Photo by the author.

A group of U Street residents and business recently formed to fight a possible liquor license moratorium along the newly bustling corridor. The reaction has been swift and strong. Georgetown’s experience with a similar one shows some benefits for a moratorium, but also bears out some of the concerns that moratorium opponents raise.

Eric Fidler weighed in yesterday with a list of reasons why a moratorium would be bad for the greater U Street neighborhood, including:

  • It makes no distinction between “good” establishments and “bad” establishments
  • A moratorium on liquor license is in effect a moratorium on new restaurants, period.
  • It will reduce pressure to offer a good customer experience.
  • It unfairly rewards current businesses over future businesses.
  • It sets the cap at an arbitrary level.
  • It doesn’t address the supposed problems those advocating for a moratorium raise (loud crowds, vandalism, etc.).
  • It’s difficult to administer.

Georgetown has had a moratorium since 1989. Right now, only about 70 liquor licenses can be issued to Georgetown bars and restaurants. Liquor stores and hotels are not subject to the moratorium. Here are some of the results attributed to the long standing moratorium:

  • Opening a new restaurant in Georgetown is more expensive than opening one elsewhere. On top of the higher rent, you need to purchase a liquor license on the secondary market from a license holder who no longer wants it. This has reportedly driven the cost of such licenses close to $100,000.
  • Georgetown restaurants are pretty boring. No new exciting restaurant has opened since Hook did, and it’s closed already.
  • Drunken revelry is only a problem in certain spots around the neighborhood.

So some of Fidler’s predictions have already come true in Georgetown. The moratorium cannot be waived for particularly “good” restaurants, the quality of the restaurants has not kept up with the dining renaissance seen in other neighborhoods, and the cap seems arbitrarily set.

Some of Fidler’s predictions for U Street have not come true for Georgetown. Restaurants have opened in Georgetown without obtaining a liquor license. They are more likely to cater to a lunch crowd, but a restaurant is a restaurant. And it isn’t really difficult to administer. The zone basically is everything south of Q Street.

Also, it’s true that moratoriums don’t address the negative externalities of existing drinking establishments. But they do address the negative externalities of bars that haven’t yet opened. (And of course it also eliminates the positive externalities of those unopened bars and restaurants too!)

The cap may be arbitrary, but right now U Street has 107 licenses, over 50% more than Georgetown. Maybe it’s arbitrary, but it doesn’t seem likely that it’s low.

All that said, U Street should not pursue a moratorium. New and interesting restaurants open there almost weekly. It would be like killing the goose that laid the golden egg to stop that now. It would make sense for U Street to trust the market but verify with strong voluntary agreements that address hours and outdoor patios, etc.

One criticism of moratoriums that Fidler did not mention, but should be pretty obvious from Georgetown’s experience: they don’t go away. Georgetown’s has been renewed multiple times, and nobody seems to even make the case to let it expire. (To the ANC’s credit, they did add seven new licenses to the cap last year, but that only brought us back to the level that existed in 1989).

Finally, many believe that moratoriums make existing licenses worth a lot more. And that appears to be mostly true. Last year, when the city “released” those seven new licenses into the Georgetown moratorium zone, they were quickly snapped up, in some cases by parties with only sketchy plans for actually opening. It was a land rush.

The thing is, half of those licenses have already been forfeited because the speculative plans simply fell through (or in one case the restaurant didn’t want to comply with voluntary agreement restrictions). At least a couple now sit in ABRA unclaimed. Supposedly the lack of cheap liquor licenses is a huge obstacle to new restaurants opening in Georgetown, but the longer the free licenses sit there, the more that conventional wisdom seems wrong.