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Liquor Lament

Bar owners threaten suit on permit freeze

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If Gov. C.L. "Butch" Otter has his way in reforming Idaho's 62-year-old liquor license quota system, the state may have the legislative equivalent of a bar brawl on its hands.

Many bar and restaurant owners argue that Otter's proposal will virtually destroy their largest asset—their state liquor licenses. Under the proposed system, restaurants and hotels will be able to purchase liquor licenses from counties and cities, freezing the number of state-issued licenses, of which there are only about 1,300.

"This is a financial penalty for us," said Phil Roderick, who owns CJ's Nightclub in Moscow. "If they're going to be doing something like this, we need to be financially reimbursed. You're stealing my heritage, my retirement program."

Current owners of those state licenses, some of which are valued at more than $100,000, fear that the proposed bill threatens to devalue what they see as an investment akin to a retirement plan. Many owners originally purchased their licenses, with plans to later cash them in on the open market for a large part of their retirement stake.

If restaurants and hotels no longer need state licenses, holders worry that the open market value of their licenses could plummet, leaving one of their biggest assets virtually worthless.

Russ Purcell, who owns the Grizzly Rose and the Buffalo Club in Boise, said he thinks the value of his licenses will drop by 75 percent. He compared the proposed bill to the government taking away a farmer's water rights.

"It was the investment of my life," said Purcell, who paid nearly $200,000 for his licenses. "I was buying stock, in essence. We were investing in our business, and these licenses were critical in our ability to retire."

Backers of the new licensing system argue that it will boost the economy, a claim that license holders see as specious. While making it easier for restaurants and hotels to sell liquor by the drink, bar owners worry that the new system will, in essence, take customers out of their bars.

One economic question centers on the number of drinks that can be sold in Idaho. If that number is elastic, then opening up drink sales to more businesses should be a boon to the economy.

However, if that number remains the same in the face of an expanding number of license holders, then the number of drinks sold in an individual business is in serious danger of being diluted.

Dave Krick owns Bittercreek Alehouse and the Red Feather Lounge and holds a single state license that serves both Boise restaurants. As word of the bill spread, Krick voiced his surprise that the press knew more about the bill than the people it would affect.

"We've had very little voice, if any, in this process," he said. "It makes a guy pretty suspicious as to what's really going on."

While Krick says he supports updating Idaho's licensing system, he fears that he will not be compensated for the loss of value of his license.

"We're a small, family-owned business. And we bought [the liquor license] in good faith that the value would be there when we didn't need it anymore."

Krick said that the state should compensate current holders up to their licenses' lost value.

"My biggest thing is just not having to take a hit," Krick said.

If enough license holders take such a hit, then the state could find itself fighting a class-action lawsuit.

When asked if he would join such a suit, Purcell had a short answer: "You betcha."

Roderick, for his part, is gearing up for a fight.

"Whose name is going to be on the class action suit?" he asked. "It's going to be mine, because I'm going to hire the dog to go and get them. I'm not going to sit there and let them steal everyone's assets."

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