Changes in state law could increase the number of liquor licenses available in Duluth and devaluate existing licenses, a highly priced asset in the hospitality trade.
State law historically limited the number of liquor licenses in the city to about 67, based on a population formula, plus some special licenses. The latter included the Duluth International Airport, the DECC, Spirit Mountain, the Great Lakes Aquarium and most recently the St. Louis County Heritage and Arts Center.
On-sale intoxicating liquor licenses cover bars, restaurants and hotels. The licenses are transferable and with a limited number available can bring a high price. According to council discussion, the new Olive Garden restaurant paid $125,000 for the liquor license it obtained from the Western Tavern, and other establishments bank on their liquor license value. The City Council approved the Olive Garden transfer in April.
But under new legislation, which brought a package of liquor law changes; hotels, restaurants, bowling alleys and theaters can get liquor licenses that are excluded from the state limit. The same legislation enabled later closing hours, brew pub beer to go and a liquor license for the Heritage and Arts Center. And now with applicants lining up, the city has to decide if it wants to accept that change, said City Attorney Bryan Brown.
At a meeting on the changes this week, City Councilor Ken Hogg said it was permissive legislation, not a mandate from the state. "If the council does nothing, very soon the city will have to start issuing these licenses," said Brown.
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Councilors had different views on how the city should proceed. Councilor Neill Atkins said it was more a dilemma than an opportunity. He said the city could do nothing and there would be an unlimited number of liquor licenses available, or the city could set limits.
Councilor Greg Gilbert favored letting the marketplace decide, and Councilor Russ Stewart concurred. "It's pretty clear there is additional demand out there," he said.
There is also the issue of what defines a restaurant. Unlike bar-only operations, restaurants are allowed to serve liquor on Sunday, which has prompted many bars to add some level of food service. The bar/restaurant issue was also a big part of the smoking ban controversy.
Councilor Donny Ness said he does not like the existing situation which limits who can have a license. He favors having some limits and standards which favor existing restaurants.
The council has another option, according to Brown. "The ultimate power you would have would be to make the city a dry city," he said. But there were no takers.
