Boston Nightlife

[RandomWalk]

There needs to be a sunsetting of the transferable liquor licenses. They create perverse incentives where a restaurant is more valuable dead than alive.

 

[ritchiew]

I've posted this elsewhere, but there's a pretty straightforward business-friendly approach that both makes licenses more available and also prevents the real issue, which is fear of asset forfeiture/devaluation experience by current license holders. Make it revenue neutral to reset the system and then go forward under the new regime:

1. Commonwealth estimates demand for new licenses in Boston under an unlimited scenario
2. Price licenses statewide such that the vast majority would be willing and able to pay (say $10,000, one-time)
3. Estimate the total market value of Boston liquor licenses bought and sold in the last 5 years
4. Provide incumbent license holders with a tax deduction equal to aggregate license "value", divided by number of current holders, that applies over 5 years
5. Increase price of (2) as needed to cover shortfalls and approach budget neutrality
6. Print cash based on new sales tax revenue from a million new successful businesses

Basically provide a huge one-time tax write off to current holders while writing down the value of their liquor license to zero and then remove all restrictions. Have to get incentives aligned somehow, and even if lifting the cap were "good" for Boston, doing so without relief to incumbents will have them fighting like hell to prevent any changes.

This might work. But I wonder, really specifically, who is it lobbying against allowing new liquor licenses in Boston? Do we know? I thought a part of the problem is that people are essentially using liquor licenses as collateral with banks and landlords. It's those groups who are most resistant to any change. In that case, giving tax breaks to the restaurateurs (who technically hold the license) doesn't appease the bank.

 

[commuter guy]

I can't recall whether 02215 is one of the zip codes in the neighborhood license program, but even if it is, the original set of neighborhood licenses came with a restriction on such replacement of existing licenses.

I'm almost certain that this area was not part of the new neighborhood license program. Most of central Boston is not. In fact, there was some legislature rep from Brighton that got 3 random extra licenses just for the oak square section of Brighton because the Allston/Brighton was not part of the recent license expansion. The city and mayor Wu were focused on outlying neighborhoods in the last expansion. While I agree that demand in those neighborhood needed to be addressed, the problem is that supply is so artificially restricted, that the Seaport and maybe Back bay seem to be siphoning available licenses. For example bars have closed in downtown crossing in order to sell their license. I suspect the same situation happened here with the Dugout. Apparently, there are neighborhood restricted licenses still available in all of the outlying neighborhoods due to slow uptake aside from East Boston and the 3 licenses in Oak Square which have all been snapped up (https://www.wbur.org/news/2025/09/18/boston-liquor-licenses-neighborhood-disparity). My problem with the recent expansion, although it was a step in the right direction, is that it did nothing to address where demand is highest, which is in the core, so neighborhoods like the Fenway, Beacon HIll, Southie, Downtown Crossing were omitted.

 

[Stlin]

This might work. But I wonder, really specifically, who is it lobbying against allowing new liquor licenses in Boston? Do we know? I thought a part of the problem is that people are essentially using liquor licenses as collateral with banks and landlords. It's those groups who are most resistant to any change. In that case, giving tax breaks to the restaurateurs (who technically hold the license) doesn't appease the bank.

Do the banks actually have that much influence over that? Like a house pledged to a bank as collateral, it doesn’t matter if the collateral isn't worth as much as it was the loan was taken out - even if you're underwater on the loan, you (or the resturanteur) still owe the bank 500k.

Here the analogy I'm going to reach for is taxi medallions, which until the birth of Uber used to be worth hundreds of thousands - Boston's used to trade for $700k as recently as 2014, and Cambridge and NYC medallions were similar. They're worth a fraction now - and at least in NYC some drivers who had taken out loans to buy them were forced into bankruptcy.

The respective cities taxi commissions could probably have acted to protect the value of medallions by not permitting Uber to operate, which is what many did at first before reversing themselves - in this respect liquour licensing isn't really susceptible to market disruption, but strictly speaking the city has no duty (beyond to restaurant owners as constituents and their influence as a lobbying group) to protect the value of their investments.

Honestly, as @RandomWalk suggested, I too would encourage legislation that introduces a sunset date on all transfers for current owners - I'd propose that existing licenses sunset in say, 10 years from their next transfer. A current holder could still transfer an existing license to a new operator, and over the 10 year remaining term, such should be substantial enough that it should retain enough value for the new owners to amortize the cost. That 10 year period also protects some amount of resale value during its remaining "transfer window," based on years remaining, and allowing it to convert to an annual licence upon expiry protects the last incumbent owner. But, once they expire they can no longer be transferred between private owners. Maybe add a longer "no transfer" sunset date, but owners of legacy establishments would be fully protected because the sunset doesn't kick in until they sell it, so that solves that issue and provides a "soft landing" for most restaurant owners, and feeds them back into the pool relatively predictably - once enough are in that pool, the value of an existing licence should drop enough for the city to be able to issue some amount of new, non transferable licences without stepping on too many toes.

 

[Justbuildit]

I'm almost certain that this area was not part of the new neighborhood license program. Most of central Boston is not. In fact, there was some legislature rep from Brighton that got 3 random extra licenses just for the oak square section of Brighton because the Allston/Brighton was not part of the recent license expansion. The city and mayor Wu were focused on outlying neighborhoods in the last expansion. While I agree that demand in those neighborhood needed to be addressed, the problem is that supply is so artificially restricted, that the Seaport and maybe Back bay seem to be siphoning available licenses. For example bars have closed in downtown crossing in order to sell their license. I suspect the same situation happened here with the Dugout. Apparently, there are neighborhood restricted licenses still available in all of the outlying neighborhoods due to slow uptake aside from East Boston and the 3 licenses in Oak Square which have all been snapped up (https://www.wbur.org/news/2025/09/18/boston-liquor-licenses-neighborhood-disparity). My problem with the recent expansion, although it was a step in the right direction, is that it did nothing to address where demand is highest, which is in the core, so neighborhoods like the Fenway, Beacon HIll, Southie, Downtown Crossing were omitted.

It's also as backward looking as rent control. If you believe in growth and an expanding city, you've gotta let the pie grow! Zero sum swapping of licenses does nothing to look to the future. What about Channelside on Fort Point? What about future air rights parcels? There will be new establishments and eventually there won't be enough of anything to go around.

This might work. But I wonder, really specifically, who is it lobbying against allowing new liquor licenses in Boston? Do we know? I thought a part of the problem is that people are essentially using liquor licenses as collateral with banks and landlords. It's those groups who are most resistant to any change. In that case, giving tax breaks to the restaurateurs (who technically hold the license) doesn't appease the bank.

My read is there's always going to be a constituency to oppose a policy if they believe they're harmed. I don't know the detailed voting record on this, but medium-sized restaurant groups that may need to sell off the occasional license would be a key constituency that could lobby a key congressperson to spike a bill. Let's not forget that Healey yanked liquor-license home rule legislation a few years ago at the 11th hour, surprising even Spilka (below). That didn't happen naturally and stinks of tough lobbying on behalf of someone. It could be the banks, but my money would be on incumbents.

Healey scratches liquor license provision from municipal bill

GOV. MAURA HEALEY touched off a bit of political intrigue on Monday when she filed “municipal empowerment” legislation that lacked one of the powers she

commonwealthbeacon.org

 

[BOS2BON]

I'm almost certain that this area was not part of the new neighborhood license program. Most of central Boston is not. In fact, there was some legislature rep from Brighton that got 3 random extra licenses just for the oak square section of Brighton because the Allston/Brighton was not part of the recent license expansion. T

The Brighton rep is the current Majority Leader, Michael Moran.

 

[ritchiew]

Like a house pledged to a bank as collateral, it doesn’t matter if the collateral isn't worth as much as it was the loan was taken out - even if you're underwater on the loan, you (or the resturanteur) still owe the bank 500k.

Oh, it matters a lot if the value of a collateralized asset goes down. The loanee might still owe the 500k, but that could be effectively uncollectable. The loanee might not be able to pay, file for bankruptcy, skip town, whatever. That's kind of the whole point of the collateral, is to make sure there is something of value the bank or investors can collect if need be. Banks/investors/landlords who are holding those licenses as collateral could be reasonably worried if their value were about to drop to zero. I could see them secretly lobbying to make sure there are no new liquor licenses, and I also don't think tax breaks to restauranteurs makes the banks/investors/landlords change their mind.

Here the analogy I'm going to reach for is taxi medallions, which until the birth of Uber used to be worth hundreds of thousands - Boston's used to trade for $700k as recently as 2014, and Cambridge and NYC medallions were similar. They're worth a fraction now - and at least in NYC some drivers who had taken out loans to buy them were forced into bankruptcy.

That's a fair analogy. But it makes me think we're talking about two slightly different things here. One issue is how to be fair to the restauranteurs who got screwed by the government and were forced to pay through the nose for liquor license. We don't want them getting screwed again, and maybe go bankrupt like the taxi drivers. Tax breaks like @Justbuildit suggested make sense. And some policy like that is probably the right thing to do however this plays out.

The other issue is what changes are politically needed to make radical licensing reform possible. If it really is just restaurateurs lobbying against change, then tax breaks for license holders might be enough. But if it's some other groups with slightly different motivations, then maybe not. The opposition might be third parties worried about the value of their collateral. The opposition might be something like a (hypothetical) North End Restaurants Association that wants to keep the neighborhood a unique destination for dining. The opposition might be one, rich, politically connected crank. Then tax breaks to license holders may not be enough to get the required political support. There might be some other fair policy way around that. Part of the solution might just be to name and shame the politicians that are holding up any progress.

That's why I was asking who, really specifically, is lobbying against license reform. From the news I've seen, it's never totally clear. It's some restauranteurs, but I think it's also a bit more complicated than that. I don't really know.

 

[JumboBuc]

What is needed, is a system through which neighborhood/independent establishments can sell their license to a seaport chain, and then obtain a free license. I can't recall whether 02215 is one of the zip codes in the neighborhood license program, but even if it is, the original set of neighborhood licenses came with a restriction on such replacement of existing licenses. There was a restaurant in Roslindale (Reds-n-Rozzie) that closed because the owner wanted to make such an exchange, and ultimately took his ball and went home. Now he operates a restaurant in Somerville instead, after selling the license. That spot is now a Chilicates, with no liquor license.

If the city is concerned about abetting an unfair windfall for a place like the Dugout, they could tax the sale, while replacing the license, then use the proceeds to establish some kind of lending fund for assisting new restaurants to open.

A major issue with this is that the decision of who gets free licenses and who doesn't becomes purely political. If two businesses from the same neighborhood are going for the same free license, it will end up in the hands of the one that the politicians and bureaucrats favor. This is one more handout that politicians can dangle over businesses for their support, and one more lever that can be pulled to enforce conformity and incumbent advantage. You're never going to see a yard sign for a non-incumbent politician in the window of a business going for a free license, but you will absolutely will see yard signs for the incumbents who gave them their license in their windows.

This system also makes it harder to start a new business, because free license allocation absolutely favors existing non-alcohol establishments over startup ideas. So we end up with ice cream parlors adding boozy shakes while dive bars that closed to sell their licenses in the past don't get replaced.

A business license -- which this is -- should never be a handout given at the discretion of politicians. It should be an entitlement open to any and all who can satisfy a defined list of objective eligibility criteria.

I've posted this elsewhere, but there's a pretty straightforward business-friendly approach that both makes licenses more available and also prevents the real issue, which is fear of asset forfeiture/devaluation experience by current license holders. Make it revenue neutral to reset the system and then go forward under the new regime:

1. Commonwealth estimates demand for new licenses in Boston under an unlimited scenario
2. Price licenses statewide such that the vast majority would be willing and able to pay (say $10,000, one-time)
3. Estimate the total market value of Boston liquor licenses bought and sold in the last 5 years
4. Provide incumbent license holders with a tax deduction equal to aggregate license "value", divided by number of current holders, that applies over 5 years
5. Increase price of (2) as needed to cover shortfalls and approach budget neutrality
6. Print cash based on new sales tax revenue from a million new successful businesses

Basically provide a huge one-time tax write off to current holders while writing down the value of their liquor license to zero and then remove all restrictions. Have to get incentives aligned somehow, and even if lifting the cap were "good" for Boston, doing so without relief to incumbents will have them fighting like hell to prevent any changes.

This is asking a ton of the government to accurately and objectively measure demand and pricing and undertake multiple complicated financial arrangements accordingly. Governments are very bad at this, full stop. Ask anybody who works or has ever worked in public sector financial planning, and they will tell you that the best-laid plans of accountants and analysts ALWAYS come second to the whims of electeds and their campaign concerns.

Also -- even assuming the best intentions and highest commitment to objective analysis -- this only really addresses holders of Boston licenses who plan are tax planning on a five-year horizon. That far from covers the number of incumbent license holders who will take issue.

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In my view, the best way to expand license availability without totally screwing over incumbents who have bought their licenses is to execute a "license split" similar to a stock split. Turn every existing transferrable license into (something like) two licenses, and let the market do its thing. This will cause the availability of licenses to increase and their price to fall. Licenses will then become more available for purchase to those that want them, and existing license holders will have spares they can sell to recoup value. If doubling licenses is found to be too much you could even do a 1.5:1 split, but that would require a broker intermediary to bundle half-shares into full licenses. The same market forces would still apply.

It's a market-focused win-win, but it requires bold action (which our City and Commonwealth are terrible at).