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town-crier_facebookOur State’s liquor licensing laws date back to the ratification of the Twenty-first Amendment in the 1930’s. The world is a different place. And those laws have tended to stifle competition and to hamstring local economic development options.

New Jersey municipalities looking to revitalize downtowns and Main Streets, could use some new tools. Thus, the League of Municipalities supports A-2452, which would create new liquor licenses for restaurants meeting certain criteria. It is the sponsor’s intent to foster and encourage economic development and growth in this State by creating a new less-costly restaurant license that permits the licensee to sell alcoholic beverages and to provide financial compensation to certain plenary retail consumption licensees who already have established businesses and paid market value for their licenses.

This bill creates a restricted restaurant license (R1) which permits the holder to sell any alcoholic beverages for consumption on the premises of certain restaurants.  In addition, the bill creates a restricted beer and wine license (R2) which permits the holder to sell only beer and wine by the bottle or can.  There is no doubt that these licenses would represent an important economic development or redevelopment tool for many municipalities, and give an economic boost to neighborhood restaurants and to other businesses located in proximity to those establishments.

Under current state law, dating back to the repeal of Prohibition, a municipality may not issue a new license unless and until the combined total number of licenses in the municipality is less than one for each 3,000 people. Assemblyman (and former Mayor) John Burzichelli, the prime sponsor of the bill, has noted, “As a result of this restriction, there’s an insufficient number – or complete lack – of available licenses in many municipalities, inflating the value of existing licenses and forcing prospective restaurateurs to buy a license at an exorbitant price or simply operate without a license. This has created an unfair situation for many restaurant owners.”

Allowing restaurants to get a newly created license makes sense, as long as it’s coupled with relief for existing license owners, so this bill proposes tax credits to the holders of existing licenses to compensate them for any devaluation of their licenses.

The bill establishes a fee schedule for the initial issuance and annual renewal fee for the restricted restaurant license and restricted beer and wine license based on the square footage of the restaurant. The first $2,500 of the initial and renewal fee for the restricted restaurant license and the first $1,250 of the fees for the restricted beer and wine license, would be paid to the municipality where the restaurant is located. If the restaurant is located within the boundaries of two or more municipalities, the fee is to be divided equally among those municipalities. The remainder of the fees would go to the Director Division of Taxation to be used solely for the purposes of offsetting the costs associated with issuing tax credits provided under the bill.  After the Division of Taxation is reimbursed for costs associated with issuing tax credits, the full fee is to be paid to the municipality.

The bill imposes certain penalties on the holders of the restricted restaurant license or restricted beer and wine license who violate the law.  Any fine money collected is to be paid to the Director of the Division of Taxation to be used solely for the purposes of offsetting the costs associated with issuing tax credits provided under the bill.  After the Division of Taxation is reimbursed for up to 75 percent of the projected estimated cost associated with issuing tax credits, the full fee is to be paid to the municipality.

The League’s Liquor License Task Force carefully studied this proposal and recognized the benefits such licenses could provide to many municipalities throughout the State.  We also identified some problems in the bill.

Assemblyman Burzichelli, has indicated his willingness to accept many of our recommendations.   In particular, the Assemblyman agreed to our suggestion to allow an “opt-in” provision for all municipalities.  We sincerely appreciate his eagerness to involve us in discussions on the bill and to consider our concerns.

We have no doubt that a significant number of municipalities, if given the opportunity, would take affirmative action to make such licenses available to local restaurateurs. The bill is referenced to the Assembly Regulatory Oversight Committee, which held a “for discussion purposes” only hearing on February 27.  We hope to see the bill advance soon.

We suggest contacting your Assembly representatives and ask for their support of A-2452.

Contact: Jon Moran, Senior Legislative Analyst, jmoran@njslom.org ,609-695-3481, x121.

 

 

 

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