EXCLUSIVE: Worcester’s Unlimited Supply of Alcohol Licenses

Thursday, May 31, 2012

Walter Bird Jr., GoLocalWorcester Reporter

The owner of one longtime Worcester restaurant wants the city to make a major change to how it awards liquor licenses. The city currently has no limit on the number of on-premise alcohol licenses it issues and not everyone likes it.

“Everyone’s welcome to open up a restaurant and bar here,” said Tom Oliveri, owner of Peppercorn’s Grille & Tavern at 455 Park Ave. “There’s just so many places that have liquor licenses, so many bars and restaurants. It’s already over-saturated. They should level the playing field. I am absolutely in big favor of a quota.”

Quota on Permits

Worcester is one of three Central Mass communities that have no quota on the number of on-premises alcohol licenses it can distribute, according to the state Alcoholic Beverages Control Commission (ABCC). Marlborough and Sturbridge are the others. Across Massachusetts, 25 cities and towns place no restriction on the number of those permits. Worcester, with a population over 180,000, currently has 233 active on-premises licenses. Those permits are awarded to restaurants, bars and taverns and are for establishments where the alcohol must be consumed on-site. The city has a quota of 37 permits for full package store licenses and all 37 are currently in use. The limit on malt and wine package stores is also 37, of which 15 have been distributed. All 25 communities with no limit for on-premises licenses, including Worcester, have a quota for package store licenses.

Quotas are determined based on population, although a city or town can “reject the quota,” according to Chandra J. Allard, deputy communications director for state Treasurer Steven Grossman, and also an ABCC spokesperson. Worcester was among those to reject the state’s quota, which would have put a limit of 203 on all alcohol permits. Instead, the city adopted its own regulations governing the distribution of permits.

The Reason the City Has No Limit

Having no limit on licenses for restaurants, bars and taverns is good business for the city, according to Joel Fontane Jr., director of Planning & Regulatory Services in Worcester.

“It works well,” Fontane said. “We are a city and think of it as economic development. And remember, even though there’s no quota, these establishments can only occur in certain zoning districts.”

Although much smaller a community with a far different composition, Sturbridge eyes quotas the same way, according to Selectmen Chairman Tom Creamer.

"Personally, I'm not a proponent of using an arbitrary number that dictates whether a business can be in Sturbridge," Creamer said. "If zoning allows it ... let the market dictate what is appropriate."

A Cost to Businesses

The way Oliveri sees it that might be part of the problem. With a limited area for alcohol-licensed facilities to set up, the market is ripe for what he calls “fly-by-nighters” who come in, do well for a while, then leave.

“Does it kill your business? No,” said Oliveri. “But it absolutely costs a little bit of business.”

Permits are Valuable

There is a side effect, perhaps unintended, to having a quota. With no limit on who can open up a bar or restaurant and sell alcohol, the existing permits carry little to no value. In other towns, where there is a quota and where the competition might be a little more extreme, owners can pocket a mighty sum of change if they find the right buyer for their license.

“I’m opposed to places that have a limited amount of licenses and they’re selling them for an exorbitant fee,” said Oliveri. “I don’t think they should be able to turn around and sell their liquor license.”

District 3 City Councilor George Russell agreed, noting the interest some establishments might have in wanting a quota in place.

“If there’s a limit on any kind of license, it makes those licenses already issued a valuable commodity to sell,” Russell said. “Being a real estate agent, I know.”

At-Large Councilor Frederick Rushton saw the issue the same way. “The bottom line,” said Rushton, “is competition is good. The only people having no limit would help are those who want their permits to have a value. I see no need for having a quota other than to help boost the value of the permits.”

The owner of Funky Murphy’s, a popular eating, drinking and entertainment venue at 305 Shrewsbury Street, sees both sides of the argument, although like, Oliveri, he thinks he’d support a quota.

Everyone has an Interest

“Competition is healthy,” said Dessie McKane, co-owner of Funky Murphy’s said. “At some point in time, though, can the market become over-saturated? Yeah, it’s something they have to be wary of.”

As the second largest city in New England, however, McKane realizes Worcester has a need to fill, saying: “You have to provide some type of entertainment. It’s in everybody’s interest.”

He did add that he wouldn’t mind a little value in his liquor license, saying, “Everybody loves a value. Someone with a liquor license is going to like a quota because that makes the permit worth a lot of money. From the other side of the coin, someone else can say, ‘Hey, I paid for my permit and everyone else got theirs for free.’”

But McKane conceded he wouldn’t mind seeing a quota “to some degree,” depending upon how the city handle the process.

“There’s a lot of different parts involved,” said McKane. “Where does the (quota) figure come from? Do they say there’s a 233 now, so we’ll cap it at 250 and everyone who already had one keeps theirs?”

Safety Concerns

The other element to an unlimited number of alcohol permits is safety, but Fontane said Worcester has nothing to worry about in that regard.

“We have our team that does that, as far as enforcement,” Fontane said, noting he works “closely” with the police department. “I think what it comes down to is the vast majority of the people want to obey the law. That’s why we have a license commission, to oversee that and enforce the rules and regulations.”

Peter Lukes, the chair of the city’s license commission, could not be reached for comment.

“It really hasn’t come up as a problem, in my mind,” Fontane said of the lack of a quota on on-premises alcohol permits. “Are there issues at times? Sure, but that’s the case in every jurisdiction.”

From Fontane’s perspective, it goes back to the issue of economic development.

“Is it a vehicle for our economy? I think it is,” he said. “This is how you can encourage economic development. You have an enforcement arm that does a good job. This can help serve the vitality in this city. The vast majority are doing business in a responsible manner.”