What happened at the Liquor Board on February 12, 2015.

Ms. Hecker went over the requirements of the new license again, which include a $700,000 capital investment, a minimum of 75 seats, and 65% annual average daily receipts from sales of food. She argued that the applicants have shown a $797,000 investment two different ways: the first way is that the value of the premises to be operated by the applicants is $377,000, calculated by the square footage that they will take up. The second way is that the applicants will pay $489,000 in rent for the property, over their 10-year lease. Hecker suggested that the Board may wish to seek the advice of the Attorney General on this issue, a suggestion that Chairman Ward immediately dismissed.

Hecker pointed out that, in most areas of the city, a restaurant may apply for a new Class B license after having invested $200,000, not including the costs of land or buildings. In the 46th legislative district, the requirements are heightened. In five smaller areas within the 46th district, the requirements are heightened even further. In all five of those small districts (within which this restaurant would fall), the statute does not specifically say that the capital investment must exclude the cost of land or buildings. Rather, the statute is silent on whether or not the investment may include real property. Hecker argued that, because the legislature did not specifically exclude land and buildings, the inference is that real property could be included in the capital investment requirement. Hecker had spoken with former state senator George Della, whom, she claimed, had agreed with her on this. Mr. Della was not present to give his own perspective, nor did he provide a letter or other document to explain his position or give any legislative history. Hecker said that the legislature knows how to exclude the costs of land or buildings when it chooses to; because they did not exclude it, those costs should be included.

The second argument that the attorney made is about when the capital investment must be complete. Hecker said that there is no provision in Article 2B that requires that the capital investment be new or be made prior to the issuing of the license. She pointed out that the applicants will be paying $4,000 in rent per month over ten years. Ward noted that the applicants are assuming that the rent will be paid over ten years, but it will be due in monthly installments.

Commissioner Moore said that Hecker’s argument that the capital investment did not have to be a new investment was illogical and against the plain meaning of the law. She also said that there is a difference between the terms cost, investment and value, which the applicants were trying to make equivalent. Moore said that the terms in the law were simple, and the Commissioners should not have to go through mental gymnastics to approve the license. Even if the Commissioners counted rental payments as part of the investment, the applicants aren’t going to spend that amount for ten years.

There was then some confusion about the exact space where the restaurant will be located within the large building. Commissioner Moore doubted the restaurant’s ability to fit in 75 seats in the space she was imagining. Chairman Ward asked Chief Inspector Shelton Jones to go out and visit the space, to report back to the Board on how big it is and whether 75 seats will fit.

Ms. Hecker concluded by arguing that the Board should interpret the law in such a way that it produces the most “beneficial results.” She said that the legislative intent of the statute was to “ensure legitimate restaurants,” which these applicants plan to create. There is no community opposition on the record, and Mr. Tom Yeager was present in support of the project. Hecker suggested that the Board hold the matter sub curia until they have had the chance to read her memorandum on the issue, which she had submitted the afternoon before the hearing.

Here, the Board has consistently told applicants that they must have invested the full amount required by statute before they receive their new Class B restaurant license, whether that required amount is $200,000, $500,000, or, as here, $700,000. The Board cannot legally refrain from applying this rule in this case and then go back to applying it to future licensees. The Board could announce a change in their interpretation and apply the law differently going forward, but the Board must not be “arbitrary and capricious” in its interpretation and application of the law.

It makes sense to require that the applicant actually have spent the capital investment money before receiving their license, though technically the applicants’ attorney is correct that the statute does not explicitly require it. Over sixty percent of restaurants close or change ownership within the first three years of operation. If that happens in this case, and the Board has allowed the applicants’ rent to be considered their investment, they will have only spent $144,000 by the time they close their restaurant, which will not bring their total investment above $700,000, as required by the statute.

It also makes sense to require the money spent to be “new money” expended for the benefit of the business requesting the new license. The Board acquiesced on this at the Atwater’s hearing (over Commissioner Moore’s dissent) but has otherwise required it. Otherwise, it is difficult to draw the line of which investment should be counted in the total.

In Ms. Hecker’s final argument, that the Board should interpret the statute to ensure “beneficial” results, there was no discussion or explanation of any of the terms used. It was unclear what it means to be a “legitimate restaurant” and what would differentiate it from an illegitimate restaurant, or whether the attorney’s understanding of “beneficial” results meant anything different from the results desired by her client.

Commissioner Moore asked about the nature of the undue hardship (as required by Article 2B section 10-504, the Board must make a determination that the licensee has suffered an undue hardship before they may grant an extension.) Mr. Fogleman responded that Mr. Mathison’s landlord ended the lease and razed the building, through no fault of Mr. Mathison’s.

To be sure of the timeline, Commissioner Moore went through it again: the license ceased use on August 31, 2014. The licensee submitted a request for an extension of the license due to undue hardship on January 30, 2015, within the statutory period, and is asking for an additional 180 days from the end of the first 180-day period.

Baltimore City Police Detective LC Greenhill testified to the facts from his report. Cadet Ken Jones, 19 years old, who made the purchase, also testified about the facts charged against the licensee.

Mr. Fogleman called the licensee’s brother to testify that the licensee died on October 3, 2014. Fogleman provided a copy of the death certificate to the commissioners. According to Kif Kim, the licensee’s brother, a Mr. Cho Wong was the clerk who sold the vodka to the cadet. It was Mr. Wong’s second day on the job, and he was fired immediately.

Mr. Fogleman then asked the Board to dismiss the charge, because the licensee had died before the violation occurred, and, according to Fogleman, a person can’t be held responsible for anything that happens after his death. Fogleman said, “I don’t want to be ‘that guy'” but it is an absolute impossibility that the licensee sold or furnished alcohol to the cadet two months after his death.

Chairman Ward denied Fogleman’s request, saying that a person who succeeds to the operation of a business absorbs all legal responsibilities. The law and the facts in this case were clear, and Ward said that the estate is fully responsible for the violation.

In mitigation, Mr. Fogleman told the Board that Mr. Kim was a very good neighbor to his community. He used to donate turkeys to those in need. There are prior violations on his record for selling to underage cadets, but in 2013, he did not sell to a cadet and received a commendation from the Liquor Board. Councilman Branch agreed that Mr. Kim was a good neighbor, was good to the community and generous with his neighbors. Branch said that he can count on one hand the number of businesses that give back to the community in his district, and Mr. Kim was one of them.

Councilman Branch went on to say that M & M’s is an example of a business that has been problematic. The Board gave the licensees there a three month suspension, but the Circuit Court granted the licensees an emergency stay, so they are back open. Branch said that he visited the establishment recently, and they’re still not letting people in the tavern portion of the store. Chairman Ward called up Chief Inspector Shelton Jones and told him to do something about M & M.