back into the Georgetown restaurant scene. Two years later, though, and we can see this was a failed policy.
There were several justifications given for adding licenses to the moratorium limit. On top of a desire to inject some life, the powers that be realized that since the beginning of the moratorium in Georgetown, seven licenses had been canceled. So we could add seven without exceeding the total that existed at the time the moratorium was created. Also, there was a recognition that getting a liquor license was a strong disincentive to new restaurants opening in Georgetown. Due to the moratorium, they were forced to buy the license off one of the license holders who were no longer using theirs. The going price for a license was in the high five figures. This action would provide new licenses without that ridiculous mark-up.
Seven entities jumped on the new licenses. However, this is what happened with them:
- Bills Bar and Burger – Was supposed to go into the old Philadelphia Cheesesteak Factory building. Never did.
- Zenobia Lounge – Coffee shop wanted to sell liquor. After obtaining license, they decided they didn’t want to live with the restrictions so they stopped selling liquor.
- Tacklebox – Jonathan Umbel had been trying for years to get a liquor license for this restaurant. He finally did.
- Puro Cafe – Another restaurant that was already open.
- Hu’s Wear – The owners of Hu’s Shoes said they wanted to open a restaurant where Bartleby Books used to be. The bookstore was kicked out; the restaurant never moved in.
- International House of Ping Pong – This was supposed to be a ping pong-themed restaurant in 1010 Wisconsin Ave. It never opened.
- Paul Bakery – This restaurant was planned but not opened when they obtained the license.
So three restaurants were already open and one was going to open regardless. Three never opened. And of the three that never opened, despite never once selling a single beer, the owners still get to keep the licenses for as long as they pay the annual fee (Zenobia’s owners also get to keep their license). At around $1,000, it’s not a trivial annual fee but it’s a small price to pay to maintain an asset that could be worth up to $100,000 to the right buyer. Continue reading
Way back in June of last year, the city added seven new liquor licenses to the Georgetown moratorium cap. The idea was to address a perception that good restaurants were avoiding opening shop in Georgetown because the cost to buy an outstanding license was too high. Moreover, since about seven licenses had be forfeited since the moratorium was originally put in place, adding seven back to the mix would only bring us back to the original level.
So once those license spots became available, they were quickly snatched up by the following places:
- Puro Cafe,
- Zenobia Lounge
- Paul Bakery
- Bill’s Bar and Burger
- Hu’s Wear
GM was wondering recently what happened with all those licenses. His curiosity coincided with a new liquor license application, whose provenance GM was confused over. But first to the seven licenses: Continue reading
In June, the Current reported that the seven establishments likely to be awarded the seven new liquor licenses in Georgetown had already been determined. They were:
- Puro Cafe
- Zenobia Lounge
- Paul Bakery (a new French bakery going in just south of Banana Republic)
- Bill’s Bar and Burger (a new place moving into the old Cheesesteak Factory)
- Hu Wear
The first four were no great surprise to anybody, and now it looks like they will be the first to get the new license. All four have had their applications approved to be placard and will each have a hearing with ABRA in September. They all will likely be protested by the ANC, which will lead into the inevitable “voluntary” agreement process. Assuming that goes as it normally goes, these establishments should be boozing it up by early winter at the latest. (Paul Bakery was supposed to open by November according to GM’s sources.)
The last two applicants were mysteries in June and they still are.
Yesterday, the Current alerted GM to the fact that the Mayor has proposed legislation that would address the problem of inactive liquor licenses.
If passed, the proposed Omnibus Alcoholic Beverage Regulation Amendment Act of 2010 would levy a fee on inactive liquor licenses, which are better known as “licenses in safe keeping.” In Georgetown, there are about fourteen such licenses. The existence of the Georgetown moratorium means that the only way to get a new license in Georgetown is to buy it from someone else (and since it’s unlikely that an actively used license will be sold, the only real source is the list of inactive licenses). This regulatory scarcity has caused the market rate for licenses to sky-rocket into the high 5 figures.
In fact, it was this specific problem that the ABC Board wanted to address when they authorized the issuance of seven new licenses last month. GM has argued that a more effective long term solution to the high market cost of obtaining a new license would be to charge a “use-it-or-lose-it” fee on those licensees who continue to sit on inactive licenses in Georgetown. Continue reading
Walking through Dumbarton House by Thisisbossi.
Good morning Georgetown, here’s the latest: