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Saturday, November 1, 2014 |  Madison, WI: 24.0° F  Fair
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Proposed bar restrictions in downtown Madison could strip resale value of businesses
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Gary Garten, in front Mondays, the tavern he owns on State Street: "I’ve been in business for 28 years, and that provision pretty much makes my business useless. It makes it so that it’s not worth anything"
Gary Garten, in front Mondays, the tavern he owns on State Street: "I’ve been in business for 28 years, and that provision pretty much makes my business useless. It makes it so that it’s not worth anything"
Credit:Bennet Goldstein

The time may come when you will no longer see a new tavern, nightclub or cocktail lounge open on State Street.

This is one possible outcome if a set of recommendations (PDF) to revise Madison's Alcohol License Density Ordinance, released by city staff in June, are approved by the Common Council.

The proposals include an ordinance that would create a State Street Overlay District. Within this district (see the map at bottom), no taverns, nightclubs or cocktail lounges could replace existing businesses at their respective locations. In effect, State Street could become tavern-free by attrition as owners sell or close their businesses.

Downtown bar owners say the proposal threatens their livelihoods.

Michael Hierl, owner and general manager of Segredo dance club on University Avenue, says the proposed ordinance would diminish the worth of his business if he attempted to sell it without being able to guarantee a tavern license to a prospective buyer.

"It's a chilling message that we would not be able have the licenses grandfathered should we choose to sell " whether it's retirement, serious illness or something else," Hierl says. "It really would harm a lot of people who are investing in Madison's future."

City officials moved to revise the current licensing system because they felt it failed to reduce alcohol-related crime and attract alternative entertainment venues, which was its intended purpose. In 2011, the Common Council directed the city alcohol policy coordinator, Mark Woulf, to head a committee that would explore ways to revise or replace the ordinance. Woulf presented recommendations in June, and the council voted July 2 to extended the current ordinance until Jan. 1, 2014 to give city staff time to develop alternatives.

The city already restricts the number of alcohol licenses it will issue as a way to curb the number of taverns that operate downtown. Taverns are currently defined as businesses that hold licenses to serve alcohol and earn more than 50% of their income from alcohol sales.

When taverns are sold or closed, owners must relinquish their alcohol license. New tavern owners apply for a license and pay a number of fees (PDF) to operate a tavern on the premises. Once the new owner's application is approved by the Common Council and Alcohol License Review Committee, a tavern license is granted. Some bar owners call this process "grandfathering."

At present, there is a two-year grace period when the change in ownership must occur, otherwise the property owner loses his right to host a new tavern with an alcohol license.

Under the proposed recommendations, there would be no grace period. If a tavern is sold or closes in the State Street district, the property owner can no longer replace it with a new tavern. This also means the business owner cannot sell his tavern with a grandfathered license, says Mary Carbine, executive director of the Downtown Business Improvement District.

"If a business with one of the restricted licenses closed, the business ... couldn't get the same kind of license again, or another business of the same type couldn't establish itself in the same venue," she says.

City staff added additional restrictions to the State Street district because the area experiences high numbers of alcohol-related disturbances, particularly the 500 block of State Street and the 600 block of University Avenue. With an overlay district, city officials can use zoning regulations to shape the types of businesses permitted by adding additional layers of scrutiny to evaluate the economic, safety and land use impacts establishments may have.

But tavern operators say the proposed restrictions are overly broad and blindly penalize owners whether or not they abide by Madison's alcohol ordinances.

"I'm there all the time, I'm responsible," says Jack Sosnowski, owner of Ivory Room piano bar, Capital Tap Haus and Buck & Badger Northwoods Lodge. "I really think it should be focused on ... how the operator is, what they've done in the past, how much experience they have. I think [that] determines who you're giving licenses to, not just the part of where you land in the real estate of Madison."

A manager of a University Avenue tavern, who wished to remain anonymous for fear of reprisal, says the city is poised to subject taverns to penalties disproportionate to their role in alcohol-related incidents. Doing so, this manager says, ignores the contributing role of restaurants, which also hold alcohol licenses. According to data released by the Wisconsin Department of Revenue, the number of downtown restaurant licenses increased from 138 to 148 between 2006 and 2012, whereas the number of tavern licenses decreased from 43 to 37.

The manager observes a lack of clear enforcement, which allows some restaurants to serve alcohol in quantities greater than their license allows.

"Someone should be checking up on it," he says. "Who's actually policing?"

Under the new proposal, restaurants that close earlier than bar time would not have a limit on how much alcohol, including liquor, that they can sell.

Attempting to sell a tavern without a license, Carbine notes, does not make sense. Although the city would permit the creation of wine and beer bars inside the proposed overlay district, Carbine says this is still detrimental because the tavern ceases to be the same business.

"It's like saying you're going to sell a sport utility vehicle, but beforehand you have to turn it into a station wagon," she says.

Gary Garten owns Mondays tavern on State Street. He does not like the idea of attempting to sell his business in any form besides a tavern.

"The provision would take out any resale value," he says. "My location has been a tavern for 60 years... It's not set up for a restaurant. It never has been."

Carbine says she is apprehensive about the proposal's "finality" because it lacks a plan for regular evaluations by city officials for determining its effectiveness as well as a sunset date.

"Do we want to really prohibit, forever, any tavern, nightclub or cocktail lounge in this area from establishing or reinventing itself or being sold to new owners?" she asks.

Carbine remains optimistic that the city will take into account business owners' concerns.

"We really support this kind of holistic support, where [city staff] are looking at ... alcohol licensing, business development and safety, because those things all interact," she says.

Woulf says the proposed ordinances will have to be reviewed by several city committees, and it will be at least a month or two before the Alcohol License Review Committee and Common Council vote on anything.

Ald. Mike Verveer, who sits on the committee, says the proposals have "city-wide implications; it's not just the downtown."

City staff indicates as much in the recommendations saying the zoning guidelines are a "blueprint for how neighborhoods will approach alcohol licensing into the future."

State Street Overlay District

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