Tuesday, December 28, 2010

Repeal 10-211

Meet Joe. Joe is a wine enthusiast. He reads books on wine, understands wine and can name the best 10 wines of every varietal and every region. If you have a wine question, you ask Joe. It's Joe's dream to open up a little wine store, only selling quality wines and not bothering with liquor and beer which he knows very little about.

Meet Rick. Rick is like you and me. He loves beer. He knows every beer that's worth knowing. He loves to talk about beer and try new beers. His dream is to open up a little shop selling beers of the quality he chooses and not bothering with Budweiser and Coors. He doesn't know much about wine or liquor and he'd rather not have to deal with selling either.

Meet Ryan. Ryan loves cocktails. He knows all the best gins, vodkas and bourbons and knows how to mix them to really bring out the flavors of each ingredient. He has no use for the Bacardi's and Jack Daniel's of the liquor world, he likes craft distilleries making specialty spirits. He doesn't know much about beer or wine. Ryan's dream is to open a little mix shop selling liquors, bitters and juices for the ultimate cocktailer.

Ryan, Rick and Joe just happen to meet at a little party and tell each other about their dream shop. They don't really know each other so they don't want to go into business together, but they know a little strip mall on Troost near the Plaza that's virtually empty. There's a little neighborhood liquor store just down the street, but it really wouldn't be a competitor to any of their dream shops. They think it would be a great idea to have their 3 storefronts right next to each other creating a little shopping center for quality drinks.

Rick decides to do a little research and finds Kansas City's Statute 10-211 that doesn't allow more than one package liquor license for every 1500 people within a certain radius. Since a store already exists within that radius, they would only be able to get maybe one more license. Ryan, Rick and Joe aren't that politically savvy, they see a law and see something that prevents them from doing what they want. So they start looking around town for other locations that would fit in the ordinance. They can't find any. Their stores never open.

Okay, fictional story over. I'm not saying this story is true or even probable. But, it is imaginable. The reason we don't see specialty liquor stores like the ones described in the little story is because a liquor license is incredibly difficult to get and somewhat expensive. Once you have one, you want to sell as much stuff as you can. This is the main reason we don't see the kind of specialty liquor stores described in the story above.

But, silly little ordinances like 10-211 don't help matters any. I spoke with the manager of Regulated Industries for Kansas City, Gary Majors, about the ordinance last week. He's in charge of regulating and issuing liquor licenses for the city. I tried to contact Councilwoman Cathy Jolly and Councilman John Sharp to get their reasons why they didn't advocate for the repeal of 10-211. Cathy Jolly's office gave Mr. Majors my number which was 1000% better than Mr. Sharp's office which ignored my request for information. Apparently Mr. Sharp is only interested in questions that honor him for getting Trader Joe's an exemption for 10-211 (UPDATE: Mr. Sharp has responded, I put his emailed response in the comments below). Both Sharp and Jolly were sponsors of the Trader Joe's exemption.

Mr. Majors and I had a very good and spirited 20 minute conversation about 10-211. I made similar points to the ones I made in my previous post. But, my main point was the ordinance was unnecessary because prospective liquor licensees don't typically try to open stores that are already well served by other liquor licensees. Majors told me that they have rejected several licenses in the past year based on 10-211 and there is a dedicated bunch of Kansas Citians that are against any openings of licensees even well respected licensees like QuikTrip. QuikTrip was the last store before Trader Joe's to get an exemption and several city council members are already regretting the exemption, not because of QuikTrip, but because the exemption has to be given for a certain area. The QuikTrip exemption has led to a couple of other prospective package liquor licensees to be granted licenses.

To his credit, Majors said that his division tried its best to work with prospective licensees to get them licensed even giving me a real inside baseball story on the Trader Joe's licensing. I don't know if what he told me was true or not, but Majors seemed quite reasonable about my position and the position of his office. Unfortunately, he is just an administrator and couldn't tell me the reason why Jolly and Sharp didn't advocate for repeal of the ordinance. It's not his job and I didn't expect it.

I acknowledge there is a group of people in town that like this ordinance and feel very strongly about it. They don't want more liquor stores or bars in town. They're entitled to their opinion and I wouldn't want to exclude them from getting their fair say in the matter. But, their fair say shouldn't be a hurdle for Joe, Rick and Ryan. Joe, Rick and Ryan are the ones taking the risk, doing the work and employing people. The opponents of liquor stores do none of that. Their rights should be to petition the council to stop a licensing, not stand in the way of every license pro forma. The ordinance is exactly backwards.

Repealing this ordinance will not result in more liquor stores in town. What it will do is open up liquor stores to competition increasing the quality of stores in town. Rick, Ryan and Joe's liquor stores might drive out a garden variety all purpose neighborhood store that doesn't serve many needs well. The ordinance as is protects these little liquor stores. I don't think they should go out of business, but if they don't serve their customers well, there's no reason for them to be protected from competition.

I don't see why this should be a controversial issue. Everyone's rights and concerns can still be addressed but Joe, Rick and Ryan can have an easier path to securing their liquor licenses for stores that I don't think anyone but the staunchest alcohol prohibitionist would object to. We all joke about how liquor laws in Kansas and Missouri are pretty stupid. Repealing this ordinance won't change that, but it needs to start somewhere. Repealing this ordinance is a fine start.

7 comments:

  1. I just want to commend you on your well written post. That is just one of the reasons we don't see much job creation here in KC. The liquor laws are only one obstacle. I believe in repealing several of the laws the prohibit or make it difficult for new business to get an upstart in Kansas City. I just wanted you to know that if I am elected, I will be looking into repealing laws such as this one.

    Tracy Ward
    www.tracyward4kc.com

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  2. As an actual resident of KCMO who also likes to frequent local bars, I say the current situation is actually a good balance. It helps the city control the concentration of liquor licenses in a dense urban area, and it's not terribly hard to get an exemption if you are an honest business with a good business plan.

    And you are incredibly naive if you think that the market will magically replace all corner malt liquor vultures with gomers outlets. This law is the city's main tool to prevent a situation with 17 liquor stores at 26th and prospect preying on vulnerable neighborhoods. As you saw, the process worked because trader joe's was able to get an exception without much trouble.

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  3. Yeah this seems like a non-issue to me. Do we have a single example of an exemption not being granted for a specialty beer store? I would guess no.

    Kansas City and Missouri already have the most permissive alcohol laws in the country (possibly with the exception of Nevada). I don't see the upside of rocking the boat. As a Kansas resident who is apparently highly interested in the state of liquor sales in Missouri you must already be keenly aware that Missouri is a much better place to buy alcohol than Kansas.

    Anyone who thinks Kansas City has a lack of corner liquor stores isn't living in the same Kansas City as me.

    I certainly agree with you on what is good and what is bad but since all legislation changes can have unintended consequences I would be reticent to go about fixing a problem that may not exist.

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  4. Anonymous, I don't think I'm naive at all. A liquor license is a very difficult thing to get, even in Missouri. It's an undertaking with many veto points. This statute is just an unneeded veto point. I think it's just a bit naive to think the city council knows the optimal number of liquor licenses to grant for certain locations. It's incredibly naive to think city council members won't be able to figure out a way to personally profit from rejecting liquor licenses based on an unneeded statute.

    John,I agree completely this is a minor issue. But, as I wrote in the post, we have to start somewhere. If you're unwilling to support such a small step that would have few if any negative consequences, it would be hard to see why any politician would feel the need to liberalize other business stifling statutes. Since this is a beer blog, I focused on the liquor issue, but this statute is one of many, many veto points the city council and other administrative agencies in KC have to stop development in the city.

    I specifically advocated in the post for the public to be able to petition any license. No one's rights are being trampled. It just gives potential businesses the easier path, rather than the status quo.

    Also, John, I don't think KCMO's budget and business climate is all that great. A little boat rocking is necessary.

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  5. So move to KCMO, become a citizen, and you can have a voice in the process. I agree we need fewer regulations, but even more so we need fewer suburbanites offering advice from afar.

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  6. Since I was critical of city councilman John Sharp in this post for not responding to my request for information, I thought it only fair to publish his response to me via email in full:

    I believe that the current city ordinances that restrict the number of liquor licenses for package liquor sales based on the residential population of the surrounding areas needs to be seriously studied and significantly revised. It was enacted years ago to deal with a concentration of liquor licenses in certain central city neighborhoods. Some of these establishments posed ongoing problems for their neighbors stemmng from excessive loitering and criminal activity on or around their premises.

    Today, however, new licensees have to successfully complete a probationary period when first licensed, and the city's Regulated Industries Division has not hesitated to suspend or revoke the licenses of problem businesses, so there are other more effective ways of stopping unsavory activity than by simply limiting the number of licensed premises.

    The density restriction clearly puts Kansas City at a competitive disadvantage to surrounding municipalities, particularly in areas near the city limits. While a recent revision I supported does exempt sparsely populated areas near the city limits from the density restriction, situations keep cropping up that demonstrate the negative effect the restriction can have on the city's economy.

    However, outright repeal of this restriction would likely face significant opposition from neighborhoods that have been adversely impacted by nearby licensees that have not been good neighbors. Perhaps a workable compromise would be to limit the density restriction to taverns and liquor and convenience stores that are adjacent to residential areas, so that it does not apply in commercial areas that are not immediately adjacent to residential areas and that it does not apply to midsize neighborhood grocery and drug stores. Large grocery stores already are exempted, as are restaurant-bars.

    While an ideal solution to the Trader Joe's situation might have been to wait until an overall revision of the densty restriction could be approved, this company was operating on a short timeline on whether to locate at the Ward Parkway Shopping Center, or locate elsewhere, perhaps in another municipality. Trader Joe's, as you know, is a specialty grocery store with a loyal clientele that will draw customers from probably about a 100-mile radius to the shopping center, thus benefitting all the surrounding merchants to at least some degree, as well as bringing in additional tax revenue. I know folks who live here who periodically drive to the closest Trader Joe's locations in St. Louis or Omaha to bring back items for themselves and friends and neighbors. We need to keep that revenue hee in Kansas City!

    Actually, allowing grocery stores to sell alcoholic beverages is one of the few areas where Missouri actually has a competitve advantage over Kansas, so I think we'd be nuts not to take advantage of it.

    My ordinance also exempted the old Bannister Mall area from the consent requirements for restaurant-bars (not nightclubs/taverns) and from the consent and density restrictions for package sales, as was done in the Zona Rosa area in the northland. Hopefully, this will jump start redevelopment in this area so those of us who live nearby can have a nice place to go to dinner and maybe even a new grocery store. Our dining out options now are limited to fast food venues, and two grocery stores in our area have been closed within the last year.

    As we continue to examine revisions to our liquor laws, I would like to have your input before these matters actually come up for a Council vote.

    John Sharp

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  7. It's also quite easy to provide "advice from afar" for both Texans and anonymous posters, but if you purchase beverages in KCMO, you are right to be concerned and voice your opinion to all of us, regardless of which side of the state line you reside on.

    As for the regulation, I believe you may have an uphill battle. Existing liquor stores won't support a repeal of the law because it is against their interest to invite new competitors into their markets.

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