Montclair’s municipal government would love to sell another liquor license, which would fetch a windfall similar to, or greater than, the price of a house. But officials can’t issue license No. 13 unless state legislators pass a bill that has stalled in the General Assembly, following heavy opposition.
Municipalities can sell one liquor license for every 3,000 people residing within their borders, under state Division of Alcoholic Beverage Control regulations.
With its population of 38,977 people, according to the 2000 U.S. Census, Montclair is 23 residents away from getting state clearance to sell another license. But until the township crosses the 39,000-resident mark, its 12 plenary retail consumption licenses, already in the hands of private business owners, are all that can circulate in Montclair’s confines.
Two years ago, local officials pushed for a change to state law that, without increasing the total number of licenses in New Jersey, would allow municipalities to sell more licenses than they’re allotted under the one-to-3,000 ratio.
Montclair’s leaders championed an amendment permitting licenses to be sold across municipal boundary lines, from one town to another. The New Jersey League of Municipalities mounted a lobbying effort backing the proposed change.
Third Ward Councilman Jerold Freier said the provision would enable municipalities such as Montclair, which has in recent years become a restaurant-and-bar capital, to purchase licenses from former boomtowns, which may not be the popular destinations they once were and, therefore, have a license surplus.
In addition, Assemblyman Thomas Giblin (D-34) said some older urban centers, such as Newark and East Orange, have a much higher proportion of licenses to residents than is currently allowed, since they granted licenses predating the ABC’s population restriction.
Allowing those towns to sell off excess licenses would benefit the governments and businesses involved, Giblin said.
By predicating towns’ liquor licenses on their populations, bedroom communities with small, quiet commercial zones could easily have more licenses to offer than establishments looking to purchase them, said Ron Botelho, chief of staff for Assemblyman John McKeon (D-27), a co-sponsor of the exchange bill.
Meanwhile, municipalities with comparatively few inhabitants, but thriving business communities, could have a license shortfall. In cases where these contrasting types of towns border one another, and where the more suburban municipality’s residents are frequenting the "Main Street" districts of their urban, commercial counterparts, it seems appropriate to redistribute the licenses, said Botelho.
McKeon and Assemblyman Patrick Diegnan Jr. (D-18) introduced a bill in September 2004 that would have allowed one municipality to buy, at fair market value, a license from a contiguous town in the same county.
McKeon told The Times the idea was proposed after a business in Millburn’s Mall at Short Hills expressed interest in acquiring a license available in neighboring West Orange. Botelho said that such transactions, if allowed, would stimulate local commerce by enriching restaurants and improving their ability spread around higher wages.
"We want profitable businesses around the state," McKeon said.
After its first reading in the General Assembly, the proposal was referred to a committee and then sent back for a second reading before the entire house, Botelho said.
When the measure emerged from the committee, it encountered strong objections from liquor-license owners, who feared that if it was passed into law, then the worth of their investments would shrink, McKeon said.
"Certain towns have one or two liquor licenses," he said. "You can imagine how valuable they are."
But this bill, if enacted, would not lower values across the board, the assemblyman said. In fact, he maintained, prices in the seller municipalities would actually be driven up as their license supply dropped.
And, in most buying municipalities, floating another license would have a "diminimous" impact on the value of the licenses already in existence, McKeon said.
But in Montclair, demand is such that local officials would have no problem selling more than just a couple additional licenses.
While there is no waiting list of businesses seeking them, demand must be "tremendous" just looking at recent sales, Township Manager Joseph Hartnett said.
The last time a liquor license was sold, by Montclair resident and developer Steven Plofker to a New York City investment group that bought the Wellmont Theater, the price tag was approximately $750,000. Prior to that transaction, another license sold between private parties for $500,000, Hartnett said.
"You don’t see those prices in other towns," he said.
Lured by such substantial revenue, could the municipality be tempted to field multiple extra licenses?
McKeon said that, under the proposal, a license sale would entail an agreement between two governing bodies, which would hopefully represent and respect the concerns of their constituents — including those proprietors who own licenses. Similarly, Hartnett said the hope is not to set up a "Wild West" situation where a limitless number of licenses could be exchanged, but rather one or two.
McKeon said he hasn’t decided if he will reintroduce the bill during this legislative session. The assemblyman said he is uncertain whether the measure would have the necessary support for passage, and he has not sat down with opponents to try finding a way to address their anxieties.
