Limited liquor licensing: A tendency of small towns

FOR THE PAST four years Dale Buchanan and his wife Ginny have owned and operated a combination cafe and pool hall on the town square of Monticello, a town of 4,480 in east central Illinois. Buchanan, 35, is a quiet, bearded man whose appearance and manner belie his determination to maintain his rights, even if it means fighting city hall.

Business was good. Buchanan was content with his restaurant. It was frequented by friends and regular customers. Then one day in the spring of 1974, Buchanan heard that some prominent local businessmen had formed a corporation and planned to open a new restaurant on the Town Square. Buchanan decided that he had better do something to insulate his business against this new competition.

"Well, the city council had just extended the number of liquor licenses from two to three. If they were going to open a restaurant, I wanted that new liquor license," Buchanan said. "If they weren't going to open up, I figured I wouldn't need it." The corporation applied for the new license, but Buchanan beat them to it. It appeared that Dale and Ginny's Cafe would soon become Dale and Ginny's Tavern.

The State of Illinois doesn't set any limitations on the number of liquor licenses a community can have. There are different types of liquor licenses, and a city council has the power, granted by state law, to limit the number of each type issued. Some licenses permit only the sale of package liquor; others permit only the sale of liquor for consumption on the premises; and another type permits the sale of both package and immediate consumption liquors. Licenses are also classified by seating capacity and by type of drinks served.

Small towns and cities are the most frequent users of the statute that grants each city the power to set limits on the number of liquor licenses available. Large cities often reason that they have so many liquor establishments already, that a few more or less won't make much of a difference. So they don't bother to set limits. Thomas J. Murphy, executive director of the Illinois Liquor Control Commission in Springfield, recognizes the tendency small cities have toward limiting the number of liquor licenses. He says the number is often dependent on the mayor's opinion of how many liquor establishments could be adequately supervised by the police. "Often it is this question of ability to police these liquor operations that is the crucial factor, especially in small cities," according to Murphy.

Not all mayors would agree. Mayor Hiram Paley of Urbana doesn't see police control as decisive. He says it relies more on the nature of the community and community pressure. "The people in Urbana tend to be conservative. Here, the limiting of liquor licenses is an outgrowth of that conservatism. We do have limits now, but I have found that the city council has shown a flexibility toward extending the limits when necessary."

Dale Buchanan expected the license to be granted to him. Yet despite the fact that he met the requirements and he was the first to apply, the corporation was granted the liquor license for the new restaurant. Buchanan wasn't happy with what might have been behind-the-scenes maneuvering, so he hired an attorney. Together they prepared for a court battle over Buchanan's right to a liquor license. As a result of Buchanan's suit against the City of Monticello, Mayor Marshall R. Mitchell made a turnaround on his ruling. Buchanan was given the liquor license.

Mitchell said, "The council has jumped to give the corporation a license, so it raised the number of licenses available. But since the ordinance hadn't taken effect yet, the license was granted illegally. I had just got elected. I proved it was illegal, took the license away from the corporation and gave it to Dale Buchanan." Buchanan thought he had won, but to his dismay, his license was set to expire at the end of April 1974, just three weeks away from the day he got it.

Even apart from the limited number of licenses, not anyone can purchase a liquor license at the local level. An application must be submitted to the mayor, who serves as liquor commissioner. The mayor passes the application to city departments which check to see if the applicant meets the qualifications, including health and safety requirements. And liquor licenses must be renewed yearly. If the mayor feels it is necessary, the renewal application is again checked by the city departments.

By the time the date for liquor license renewal came up for Buchanan in April 1974, Monticello had a new liquor ordinance. The ordinance stipulated that no establishment serving alcoholic beverages could have pool tables in the same room where liquor was served. "They figured I would want to keep my pool tables more than I wanted, the liquor license," said Buchanan. "I just moved the pool tables into the basement, and now I've got them in the next room. You see, the law only prevents you from having pool tables in the same room with the liquor."

Though Buchanan had held his liquor license for three weeks, at renewal time the limit for licenses was once again back to two.

24 / June 1976 / Illinois Issues

A local community has the power to limit the number of liquor licenses that are issued. Deciding who gets them is the real problem

The city council had changed the limit after the mayor had given the license to Buchanan. Buchanan was still eligible for one of these two licenses, since he had moved his pool tables to comply with the new ordinance. But besides him there were two other applicants for the two licenses. Buchanan and his attorney attended a council meeting where they expected the matter to be decided. Nothing happened. Buchanan and his lawyer went home believing the question of who would get the two licenses would be decided at a later meeting. Buchanan found out later that after the council meeting, the two other applicants met with the mayor. Even though Buchanan had not been present. Mayor Mitchell said, "I decided that the only fair way to do it would be to draw names out of a hat. Buchanan's name wasn't one of the names drawn." Buchanan felt the whole procedure to be irregular — to say the least — and decided to appeal the mayor's decision to the Illinois Liquor Control Commission.

The Illinois Liquor Control Commission allowed Buchanan to operate as if he still had a liquor license while his appeal was pending. The City of Monticello hired an attorney to represent it before the state commission. Buchanan and his attorney were confident of winning their case before the commission, but the commission ruled in favor of Monticello. Buchanan's days as a tavern operator appeared to be at an end, but his attorney suggested to Buchanan that they take the fight to circuit court in Springfield. Buchanan agreed.

As things turned out, the court battle in Springfield never materialized. Monticello was in the midst of city elections, and one of the chief Issues was Buchanan's tavern. "The taxpayers were getting angry," Buchanan said. "The city was spending a lot of money on lawyer fees just to keep me from operating. Many of the people didn't feel that the city should be spending their money that way."

After the election, there were some new faces on the Monticello city council. Buchanan hoped they would be more sympathetic to his cause and raise the number of liquor licenses available back to three. The new council, soon after being officially installed, acted on the matter of liquor licenses. The proposal that liquor licenses be moved up to three came to a vote. The vote was a tie. In cases of a tie, the mayor casts the deciding vote, and Mayor Mitchell cast his vote in Buchanan's favor.

Deciding who gets liquor licenses gives the mayor of a community a great deal of power. Urbana Mayor Paley says that he doesn't relish this power. "I would like to see the limits on liquor licensing removed. People tend to think that money is being passed under the table. This isn't true. I don't like the connotations that limited licensing creates."

While Paley personally doesn't like the idea of limits, he realizes that there are people in the community who do. Not only do some townspeople want limits, but so do many of the licensees. "Licensees in Urbana want limits because it limits the competition that their businesses face."

Murphy of the state commission also believes that there are sound reasons for ending limits on liquor licensing. "An argument can be made for not limiting licenses," Murphy says. "They are not limited by the state in any way and they are not limited in most large cities."

There are three other, more specific reasons advanced by those in favor of unlimited liquor licenses:

1. The more licenses a community sells, the greater the tax revenue, which is used to benefit the entire community.
2. Limiting the number of licenses restricts competition among licensees. Of course, licensees are happy with the situation. Less competition means higher profits. It also means that the consumer is paying a higher price for alcohol.
3. Limited licensing may cause many people to take advantage of the situation through illegal means. Open-ended licensing could eradicate the possibility of graft and extortion.

Opponents of unlimited liquor licensing point out two drawbacks:

1. The effect no limits might have on the police's ability to control liquor establishments.
2. The effect more liquor stores might have on a community.

Mayor William Telford of Springfield believes that police supervision of liquor establishments must be safeguarded when a city considers a move to unlimited licensing. Telford says the city "does have limits set on the various types of licenses. If we didn't have a quota our Police Department would have a hard time keeping track of them."

For smaller cities with less resources and smaller police forces, unlimited licensing may pose a greater control problem than in large communities. Mayor Joe Thomas of Ottawa, a city of 19,000 in north central Illinois, says he wouldn't like to see unlimited licensing in his city because of control reasons. "The laws on liquor and human behavior are so complicated now and so hard to enforce, that any further changes would make enforcement impossible."

Unlimited liquor licensing could be detrimental to the quality and appearance of a community if liquor establishments were opened all over town. Mayor John Spicer of Marseilles, another north central Illinois town of about 5,000, says, "This is the kind of business that without strict control may cause a great deal of trouble in a community, and materially reduce the attractiveness of the area for high quality residences."

Proponents of unlimited licensing argue that competition will limit the number of liquor stores in a community. Thus, they argue, communities would suffer no ill effects from unlimited licensing. In some cases, this may be true. But one Illinois county and some cities prohibit the sale of liquor, and communities that are near cities that ban the sale of alcohol have a special problem. Liquor establishments in "wet" cities will attract customers from nearby "dry" cities. In situations like this a "wet" city may have several more liquor establishments than would ordinarily be supported by its population.

There seems to be no cut and dried solution to the problem of limited versus unlimited local liquor licensing. But what is perhaps most important is that in Illinois each community can make its own decision. 

June 1976 / Illinois Issues / 25