Liquor License Sales Under Renewed Scrutiny

In April of this year, during a hearing in which Braintree officials for failing to notify them appropriately of the restaurant's closing, Bickford's manager said the company had planned to sell its license for $50,000 to a businessman from Framingham.

The town itself charges $1,500 for the kind of license Bickford's held.

Last summer, California Pizza Kitchen outbid the owners of for the all-alcohol license held by Helen's Restaurant in Weymouth Landing, paying $82,600 through U.S. Bankruptcy Court.

That type of license, granted by the town, goes for $4,300.

An expired advertisement on a website that works with business owners and prospective buyers lists a liquor license available in Braintree for $100,000.

While that posting may be an exception, or even unrealistically priced, and while each bar and restaurant transaction is unique, there is no question that Braintree officials continue to grapple with what they have often said is a difficult environment for alcohol licenses, one that by Massachusetts law allows businesses to sell permits to the highest bidder, with no profit returning to the communities in which they operate.

Mayor Joseph Sullivan, for instance, has to file special legislation that aims to work around the problem by targeting alcohol licenses to certain areas of Braintree and restricting their use, in the hopes of bolstering efforts to revitalize Braintree Square, South Braintree Square and Weymouth Landing through small business development.

"Historically, these licenses have all been issued, making an available liquor license in our Town something rare and valuable and often commanding a high price in a private transfer transaction," Sullivan wrote in a letter to the council earlier this summer. "All too often, this contest to secure an available liquor license benefits large corporations and franchises, whose deep financial pockets allow them to outbid small business owners."

And during a subcommittee hearing prior to the Aug. 10 meeting, District 2 Councilor John Mullaney mulled attaching an amendment to the mayor's proposal that would have curbed the practice. He decided against doing so, on the advice of the Town Solicitor, but kept open the possibility of future action.

Chapter 138 of Massachusetts General Law does not explicitly allow for the sale of the licenses, but it has been widely understood in the regulating community for many years that a license given to a business becomes an asset and is ascribed a value, said Joe Powers, chair of Braintree's Board of License Commissioners.

In 2008, Braintree officials adopted a rule to reduce the ability of businesses to hold onto their licenses while they generate bids. They established a six-month limit for inactive licenses, after which time the license board can revoke the permit. Additional extensions are available for .

The 2008 revision followed a 2004 memo issued by the state that said, "Any licensee that does not comply with its obligations to conduct the licensed business and holds a so-called 'pocket license' will be subject to enforcement action by the Commission."

Pocket licenses are by definition illegal, Powers said, since a business may not hold a license without using it beyond established timelines. Two years ago, for example, Braintree's alcohol board held hearings on a number of businesses for holding their licenses for too long, including Applebee’s and the Ridge Racquet Club on West Street.

But such enforcement has not cured the problem, because within time limits imposed by the state's alcohol boards, establishments can still transfer their licenses to other parties, with approval from the local board. In some cases, in Boston, that has resulted in licenses going for upwards of $400,000. Two years ago, Police Chief Paul Frazier told the Patriot Ledger that licenses were going for as much as $250,000.

Councilor-at-Large Leland Dingee knows how difficult it can be to push back. He testified in the past at the State House about the issue.

"They told me point blank, 'This dog won't hunt,'" Dingee said at a meeting earlier this month.

About eight years ago the former Braintree selectman filed legislation with then Rep. Joe Driscoll, D-Braintree, that would have funneled 25 percent of the profits of a license sale back to the town. But the bill died in committee after pushback from the restaurant industry, Dingee said.

That bill was refiled in January by Rep. Mark Cusack, D-Braintree, who said he supports Sullivan's efforts to make at least some alcohol licenses affordable for small businesses but also knows how frustrating it can be for towns like Braintree that put a lot of work into their licenses and regulations and do not see any portion of the transfer profits.

The legislation, which has a few co-sponsors but has yet to see movement among the hundreds of other bills filed every year, is "one that makes sense and will help cities and towns," Cusack said. "The engine of our town is those small businesses."

Further highlighting the difficulty of getting such legislation through the State House was the wariness of Braintree officials to attach any amendments to the mayor's home rule petition that would limit the sale of licenses, or direct a portion of the profits back to the town.

Town Solicitor Carolyn Murray told Mullaney at the Aug. 10 meeting that the town could technically attach language to the mayor's legislation, but that it would muddle what has been a fairly straightforward request for additional, targeted licenses in other communities like Hingham and Dedham.

"In my opinion," Murray said, "the legislation gets bogged down in the State House and possibly does not pass."

She said that the issue has been a "source of contention" but that the ABCC would likely find any attempt to change the system on the local level inconsistent with state law.

"Once you hold a license and you can transfer it, it becomes a commodity," Murray said.

Mayor Sullivan's legislation would help limit the impact of such transactions by only allowing transfers within the designated economic zones. If a business cannot transfer to another within their area, the license would be forfeited back to the town. But the rule would only apply to the six licenses requested – not the current or eight wine and malt restaurant permits provided to Braintree because of its population.

Perhaps limiting the time a business can hold a license after it stops operating to say 60 days would help, said District 6 Councilor Paul "Dan" Clifford, though companies normally line up buyers in advance. Clifford also said he would be unlikely to support the government taking a portion of the profits of a license sale because of the benefits of a free marketplace.

"It's not an easy issue," Ways & Means chair Mullaney said. He said at the meeting earlier this month that he has spoken with business owners who stand by the license as a commodity that they have developed over time, creating value.

District 3 Councilor Thomas Bowes, a Ways & Means member, said he would work with his fellow councilors and Braintree's Board of License Commissioners on the issue, but in the meantime would like to see the mayor's package get through the State House for the sake of economic development.

Cusack said he was planning to file the mayor's bill on Tuesday with Senate counterparts Brian A. Joyce and John Keenan.

Update: This article was updated Tuesday morning and afternoon with more information on councilor Dingee's State House and Rep. Cusack's legislative efforts.