Thursday, February 17, 2011

Stark Raving Mad

Last night the community board held their final open meeting about revising their policies on liquor license approvals. It is now 24 hours later and I'm still stark raving mad about the whole thing. I could only stay for an hour due to a Chinese food commitment that, if broken, would have brought bad luck for at least another year. So I can't tell you how the meeting ended, only how it started, which is badly....

... when I got yelled at for cross talking, when in fact it was my turn to speak and I was defending myself against a bully who was trying to shout me down.

I would like to ask the question of the public: is there another kind of business besides restaurants and bars that is allowed to traffic in state or city issued licenses for profit? Taxis? Hot dog vendors? I honestly don't know how those licenses work but am curious to know if this is status quo for all licensed ventures, or just liquor licenses. Doctors can't sell their license. I can't sell my drivers license, but is that only because there is no market for it, or because it is frowned upon? This is a burning question.

As a non-politician, and merely an interested citizen, what is so stunning to my innocent self, is that people who have a financial interest in profiting from the rules of how liquor licenses are approved for recommendation by the Community Board (they don't actually approve licenses, only make a recommendation to the SLA), also have a vote in how those rules will be created. They say they've been over this with the lawyers, but I still can't wrap my mind around it. I believe it is the very definition of cronyism.

The issue is thus (very briefly, it's much more complex): the bar owners are insistent that when applicants are buying a liquor license from an existing owner, the community board ought to approve the "transfer" without much review, ie a rubber stamp. The reason for this is because if they apply any stipulations (close their windows by 10pm or no live music) then that reduces the value of how much the owner can sell their liquor license for. That is because when restaurants and bars fail, they can get upwards of $100,000 for their liquor license if they can find a new sucker to buy it, and suckers there are aplenty. So they are rewarded for failed businesses, supported by the policies of the community board. I cannot think of another business that gets this benefit, based on having a state-issued license in your pocket. A guarantee of big money, even if you fail. Supported by our community board, all our elected officials, and the state liquor authority. Which does make me think that there must be something I'm missing, I just don't know what it is. I seek enlightenment.

In short, the bar owners, who are members of the community board, have a vote on making this policy, which has an impact on the value of their liquor licenses. Huh?

So there are two issues: one, a state issued license can be sold and bought right in the open air, not underground, under the table, or out of sight, right there in broad daylight. And second, a member of the community board whose business is impacted financially by the decisions made by the board, can vote on these issues. Not only do they have power to keep the value of the licenses inflated, but they can also, in effect, choose their competition with the power they have to approve or deny license recommendations.

I'm not sure I'm explaining this clearly, but if you read this far, thanks for listening, I'm still kind of ranting about it because I'm some kind of crazy nutjob who thinks things should be fair, when I know, I know they are not.

Commenters, if you are so inclined, please be polite or I will delete you. Cross talking and intelligent conversation is allowed, personal attacks and hate is not.


Anonymous said...

This (the transfer) is one of the policies that is the most destructive to our neighborhood, and the most important to organize against. I think we should consider a legal suit against the city/SLA , and also a conflict of interest complaint regarding community board members voting on their own vested interests.

egit said...

I think your assertion a failed business makes big money on selling its license is somewhat flawed. The process of acquiring said license in the first place was probably just as expensive. There are loans to be repaid, construction costs, idle time while rent is being paid and business not yet open, etc.

A failed bar or restaurant will still lose a fortune.

Jill said...

Ok, good point, but still they have this opportunity to make up a big chunk of losses (depending of course on how big those losses are). And there are bar owners who didn't have to pay for their license because it was new when they moved in - so they really can make a killing, assuming they had many years of profits before they decide to cash in.

One other point I didn't make here is that I've heard about restaurants working hard to get a new license because it's an "exit strategy" and a way to plan to make back some money before they completely fail.

But even still, the added pressure on the bars of that financial burden seems unfair to them, that they have to pay those big bucks just to get the license in the first place. It inflates prices for us , and cannot possibly help them succeed.

egit said...

I agree with you. The process of CB approval is badly broken. There mere fact that a self-selected group of appointed community "watch dogs" get to say which business open and which don't is problematic. I would love to have the gas station down the street closed down... Noise, Fumes, Traffic at all hours, Taxis, Limos, etc. Same thing, different distilled product.

To your point though, by the time a bar has paid for the lawyers, the rent, the PR for community outreach, etc. that brand new license is going to have cost a lot of money. And... even after all of that they might be turned down by CB/SLA. It's a huge crap-shoot even to try.

Anonymous said...

I could not agree more! I went to the first of these meetings and was so disappointed by what appeared to be a total lack of interest in reform by the committee members when that is exactly what they asked us to show up for. That was sad, and then they wonder why residents don't want to attend such meetings. I'm only willing to show up so often and not be listened to before I just give up.

And as for bar owners being able to re-sell their licenses - seems to be really, really wrong, and I'd be very surprised that it isn't illegal. I hear that the EV community board is the only board who does that, but I hope someone will check me on that.

It seems to me that the best thing that this community board can do is to attend the SLA meetings of other community boards both within and outside nyc. They've gotten so insular that maybe seeing what others are doing might help them get back to something closer to normal.

Jill said...

Interesting, because there was reports in this meeting I went to about what other cb's do, and then, dispute whether the person reporting indeed had all her facts straight, implying that either she was flat out wrong, or that the other cb's misled her down a path of ill repute. It was hard to parse, or get to what was going on there, but in the end the feeling (the way I heard it) was to disregard other cb's because enough doubt was cast on what the real truth was.

C. Haberman said...

Amen to your comments, Jill. The transfer policy is a cancer to our neighborhood.

cb said...

What I said was that boards 2,4,5,6,7,8 in Manhattan treat "transfers" as new. Board 1 usually waives right to review unless a problem--but is not bound by a policy. The other boards have no policies and are not bound by any restrictions. This is in writing from the boards--this is not up for dispute.

chris flash said...

This shit has been going on at "Community" Board Three for as long as I've been aware of them (mid-80s) and investigating them for The SHADOW.

Half of them are appointed by the Borough President and the other half by City Councilmember Rosie Memdez.

Most of them have financial interests in the neighborhood, while others use their CB3 service to make money and/or their CB3 connections as a stepping stone to higher political office, and/or to get a plum job from a grateful politician.

In the course of publishing The SHADOW, I have been informed that persons seeking liquor licenses could always get them by paying off certain board members. The price has been in the area of $10,000.

To say the LEAST, there's a serious problem having a guy who owns several liquor serving establishments heading the SLA (State Liquor Authority) "Task Force" sub-committee of CB3 determining who can or cannot get a license!!

Aside from the very few members who genuinely desire to work within the system to keep their neighborhood together, CB3 is a nest of corruption, from the self-serving members of certain committees on which they hold sway, to the "manager" of CB3, Susan Stetzer.

Stetzer, is probably the most corrupt of all. She was one of a group in her political party who scammed money from a study funded by Con Edison to ascertain whether its 14th Street power plant was safe for the surrounding community. The study was non-existent and Stetzer's gang rubber-stamped the plant as being safe. Her take was approximately $25,000!! (All of this is documented and we will use it when Stetzer announces her candidacy for City Council when Mendez is forced out due to term limits.)

Unfortunately, the net effect of having a bunch of corrupt bastards running what pretends to be a "community" board, is to turn people away from getting involved in the affairs of their community and to further the pessimism that permeates the political process.

We'd better off having NO "community" board than to go along with the charade that CB3 represents our community!!

Anonymous said...

Great post, Jill. This is ridiculous. I can't believe liquor licenses can be sold like that. What can we do about this? Do you have any suggestions as to how average East Village residents can get this changed?

Jill said...

@chris - wow those are some pretty strong assertions, I for one would like to see more information on that Con Edison thing. When did that happen?

I don't think Rosie has a say in cb members (officially, of course she probably has a big say unofficially). According to the website, it's all done through Stringer's office.

Also, a bar owner is no longer the head of the SLA sub-committee - but there are at least three bar owners on the committee (probably more, I don't know much about most of them and so many never show up at the meetings anyways). The head of the committee is Alexandra Militano who is a district attorney in the Bronx.

Jill said...

@anon 9:18 - the only thing I would encourage is to go to the CB meetings and see for yourself, and if you have time, speak up. They are supposed to represent the community so the more voices they hear against something, the more seriously they presumably have to take it. Residents have had small successes, but big successes are politics, and politics are inherently corrupt (imho).

To solve this particular problem, it would be good to write letters to both Dominic Pisciota, chair of CB3 and Scott Stringer pointing out the insanity of these appointments, but I am certain they know have already given this consideration and condone it. The CB's argument is that bar owners should have representation on the committee for fair hearings.

As for the sale of liquor licenses, I once wrote a letter about it to Dennis Rosen, the head of the SLA in Albany, but never had any response. They are in the business of issuing licenses and think of it as a jobs program. I don't think their authority extends much further than that - also they manage enforcement and fines for license rule breaking (ie serving minors, changing the number of stools at the bar, dwarf tossing etc.)

It might also be good to write to Squadron, our State Senator. He is hosting a "community convention" trying to find out what the main concerns are from citizens.

What I wish for was a leader on this issue - it's a lot of work to make legislation, lobby for it, try to get a lawsuit, etc. and the landowners are the ones with the big money and big lobbyists. This issue impacts them mightily (they generally get a cut of the liquor license sale, from what I understand.)

Other suggestions?

Jill said...

I emailed Susan Stetzer and asked her if she planned to run for City Council. She responded, absolutely not, she will never run for elected office.

For those that don't know who she is - she's the District Manager of CB3 and one of only two (three?) paid employees at the Community Board, which is a volunteer organization. Susan runs the day to day affairs and the office, but does not have a vote, similar to how an Executive Director would operate a non-profit but not have a vote on the board.

Rosie has another term left so even if she did plan to run, it's pretty far in the future.

Jill said...

Ok I am an illiterate idiot, CB members are indeed partially appointed by City Council members. Never mind what I said before, I shouldn't do this too early before my eyes have adjusted to daylight.

Anonymous said...

Residents should pool their money together, say $50 each, and hire an attorney to file an Article 78 proceeding against the NY Conflict if Interest Board. Many people have complained about McWater & Palitz in the past but they did nothing. They do not believe that it is a 'direct' conflict of interest for them to set policy like this. Palitz is on the NYNA Board of Directors. She needs to state this before every application. If the applicant is a NYNA member then that's a conflict.

Ultimately the politicians are responsible for this and is who we should complain to. They appoint the CB members. Every notice that they have their parties in bars owned by CB members ?

rob said...

Many, many thanks for this post, Jill. I was one of those who went to an early guidelines meeting, was disappointed by the poor treatment of the community, and never returned. I'm glad I missed this one, because I don't think I could stomach it.

While I think it's brazen for a couple of bar owners to ask the CB to guarantee their investments against changes in their market, they have a right to ask, just as I have the right to go to the CB and demand that they make me a millionaire. But why should the CB listen to their whining, crying, temper-tantrum pleading for money? Don't the CB members recognize that by guaranteeing their licenses they are waving a welcome to bar owners everywhere, "The water's great here, come one in" and "pay no attention to the natives, they just live here"? What the hell are they thinking? How can they be bullied like that? The bar owners must be laughing right now, bursting their seams, "What a bunch of chumps on the CB."

I remember Meghan at the discussion of the Chinatown BID, when Harvey asked an important point about the troubling inclusion of the park in the BID, she interrupted from her secretary microphone saying, "Can we just go to the Christmas party?" I was kind of shocked: "Yeah, let's give a public park to a bunch of business owners -- we've got a party to go to." These folks are not focused on civic duty. They see only their own narrow perspective. I'm ashamed for them.

Jill said...

After writing this and getting some private emails about the issues, it is clear that the CB has gone over the conflict of interest many times through legal channels and feel it is a settled matter. I don't know if the decision to have stakeholders with a vote, on the committee, has ever been legally challenged. I was told that they are not, however, allowed to be chair of the committee.

I do agree that bar owners should have a voice in the policies, but not a voting voice. They can choose their competitors, they can prop up the price they can sell their licenses, and they have more power because of this than other types of shopkeepers. It seems so plainly unfair to me.

Regarding the sale of liquor licenses, this is couched in a "bulk asset sale" which is legal. The new owner doesn't imemdiately get the license, they get a temporary license until the whole thing is approved. It's a lot of hoo ha to get around the fact that they are selling a license.

Anonymous said...

from Anon 2/18/11 3:15 PM. Great work, Jill. Thanks so much. If you do ever decide to raise funds, I hope you'll post it here. I'm happy to donate whatever small amount I can muster. And if there's anything else we can do to help refocus CB3 on their mission of supporting this community, please keep letting us know here. Thx.