[Southsider2k12]

This is typical of the nomenklatura of MC. They are flooding the market at firesale prices. And the holders of the existing licenses are forced to pick up the soap in the showers. I think they have information about the people or corporations who will end up with the licenses. I do not trust them, and they do not operate in the open. Why should anyone trust them? ANSWER: There is NO reason to.

At the sametime, think of yourself as a business man from outside of MC. Why would you locate in that area, sans the most profitable portion of the restaurant business, when you could locate in another town with a more stable clientèle? Instead of hoping for a rival, you could go somewhere else and have a really good idea at what your business would look like. You have to give a little something to get people here.

[Roger Kaputnik]

Yeah, but burning all the local folks with the licenses already? It stinks.

[Southsider2k12]

Yeah, but burning all the local folks with the licenses already? It stinks.

Its not a pretty situation, that's for sure. The problem is no matter what you decide, someone is going to be mad.

[RedDevilMC]

I guess my hope in all of this, Is that MC would be a regional destination for all restaurants to reap the benefits of. There have been several weekends in the past year, that I've decided to go to Valpo, New Buffalo, or Chesterton to eat. I know it may stink but we have to look at creative measures to bring business here. The Blue CHip is already overbooking the new hotel for conferences. The are looking alternative agreements with other hotels in the area to meet the capacity. This should help all of the restuarants in the area. We also have to really market the area. I can already hear people saying, Let's go over to the RiverWalk in MC this weekend to eat and shop. It can happen. I don't want to downplay the fact that the local business owners are concerned about their investments. Several great comments and questions came up on Monday. I am looking into them.

[Ang]

I guess my hope in all of this, Is that MC would be a regional destination for all restaurants to reap the benefits of. There have been several weekends in the past year, that I've decided to go to Valpo, New Buffalo, or Chesterton to eat. I know it may stink but we have to look at creative measures to bring business here. The Blue CHip is already overbooking the new hotel for conferences. The are looking alternative agreements with other hotels in the area to meet the capacity. This should help all of the restuarants in the area. We also have to really market the area. I can already hear people saying, Let's go over to the RiverWalk in MC this weekend to eat and shop. It can happen. I don't want to downplay the fact that the local business owners are concerned about their investments. Several great comments and questions came up on Monday. I am looking into them.

Is there a plan to help businesses during the winter, or do these new businesses understand it's seasonal?

Personally, I think that a place that has been in MC struggling for how ever many years ought to have first dibs at anything new if they think it will help their business. Once the guys that have been there are getting back on their feet, then we should invite new touristy places to come in. Then people can say, "Look, Michigan City is a place that really looks out for the little guy and cares about its own. I think I want to move to that town."

[Roger Kaputnik]

Part of the problem in the MC restaurant scene is the reputation of Rodini's and that place on Franklin. Fine dining? yeah, for around here. If you want to eat better, you have to try the places like Sahara and PPaanniinnii. How to attract good restaurateurs? Not sure; I think it is not likely that they will lead the charge.

[mcstumper]

Yeah, but burning all the local folks with the licenses already? It stinks.

So less competition means more quality for the citizens of MC? Do you work for Microsoft?

[Roger Kaputnik]

If I worked for MS, I would not be using a surplus cop laptop on a grocery store buggy!


I am not against competition; I am against subsidizing one competitor over another.

[Southsider2k12]

I guess my hope in all of this, Is that MC would be a regional destination for all restaurants to reap the benefits of. There have been several weekends in the past year, that I've decided to go to Valpo, New Buffalo, or Chesterton to eat. I know it may stink but we have to look at creative measures to bring business here. The Blue CHip is already overbooking the new hotel for conferences. The are looking alternative agreements with other hotels in the area to meet the capacity. This should help all of the restuarants in the area. We also have to really market the area. I can already hear people saying, Let's go over to the RiverWalk in MC this weekend to eat and shop. It can happen. I don't want to downplay the fact that the local business owners are concerned about their investments. Several great comments and questions came up on Monday. I am looking into them.

You guys are really in an interesting spot. Balancing the concerns of local businesses versus the long term interests of the City is a tough spot. Is there any room for a compromise situation with the local interests where some expansion can take place? I do honestly believe we can't go forward with this type of district without getting other people's money involved, and that isn't going to happen out of the charity of their hearts. They want profit potential, and unless they think they can get it here, new investors aren't coming here.

[Roger Kaputnik]

RedDevil, can you elaborate a li'l on some of the questions and comments you are looking into?



(PS--personal aside: u d best!)

[Ang]

This poor fella can't seem to catch a break. If his problems are indicative of starting a new business in Michigan City, then no wonder no one wants to come here. It's like the Mayor says, "Yes come to Michigan City, home of sand, sun, and smiles. We will welcome your new business!" Then all of the rest of the people are saying, "No, we don't want your competition. Go away! If you won't go away we will make you! We will try to stop you from getting the things you need. We will prevent your customers from having ideal (free) parking. We will do what ever we can to prevent you from opening your doors. Oh, and by the way, Welcome to Michigan City."

http://thenewsdispatch.com/main.asp?Sectio...amp;TM=39328.78

Despite Opponents, 'Grille' Gets Permit
Court denies request from group to forbid restaurant from receiving liquor license.

Jason Miller
The News-Dispatch

MICHIGAN CITY - A La Porte County judge Wednesday denied a request to stop a new restaurant from obtaining the first liquor license in the city's new riverfront entertainment district.

Ed Arnold, a La Porte businessman and partner in 12 On The Lake LLC, received final approval from the La Porte County Liquor Commission on Thursday for a new liquor license. That license will be used by the Michigan City Harbor Grille, a new restaurant being built on the site of the former Michigan City Yacht Club.

The license was granted a day after Judge Steven King told a group of local tavern owners they didn't have standing to ask for a restraining order against Arnold's operation.

The group, which called itself the Michigan City Bar and Restaurant Association, has been pushing to stop the issuance of liquor licenses by the city for $1,000 under the new city law.

They say licenses will devalue existing licenses, which were bought on the open market for tens of thousands of dollars.

"It was a futile and erroneous attempt. They were just trying to come up with something to stop our progress," Arnold said. "Matey's is our closest competition."

Carol Bailey, who owns Matey's with her husband, Bill, spoke on behalf of the association Wednesday and has headed its efforts to stop the new district's license deals.

She declined to comment when reached at Matey's on Thursday afternoon.

Michigan City Redevelopment Commission Attorney Michael Bergerson said Thursday a key point in King's rejection of the suit was the revelation that the association doesn't exist.

He said the group of local tavern owners gave itself a name, but never officially created the group.

"The liquor commission set its hearing for (Thursday) and (opponents) filed this as soon as they found out so they could stop that hearing," Bergerson said. "But most importantly, this association doesn't even exist. They never officially organized. They're a non-entity."

The group apparently claimed 12 On the Lake's application for the license didn't sufficiently show enough evidence to support the need for a license. Michigan City Plan Director John Pugh and Plan Commission President Ken Behrendt testified in front of King that the restaurant does exhibit a need.

"I'd prefer the tavern owners embrace the idea of redevelopment. I'd rather work with them than fight it out in court," Arnold said. "Ultimately they'll benefit from it."

Bergerson said the restaurant now has its license and must only pass final inspections to begin operation, which Arnold hopes will come in July.

[Roger Kaputnik]

The question, as you may recall, is that the licenses are flooding the market at below market costs. If this is done by business, it is considered an unfair trade practice. The licenses the established businesses have are usually valued at 60-80 thou US.

[Ang]

But that's not this guys fault that the city is selling them so cheap. He's just a guy who is taking advantage of a situation presented to him by higher powers. To try to stop him is rediculous. The people who are fighting it should take their beef up with the city, or should have done so a long time ago before this guy applied to get one. I agree with Judge King that this is frivolous.
I'm sorry that they paid so much for thier licenses and now the City is selling new ones for so cheap, but it's the same prinicple as if you go to Wal-Nart and buy that super grill you've been wanting for years. You buy it when it first comes out at a price of $500. Three months later you're back in Wal-Nart and you see that same grill for $250. Are you going to stop other people from buying one because you had to pay so much for it?

[Dave]

The whole concept behind liquor licenses is beyond my comprehension.

When I think "license," when I'm thinking in english instead of legalese, I think of something like a car license -- pay a fee on a regular basis for a permit to do something. I don't have any kind of property interest in my car's license, at least not such that it would be something I could sell.

Liquor licenses are a different animal. Once you've got one, you can actually find banks which will lend money based on using the license as collateral (a problem some local businesses are currently having, due to the "devaluation" of the existing licenses). Apparently there is something of a market for them -- they're sold through agents, like real estate. And the value seems to me to be outrageously high, but that is apparently due to their being available in limited supply.

Silly me. I used to think that if I opened a restaurant and wanted to sell booze, all I'd have to do would be to go to the appropriate government agency, fill out some forms, possibly get permission (or at least no serious objections) from my new restaurant's neighbors, pay a fee, and there you go. Wrong! Only "X" licenses in town, to sell booze I'd have to acquire one of the pre-existing licenses from a current license holder.

The whole thing just strikes me as wierd.

[Roger Kaputnik]

That is NOT the situation at all.

[Ang]

What is not the situation at all? Me or Dave?

[Dave]

That is NOT the situation at all.

If you're addressing my post, I'd appreciate an explanation.

Heck, if you're addressing ANYONE'S post, I'd appreciate an explanation.

[Roger Kaputnik]

Sorry about the delay in clarification of my post. I typed the message right after reading Ang's "WalNart Grill" post. I sent it after Dave sent his "Silly me" post, and his got listed first.

At any rate, Ang's post's hypothetical situation is quite different from the case of the liquor licenses. Ang does not address the fact that the gov't is supposed to be neutral in the market. This is the basis of open, competitive bids for public works, f'rinstance. The gov't has strict limits on how many licenses are available. This highly-controlled market results in a market price of 60,- 80,000 USD. Much of the value of the license is due to its scarcity. Under these conditions, even banks concur in such valuation.

Now, the gov't has allowed ten more licenses to enter the market under further conditions of a controlled price of just 1,000 US, and concentration in a specific area. We can all agree that giving a license that has a value an order of magnitude greater for this price and protecting these licenses in a choice area of the city undermines the entire way the established licenses' value is determined.

To make Ang's "Grill" story work, we have to change some things to achieve some rough equivalence. First of all, WalNart is only allowed to sell a finite number of grills. No one else in town is allowed to sell grilled food. This controlled market, where only a small number of grills are allowed and grilled food may only be sold from those with these official grills, will naturally result in the grills having a certain value. Let us say that SSider, Dave, Ang, and I have the grills. We are grilling away, maybe even developing a side business of selling alcohol, and sooner or later, someone else wants a grill. We have the gov't tell that person, let's say mcstumper, "Sorry, you cannot get a grill. You have to get one when SSider, Dave, Ang, or Rog want to sell theirs."

Mcstumper considers this, generates a plan of how much money he plans he can make from using a grill, and considers that this is the value of the grill to him.

Now, RedDevil wants a grill, too. She figures out what she can make from using the grill, and decides that she wants to have a grill so much so that she adds a certain amount to her valuation.

They both call the four grillholders, and offer what they each figured the value of a grill. As you can imagine, barring any altruistic interference, the higher bid wins out, and RedDevil buys a grill. The other three grillholders now offer their grills as roughly this price, and get it, because the market determines that this bid is appropriate.

Now, the gov't decides that it wants a grill in a certain locale. It decides to sell a grill at not 50%, not 20%, not 10%, but at 1½% of the value of a grill that the market set.

The original three grillholders are rightly chagrined at the gov't because they followed the rules as the gov't set forth. RedDevil is rightly chagrined because the premium she had to place on the grill was devalued at a stroke. The effect on the balance sheets of the grillholders will be determined in the future as soon as the market corrects the value of having a grill.

Under these conditions, Ang's WalNard Grill post has some resemblence to the liquor license situation.

[Dave]

Thanks for the clarification, Roger. I think your analogy is pretty good.

However, I still maintain that the whole situation strikes me as odd. I can think of two better ways to do liquor licensing right off the top of my head.

Make the liquor licenses annually (or every 2, 3, 4 years) renewable, on good behavior of the licensee, and price the licenses either by:

1. determining the social costs of an establishment selling alcohol (additional police visits due to drunkenness, costs of rehab for alcoholics spread over the population, etc.), and that's how much the license costs, or;

2. if there is going to be a limited number of licenses, every 2, 3, 4 years or so, they are up for sale to the highest bidder(s). Do them like a "Dutch" auction -- sealed bids, if there are 10 licenses, the top 10 bidders get them. Non-transferable, too.

[Roger Kaputnik]

How do you maintain a business if the central asset of a license is put in question every few years?