Expert: Big liquor law changes aren't necessary

It might be popular with segments of the Coeur d’Alene business community, but a proposed bill to hand issuance of liquor licenses over to local jurisdictions definitely has its opponents.

State Rep. Luke Malek, R-Coeur d’Alene, is championing a bill with a general aim of putting cities and counties in charge of all restaurant liquor licenses going forward, while the state handles administration of licenses already in place.

Malek mentioned the Jan. 20 closing of The Cellar, an upscale restaurant at 317 Sherman Ave., as an example of problems within Idaho’s structure for handling liquor licenses.

Owner Adam Hegsted said when he closed The Cellar, he couldn’t survive without selling liquor. He had done business for a year and a half on a “borrowed” license that ultimately was switched to the new Anthony’s eatery in Riverstone.

“I really wanted to keep going,” Hegsted said, “but I couldn’t see any way to get a liquor license. I wasn’t up on the waiting list with the state, and the license sold to Anthony’s cost about $300,000. There’s no way I could afford to buy a license at that price.”

Ironically, there is a liquor license currently available in Coeur d’Alene under the state’s quota system, which offers one license per 1,500 residents.

The person atop the waiting list for that license is Brian Donesley, a Boise attorney and former head of the state’s Alcohol Beverage Control Bureau.

Hegsted and Donesley discussed the possibility of working together, with Hegsted running The Cellar under Donesley’s license and ownership.

The deal didn’t work out financially, so now Donesley intends to open what he calls a “bistro/coffee house/espresso place for professional people as the base customers” at 726 N. 4th St. — doing business in the building formerly occupied by Kelly’s Irish Pub.

Donesley has until April 16 to submit a formal application and have his background and premises checked by the state.

“The bottom line is that I want to run a place myself, the type of lounge that I would enjoy patronizing,” Donesley said. “I’ve always hoped that could be the next step in my life.”

Donesley, 68, has extensive experience both in the restaurant business and dealing with Idaho liquor laws.

He believes the current quota system has plenty of holes, but doesn’t think Malek’s proposal is the correct solution.

“I’m in favor of using the same system that’s in place, but making some changes so that it’s not so arbitrary,” Donesley said. “Maybe you could start with something simple like letting people who are on the waiting lists around the state sell their spots.

“That way, people like Adam who really want to run a place but can’t pay the giant going rate for a license in a busy market, could possibly get one much, much more cheaply. Meanwhile, the person on the waiting list makes a nice chunk of money for doing nothing, really.”

Under present law, places on waiting lists for any of Idaho’s 900 or so quota-system liquor licenses can be inherited, but not transferred for profit.

“How weird is that?” Donesley said. “You can’t sell your spot in line, but once you get the license — which is just the state’s permission to do something that would otherwise be illegal — you can sell it for a bundle if you’re in the right market.”

The state, by the way, takes 10 percent of the sale price when a license is sold.

“I’m certainly not saying it’s a great system right now,” Donesley said. “But tossing this thing into the laps of cities and counties — none of whom have any experience judging the result of what they might do — just sounds like a recipe for disaster.

“You might have some counties selling dozens of licenses, just to raise money. Is that a good idea? The truth is that the demand for liquor isn’t going to increase, just the number of venues selling it — and that’s unfair to all the current license holders.

“There’s got to be a better fix than giving the power over these licenses to every city and county in Idaho. That’s just a scary idea.”