March 23, 2009 in Idaho

Idaho committee clears liquor license bill

Legislation would end quota system of distribution
Staff and wire reports
 

BOISE – Idaho would do away with its 62-year-old quota system for liquor licenses, under legislation approved on a 6-3 vote Monday by a Senate committee.

The current system sets population-based quotas for liquor licenses, but the Legislature has allowed 235 licenses to be issued outside those quotas under special exceptions.

Kevin Settles, owner of the Bardenay restaurants, told the Senate State Affairs Committee that Idaho’s system is “a horrible way to do business.”

Settles, who has locations in Coeur d’Alene, Boise and Eagle, said there are too many liquor licenses on the market in Boise and not enough in Coeur d’Alene. He paid full market price for his three licenses on the open market, he said, but he’s ready to support reform.

“Getting on a waiting list is no way to start a business,” he told the Senate panel.

A series of mom-and-pop business owners told the committee they opposed the bill because it would devalue the pricey licenses they now own. Larry Jenkins of Emmett said, “I don’t see it helping small businesses like ours.”

Boise restaurateur Pug Ostling told the committee, “Values have plunged on those licenses, by the way, if you can sell it.”

The bill, supported by Idaho Licensed Beverage Association leaders and Gov. Butch Otter and developed by a task force over the past two years, would give cities and counties authority to issue new licenses, but only to restaurant and lodging businesses. Holders of existing state-issued licenses would get certain privileges, including the ability to transfer the licenses almost anywhere in Idaho, cheaper annual fees, and small discounts on liquor from state stores.

“We hope that over the long-term that represents a return,” said David Hensley, Otter’s legal adviser who helped write the bill.

The measure, which now moves to the full Senate, does away with existing quotas, designed to promote temperance and morality, that allow just a single liquor license in cities for every 1,500 people. For years, businesses such as golf courses and ski areas outside city limits had to come to the Legislature to ask for exemptions before being allowed to serve booze.

Hensley said getting rid of the quotas would do away with profiteering by speculators who get on waiting lists for licenses only to sell them, not run a restaurant or bar themselves.

There are about 1,150 licenses in Idaho and 584 people on the state Alcohol Beverage Control agency’s waiting list.

The bill would create a new state agency to settle disputes over liquor violations. There’s also a new punishment scheme, to include warnings for an establishment’s first two violations of liquor laws in three years. Idaho State Police would still be responsible for enforcement.

The measure also clarifies provisions forbidding “dispensing to a drunk,” to require that the person be “obviously” intoxicated. It makes it a misdemeanor for minors to knowingly misrepresent their age to get into a licensed establishment.

Brian Donesley, a Boise lawyer and former state senator, argued against the changes. Liquor licenses are a property right, he said, and modifying existing law in a way that could undermine their value may constitute an illegal taking.

Donesley headed up Idaho’s liquor control agency in the 1980s and now represents liquor-license owners in proceedings against the state.

Proponents of the plan, however, countered that the property rights question has been answered by the courts, including a 2003 Idaho Supreme Court ruling that licenses are merely a temporary permit to do something that otherwise would be illegal.

“There’s no guarantee that the liquor license you purchased will have some value in the future,” said Bill Nary, attorney for the city of Meridian, which hopes to use the proposed law to promote economic development by attracting new restaurants.

Staff writer Betsy Z. Russell contributed to this report.

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