Coeur d’Alene lawmaker seeks to reform state liquor license system

BOISE – It’s time to reform the restrictive liquor license system that’s left some Idaho restaurants on waiting lists for years and driven the price of a liquor license in Coeur d’Alene to $300,000, Coeur d’Alene Rep. Luke Malek said Friday.

Currently in Idaho, a 70-year-old quota system allots a single license for every 1,500 residents in Idaho cities; once issued, the licenses can be bought, sold or leased within the city, driving prices for the rare commodity sky-high. New, additional licenses are issued only when population increases. Anyone outside city limits has to get the Legislature to pass a special law to allow a liquor license – among those who’ve done so over the years are ski areas, golf courses, certain waterfront resorts, and theme parks; those special licenses aren’t transferable like the much-sought in-city ones.

Malek introduced legislation to set up a new two-tiered system in which cities or counties could choose to grant non-transferable liquor licenses to restaurants that have full kitchens and a state beer and wine license. Those new licenses would carry much higher fees than current liquor licenses, and would come with more restrictions, including stepped-up requirements for training servers.

Meanwhile, the current state liquor licenses for bars would continue, and those who own them would get various discounts and benefits designed to act as a “buy-back” over time for what they invested into their licenses under the current system that’s driven their value up so high. Those would be underwritten by the fees on the new licenses.

“It creates a system that will be equitable from here on out,” Malek said.

The House Ways and Means Committee agreed unanimously Friday to introduce Malek’s bill, clearing the way for a full hearing.

“I’ve been researching it for several years,” Malek said. He worked with a wide array of interest groups, including liquor license holders, restaurants and the Idaho State Police; one meeting to work on the bill was hosted by the governor’s office.

Gov. Butch Otter proposed his own liquor license reform bill in 2009; it passed the Senate but failed in the House. It hasn’t been back since, but complaints about Idaho’s system have continued to mount.

In January, the Idaho Business Review reported that in the central Idaho resort city of McCall, the name at the top of the waiting list for a city liquor license had been waiting since 1979.

Pam Eaton, executive director of the Idaho Lodging and Restaurant Association, said, “Idaho needs to redo its liquor license laws – they are awful.”

Successful Idaho restaurateur Kevin Settles, who operates three Bardenay restaurants in Idaho, including one in Coeur d’Alene, announced earlier this year that his next restaurant and distillery location would be in Colorado because of Idaho’s liquor license laws.

“There’s a lot of support back home in my community,” Malek, a third-term Republican, said. “The last liquor license that sold up there was $300,000.”

Adam Hegsted, former owner of The Cellar, a popular restaurant that operated on downtown Coeur d’Alene’s Sherman Avenue, said in a statement, “I leased my restaurant’s liquor license, and when another business was willing to pay $300,000 we lost the license and ultimately shut down. Bidding wars are putting people out of business. The system needs to be changed.”

Though it’s already getting late in Idaho’s legislative session, Malek said he believes his bill could pass and become law this year.

“This idea has been vetted and vetted,” he said. “Really, we’re getting at the policy issue of an unjust system and trying to make it a just system.”

The new, non-transferable licenses the bill would create couldn’t even be transferred when a business is sold – the new owner would simply apply for a new license.

Malek said a major obstacle to fixing Idaho’s system for years has been the big investments that current liquor license holders have made in their licenses.

“If we were just to go in and … scrap the whole system, you would have an unjust outcome for current liquor license holders,” he said. “This strikes a balance between those two.”