West Windsor Council is expected to take another shot at passing an ordinance later this month or in December that would allow the township to issue hotel/motel liquor licenses for sale to the highest bidder.##M:[more]##
Earlier this month Mayor Shing-Fu Hsueh vetoed a version of the ordinance that would have forced all hotels — including the Palmer Inn and the Hyatt Regency, which have state-issued licenses for almost two decades — to bid on the issuance of liquor licenses. The ordinance was approved in October by a 3-2 council vote.
Hsueh said he believed it was unfair to the two hotels and would have also virtually guaranteed a lawsuit by the Hyatt and Palmer Inn challenging the ordinance.
On November 8, council voted 3-2 in an attempt to override Hsueh’s veto — one vote short of the 4-1 majority required.
The vote to override was the same as the vote to approve the ordinance, with Jackie Alberts, Alison Miller, and Charles Morgan voting yes, and Council President Franc Gambatese and Kristen Appelget voting no.
At its agenda session on November 15, council decided to discuss introduction of a version of the ordinance that would allow the Hyatt and Palmer Inn to keep their licenses.
Meanwhile, council has asked Township Attorney Michael Herbert to investigate whether liquor licenses issued to hotels are specific only to the current ownership, or whether they can be transferred. Council is expected to introduce a new ordinance once Herbert investigates the issue.
The issue of transferability is key to a provision proposed by Gambatese on November 15 that would allow the Hyatt and Palmer Inn to retain their licenses, but require them to be put up for bid if the ownership of the hotels were to change.
According to Gambatese, the idea for the “grandfathering” provision came from a discussion he had with a member of the West Windsor business community. He adds that the majority of council seemed to be in favor of the provision.
Both hotels originally obtained their licenses under a statute that allowed hotels with more than 100 rooms to obtain liquor licenses without having to go through the bidding process communities must conduct for new bar and package store licenses.
After the state Division of Alcoholic Beverage Control (ABC) recently allowed towns the option of requiring hotels to bid on liquor licenses, Hsueh proposed an ordinance to council that would have required all new hotels to have to bid on licenses, but would have grandfathered the Hyatt and Palmer Inn.
“We shouldn’t penalize a long-time resident and taxpayer,” says Gambatese. “We need to be fair and consistent in the way we’ve treated this issue. It’s not their fault (the Hyatt and Palmer Inn) that the town didn’t charge them the full market value.”
Alberts says although she voted in favor of the failed ordinance, she would also support a new version.
“I take a very pragmatic view,” she said. “Philosophically, I support raising as much revenue for the township as possible.” She adds that she voted for the previous ordinance because it raised the most revenue. “Failing that, I’ll vote for the other version.”
Alberts also maintains that the version of the vetoed ordinance would have brought in an additional $1 million in revenues based on the most recent liquor license sales in the township.
“The mayor, by his veto, gave up $1 million of revenue just by his fear of litigation,” says Alberts. “This town has gone to court and spent a lot of money for far less noble reasons.”
But Hsueh and other officials argue that the licenses would bring in much less revenue — especially if they cannot be transferred. Both distribution and consumption licenses are transferable and can be resold — often for more money than the original buyer paid for them. If the hotel liquor licenses cannot be transferred, their value significantly decreases.
“The issue now is transferability of the licenses,” says Appelget. “The version we were considering (on November 15) didn’t have any provisions about whether these licenses could be transferred or sold. So we asked the township attorney to do some investigation with the ABC.
“When we sell a $600,"000 liquor license to a restaurant, then they have a right to sell it on the open market,” says Appelget. “We have to find out whether these hotel licenses are unique to a specific management or owner, or if they are specific to the location. My question is how we know what the value of these really are. If they aren’t transferable, then what is the inherent value?”
Morgan, who originally raised the idea of not grandfathering the Hyatt and Palmer Inn, said that it appears that the hotel licenses are similar to township taxi licenses, which are issued to an individual and cannot be transferred.
“If that’s the case, how do you justify charging market rate for a license that can’t be transferred?” Morgan asked.
“The question becomes whether it makes economic sense,” he adds. It’s an oxymoron to ask someone to bid on a license when there is no bid. Let’s just call it what it is — an outrageous fee.”
There are currently 10 liquor licenses — including the Hyatt’s and Palmer Inn’s — in West Windsor, but only eight were awarded by the township.
The two hotels were given their licenses under a state Division of Alcoholic Beverage Control law known as the “hotel-motel exception.”
The exception also allows a municipality to circumvent state law limiting the number of licenses based on a town’s population.