May 03, 2012

A moratorium will stifle new restaurants and lower service

We recently received a petition to oppose a liquor license moratorium for the U Street area.  We weren’t sure why the petition came up, but it seems there is yet another movement afoot to establish a liquor license moratorium (and thus a restaurant moratorium) on U Street.  The moratorium’s backer is a resident on 13th Street and she proposes the moratorium for all new liquor license applications within a 1,800-foot radius of Ben’s Next Door.

We wrote about this matter two years ago when Jim Graham floated the idea.  Nonetheless, it’s worth revisiting why this moratorium is a bad idea:

It makes no distinction between responsible businesses and rowdy businesses.

A moratorium fails to differentiate between businesses that are quiet and cause no trouble for their neighbors, e.g. the Saloon, and those that cause raucous noise late into the night.  ANCs and neighbors should protest irresponsible and disruptive businesses, but a moratorium is essentially a permanent, unconditional protest of all proposed restaurants and bars.  Many new establishments are started by experienced restaurateurs whose previous businesses exist in harmony with their neighbors.

It’s effectively a restaurant moratorium.

Restaurants make their money on alcohol and relatively little on food.  This is why Shaw’s Tavern, when dry, quickly shuttered.  Prohibiting the issuance of new liquor licenses will essentially deny new restaurants the ability to earn enough to pay rent.  A liquor license moratorium is a restaurant moratorium.

It will reduce customer service.

A moratorium will limit the supply of restaurants and bars even while demand rises.  This means restaurant prices will face upward pressure, seating may become scarcer, and service quality will likely fall.  The population of the census tract covering the eastern side of the U Street corridor grew by 86% from 2000 to 2010 and will continue to grow as more residential buildings come online.  If you think finding a table is hard now, a moratorium will make it worse.

It unfairly “picks winners”.

Placing a legislative cap on new business activity unfairly privileges incumbent businesses.  To intervene so severely in the market as to artificially limit consumer choice means that current license holders will enjoy an oligopoly.  This increased business, however, will not result from a restaurant’s merit, but will result from the fact that consumers will face limited choices.  A business owner’s “merit” will simply be that he had the good luck open shop just before the regulatory door slammed shut behind him.

It’s arbitrary.

There are currently 107 licenses within the proposed moratorium area.  There is no definitive proof that the 107 number is too high, too low, or just right.  Unfortunately, moratoria disregard nuance and set arbitrary numbers as permanent limits.

Furthermore, it’s arbitrary to propose that the moratorium be based on a perfect circle, that the circle have a 1,800-foot radius, and that the circle be centered on Ben’s Next Door.

It will not resolve the stated problem.

Matters of crime, noise, and trash, which the City Paper reports as the main motivators for the moratorium’s proponent, will not be resolved by a moratorium.  Restricting the issuance of alcohol licenses will not reduce crime, will not reduce noise, and will not reduce trash.  It will, however, result in longer wait times for table, higher prices, and lower service.

It’s difficult to administer.

Laws should be simple to understand and administer.  The proposed moratorium area is a circle and circles are harder to measure on land.  In fact, we discovered this problem recently when measuring the distance between a liquor store and Cleveland Elementary School.  Do you measure by the edge of the property line or by the edge or the building?  Certainly we have the technology today to determine this distance, but it takes time and skill to do it accurately.  The technical challenge is a hurdle for business owners and citizens alike to understand the impact of the law.  A listing of city blocks would be far easier to decipher and would cause less confusion than a circle.

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Instead of swinging a legal sledgehammer to stop all future restaurants, good and bad, we should judge each application on its own merit.  Restaurateurs who have proven records of being good neighbors should by all means receive licenses and less reputable restaurateurs should be denied.  We urge you to sign the petition to oppose the moratorium.

Categories: Good Goverment, Local Businesses
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