Class B liquor license shortage forces creative solutions
Municipalities resort to quota loopholes for new businesses

By Hannah Weikel - Freeman Staff

Feb. 23, 2018

 Robyn Giovanni, assistant manager at Pink Mocha Cafe in Hartland, makes a chai latte on Thursday afternoon. Pink Mocha was denied a Class B liquor license this month because the village is facing a shortage and voted to reserve the last “regular” license for a different kind of restaurant.
Hannah Weikel/Freeman Staff

WAUWATOSA — City Clerk Carla Ledesma says Wauwatosa has been on the edge — with only one remaining Class B liquor license — for about a year now. The state imposed limits on Class B liquor licenses more than two decades ago, but the city has seen an uptick in new businesses applying for the remaining licenses in the last few years.

Now, Wauwatosa and other municipalities facing similar shortages must look for ways to obtain additional Class B liquor licenses before new restaurants and bars start taking their business elsewhere.

“The city on some level knew this was coming for quite some time,” Ledesma said, “and although you knew the number was dwindling, it became a situation that there weren’t many left and we really need to start getting creative.”

Shaking them loose

There are several options for municipalities running low on liquor licenses, which allow the sale of wine and liquor, and Ledesma said Wauwatosa has been looking into all of them.

First, communities facing a Class B shortage have the option of buying unused licenses from neighboring or nearby communities that have a surplus, according to state statute.

Ledesma said Wauwatosa has reached out to Milwaukee and West Allis to see if either might be willing to part with a few Class B liquor licenses, but neither has agreed to help.

In Brookfield, Mayor Steve Ponto said there are still 10 Class B licenses, but city officials have already started asking other communities to help fill the void when Brookfield runs out. Still, Ponto said purchasing liquor licenses from other municipalities is like a free market because of the demand.

“They can charge as much as a municipality is willing to pay,” Ponto said.

The Town of Brookfield bought two Class B liquor licenses from the Town of Lisbon last spring for $25,000 each, said Brookfield Town Clerk Elisa Cappozzo.

The Town of Brookfield has had a moratorium on liquor licenses for a number of years, but with the development of The Corners off Interstate 94 and the potential for a cinema that sells liquor and food among other developments in the area, the few remaining licenses could soon go quickly.

Before the Town of Brookfield issues the two liquor licenses from Lisbon, it will have to sell two Premier Economic Development District (PEDD) liquor licenses it acquired for $15,000 each, which can only be used within the PEDD area. PEDD liquor licenses are another option municipalities facing shortages are resorting to, Cappozzo said.

Municipalities can also get over-quota liquor licenses for full-service restaurants with more than 300 seats or hotels with more than 60 rooms.

 Pink Mocha Cafe in Hartland was denied the village’s last “regular” Class B liquor license earlier this month. Owner Heidi Nugent says she plans to reapply for the remaining license after the Village Board election in April.
Hannah Weikel/Freeman Staff

Forfeited licenses

When an existing bar or restaurant closes, its liquor license goes back into the pot and can be reissued to someone else.

This was the case in Hartland when the Village Board unanimously voted to revoke JC Bogar’s liquor license last month after its owner announced it would close. That license is now up for grabs and is the village’s last “regular” Class B license that costs $500 upfront and another $500 every year it’s renewed.

Pink Mocha Cafe, an established breakfast and lunch business in Hartland, immediately applied for the license, but was denied by the Village Board last week, which chose instead to reserve it for an establishment that plans to stay open later and serve a wider selection of booze.

The village also has three “reserve” Class B liquor licenses available for $10,000 upfront and $500 every year it’s renewed, but Pink Mocha Cafe owner Heidi Nugent said she doesn’t think it’s fair that the village withheld the cheaper license.

“I’m not going to spend $10,000 on a liquor license, being a small cafe and wanting to have growth,” Nugent told The Freeman last week. “I’m angered by this because they’re telling me you can’t have the $500 license, but you can purchase the $10,000 license.”

 Customers order coffee and espresso drinks at Pink Mocha Cafe in Hartland Thursday afternoon.
Hannah Weikel/Freeman Staff

The quota system

Wisconsin adopted the quota system in 1997, which allows municipalities a certain number of licenses based on a formula. Communities with large populations and few existing liquor licenses were allotted the most, based on the formula.

A municipality can request an additional license from the state Department of Revenue every time the population grows by 500 people, but is otherwise stuck with the quota.

State liquor license laws have become more flexible — allowing for some options when communities run out — since the quota system was implemented, but tavern and bar lobbyists have fought any legislation that loosens restrictions too much, said Pete Madland, executive director of the Tavern League of Wisconsin.

“You have to understand that we’re dealing with alcohol, we’re not dealing with ice cream,” Madland said. “Society and government has deemed over the years that this has to be very, very regulated.”

Still, he said the Tavern League’s opposition to additional licenses is mostly about business.

“All those who are already in the business know that liquor licenses have value,” Madland said. “If we issue more licenses, the value of the existing licenses goes down.”

Madland said Wisconsin has the third most liquor licenses per capita compared to other states. He said Wisconsin is known for its drinking culture, but people living here just keep wanting more outlets for alcohol.

“If you want to get a drink in Wisconsin, it’s not very difficult,” he said.

State Rep. Dale Kooyenga, R-Brookfield, who has fought for more Class B liquor licenses as communities in his district face shortages, did not respond to a request for comment before deadline.

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