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Smaller city businesses struggle for liquor licenses

Posted by boston.com  December 9, 2013 03:02 PM

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Shirley Chen

The bar at Piattini in Back Bay

Josephine Megwa doesn’t like telling customers, “No.”

“They get mad,” she said of patrons who don’t understand why they can’t order a whiskey on the rocks or a regular gin and tonic at her Newbury Street establishment.

Megwa owns and runs Piattini, an 80-seat Italian wine café tucked beneath a tanning salon in Back Bay. Megwa, the sole proprietor, opened the place in 2001. At the time, she obtained a license from the city of Boston allowing her to put beer and wine on the menu.

Today, her bar list includes cordials, or sweetened spirits. But Megwa can’t afford a full alcohol license; she said the cheapest she can get in the Back Bay is upwards of $400,000. The limitation on her current license means she can’t serve unflavored liquors.

“When you try to explain it (to customers), they think you’re trying to pull a fast one on them,” said Megwa.

Boston’s liquor licensing system has received growing attention over the past year, with a focus on the uneven distribution of licenses throughout the city. Massachusetts legislation designates 650 full alcohol and 320 beer and wine licenses for the city of Boston – and when all those licenses are taken, businesses like Megwa’s are left waiting to try to purchase one from an establishment either going out of business or otherwise willing to sell its license at a high price.

City Councilor Ayanna Pressley has been particularly vocal about the system, saying that businesses in less affluent neighborhoods like Dorchester and Mattapan have almost no chance of obtaining liquor licenses because establishments in wealthier places tend to snatch them up.

“The current law has artificially inflated (license) prices,” said Jessica Taubner, Pressley’s chief of staff. “Because there’s a limited amount, they become a hot commodity.”

Megwa pointed out that small businesses in affluent neighborhoods are also adversely affected by market prices. For instance, the Neighborhood Association of Back Bay has long requested that the Boston Licensing Board prohibit new licenses in the area, making licenses there especially costly.

James Hill, head of the association’s licensing and business use committee, said the group has maintained the request because of concerns that the community might get too congested with establishments that serve liquor. He pointed out that there are already 50 to 55 full alcohol licenses in the Back Bay alone, while other areas have a fraction of that number.

The existing system leaves Megwa few options except to buy a license already existing in Back Bay, instead of bringing one in from, say, East Boston, where a full alcohol license might be more affordable, she said.

The state regulates the number of licenses in cities and towns in Massachusetts, based on population. Boston’s cap of 650 full alcohol licenses has been the same for decades.

According to Nicole Murati Ferrer, chairwoman of the Boston Licensing Board, the city no longer has any full alcohol licenses available. She said all existing licenses are held by business owners, who are legally allowed to sell them at the going rate.

Based on online listings by license brokers and restaurant groups, a full alcohol license currently goes for no less than $250,000 in Boston.

Pressley has been seeking to pass, through the City Council Committee on Government Operations, a home rule petition that would get rid of the state cap and give the city the power to regulate licenses. Once passed, the petition would allow only those who already own transferrable licenses to sell them on the market. Business owners who buy licenses after the date of passage can no longer sell them; they would have to return the licenses to the city.

“Cities and towns, not the state, should have the authority to grant licenses according to their own economic goals,” she wrote in a January 2013 editorial for Commonwealth Magazine.

Taubner said that if passed, the petition would give all of Boston’s neighborhoods an equitable chance of obtaining liquor licenses, allowing small businesses like Megwa’s to have a shot at competing with better-funded establishments.

Meanwhile, Megwa is working with what’s available.

She is applying for a zoning-restricted alcohol license, one of 95 that the state made available in 2006 to establishments located in so-called “main street districts,” urban renewal areas, empowerment zones and municipal harbor plan areas. Those licenses – 60 for full alcohol and 35 for beer and wine – may not be sold by business owners, but must be returned to the city.

Megwa’s frustration comes mainly from the high costs of obtaining a regular full alcohol license, and the lack of reasoning behind it.

“Everyone I have dealt with, (they) have all been very gracious in terms of the process,” she said. But she added, “they can’t tell me why it is what it is.”

She hopes to hear back about her application before the end of the year.

This article was reported and written under the supervision of Northeastern University journalism instructor Lisa Chedekel, as part of a collaboration with The Boston Globe.

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