Liquor licensing spawns a clash of political wills

Prices on liquor licenses in Boston have more than doubled a year after the city ran up against a state limit on the number of licenses it can issue.

With a growing pool of would-be restaurateurs and club owners trying to outbid one another for the few licenses coming available as establishments go out of business, the amounts being fetched have soared into the hundreds of thousands of dollars.

Those prices are well out of reach for many small operators, and some industry observers fear that restaurateurs will give up or bypass Boston to open new establishments in the suburbs.

Mayor Thomas M. Menino has been trying to lift the cap of licenses imposed by the Legislature a century ago, but has been thwarted on Beacon Hill, which must approve any changes in the cap. Behind the scenes, a political drama has unfolded pitting the mayor against a Quincy legislator who wants the state to have more control over the licensing process, currently handled by the Boston Licensing Board. It has turned into a nasty fight that has evoked old State House-City Hall animosities and involved powerful special interests.

Tempers have reached a high point; the two sides have sniped at each other in meetings. The legislator, Senator Michael W. Morrissey, is openly critical of City Hall as it argues for permission to increase the number of licenses it can issue from 970 to 1,025. As a condition of lifting the cap, Morrissey says he wants the city to submit exact addresses where each of the licensees would be located, effectively usurping the licensing board's power to decide which applicants get licenses.

``The only problem is, in Boston some nitwits can't get it through their heads," he said.

Beacon Hill has regulated the number of liquor licenses Boston can hand out since 1906, when a Yankee-controlled Legislature, distrusting Boston's Irish elected officials and fueled by Puritan beliefs about alcohol, limited licenses in Boston and required an amendment of state law to change it. Elsewhere in the state, the number of licenses is tied to population growth, triggering automatic increases.

Boston reached its 970-license limit in the spring of 2005. Before then, people seeking licenses could apply to the Boston Licensing Board for a new license, paying a $200 application fee and annual renewal fees of about $1,500-$2,000 .

Some acquired licenses by purchasing licensed restaurants, especially in neighborhoods such as the North End, where the city rarely or never granted new licenses. In those cases, beer and wine licenses typically made up $10,000-$50,000 of the cost of a restaurant, and all-alcohol licenses made up about $150,000-$200,000, industry observers said.

Now, the going rates for existing licenses are about $40,000 to $125,000 for a beer-and-wine license, depending on location, and about $225,000 to $325,000 for an all-alcohol license.

Opinions in the restaurant industry about how the situation should be resolved are divided.

Edilson Oliveira and his business partner, Wilton Rangel, opened a Brazilian barbecue restaurant in East Boston about six months ago without a liquor license. They can't afford the cost of purchasing an existing license.

``All the time, people coming in, they walk out because they want beer," Oliveira said.

Meanwhile, Finbar Griffin, who with a partner recently spent $245,000 on a license for the Farragut House in South Boston, doesn't want any new licenses issued. ``No way," he said, noting that he doesn't want to compete with establishments that didn't have to pay as much as he did.

Since January, when Menino first floated a proposal for 60 new beer and wine licenses but no all-alcohol licenses at the Legislature, the city has rewritten its proposal several times. Each time, officials say, Morrissey has rebuffed them. Things turned particularly ugly after a meeting at the State House in April, several city officials who attended said, when Morrissey was late and spoke condescendingly to the mayor.

``I couldn't believe it," said one of the officials. ``I came out of there, like, `How dare you?' "

Menino says only that he hopes to work with Morrissey to reach a compromise.

Morrissey says he's always late to meetings and doesn't remember being condescending. He concedes that he harbors some anger toward the mayor, who instituted new fees last year for suburban boat owners who want to use city docks. Morrissey is a boat owner and counts many boat owners among his constituents, but he said that has nothing to do with his stance on liquor licenses.

He said he is looking out for the interests of current liquor license holders who paid hundreds of thousands of dollars for licenses in the recently inflated market. Such businesses include Legal Sea Foods, which recently purchased a license from Jimmy's Harborside restaurant for its new Legal Test Kitchen in South Boston. If the city rolled out new licenses, potential competitors could move in after spending a tiny fraction of that.

``Don't you think Legal Sea Foods would be a little [angry]?" Morrissey said. ``They played by the rules and what did it get them? $240,000 in start-up costs."

Some say that Morrissey's proposal would mean a major power shift, from a nonpartisan panel to an elected one subject to the influence of special interests with money to donate .

``No one ever imagined a legislative committee would determine who gets licenses," said Lawrence S. DiCara , a former city councilor and lawyer who has studied the statute and has represented prospective licenseholders in the city.

Meanwhile, as the two sides dig in , the financial bar for getting into the restaurant business in Boston keeps getting higher. And frustrated license-seekers are haranguing politicians at parades, civic meetings, and City Hall, hoping more licenses become available.

``The only thing that this is accomplishing is keeping good businesses from opening and perhaps causing open businesses to close," said City Councilor Michael Ross , who says he fields calls every week about the issue. ``The only people who are benefitting are those who can afford to pay the premium prices that have been driven up by the cap. This is not fair."

Donovan Slack can be reached at dslack@globe.com.