Learn more about our Fall Fundraiser: Powering Forward Together on October 29

Community Law Center

Lawyers for Neighborhoods & Nonprofits

Summary of the Liquor Board Actions over the Summer of 2013

This past summer, Community Law Center began a new initiative: following up on the now infamous March 2013 Liquor Board Audit.  We set out via a blog on our website, Booze News: Distilled in Room 215, to find out how Liquor Board proceedings were or were not in compliance with state law, and how the audit did or did not improve Liquor Board operations.  Throughout the summer, we followed Liquor Board hearings closely and reported what we observed.

The blog was such a success that we have decided to continue it.  But first, we wanted to take a look at what did happen over the summer and give a general update on what we have seen so far, what we haven’t, and what it means.

Most significantly, the Liquor Board responded to the public attention its actions and inactions received.  After one week of blog reports that the Board did not announce its vote breakdown, potentially in violation of the Open Meetings Act, Chairman Fogleman began announcing at the beginning of each docket that all votes were unanimous unless otherwise stated.  After we reported that the Horseshoe Casino lacked the three citizen signatures required by state law, the Board started to verify the validity of these signatures during public hearings.  And after we reported that the Board was approving applications without all documentation in place, Chairman Fogleman began stating during the decision phase of hearings that each approval was contingent upon all of the proper documentation being received.  (As explained in the Baltimore Brew in the July 11, 2013 article on Booze News, this is still problematic because (1) the audit shows that the documentation is not being consistently checked after approval and before issuance and (2) when the Board approves a license without having all information, it is approving an application that the surrounding community – whom state law gives a concrete role in evaluating the application – has not had the opportunity to review, because it will be changed after the public hearing.)

Developments at the Liquor Board

Here’s a point-by-point breakdown of the developments we have seen:

1. Chairman Fogelman has publicly announced that from now on there will be no mystery about the vote count, and that all votes will be assumed to be unanimous unless a dissenting vote is specifically announced.

2. Community Law Center received indication that the Liquor Board will grant postponements of hearings when requested in order for a community association to secure legal representation (community associations have had to fight hard for these in the past, while licensees were routinely granted postponements).

3. The Liquor Board has begun to follow state law by requiring licensees to fully and accurately complete license applications before such applications are approved.

4. The Commissioners are now verifying the following portions of applications during Liquor Board hearings: 1) corporate standing of LLC (by asking the applicants if the corporation is in good standing – this should be checked with the Maryland State Department of Assessments and Taxations before the hearing), and 2) how the applicant knows the three citizen signatories on the application.

5. At the suggestion of Community Law Center, the Commissioners have begun verifying citizen signatories’ voter registration with the Board of Elections.

6. The Commissioners now state at public hearings that all approvals are contingent upon the Board receiving all proper documentation.

7. The Liquor Board has begun pulling hearings from the docket if the application is incomplete.

And, in a nice recognition of the blog’s impact, we also won a “Best of Baltimore 2013” award from Baltimore Magazine and “Best of Baltimore 2013” from City Paper!  We have also been nominated for a Baltimore Innovation Week 2013 award.

 Summary of All Liquor Board Hearings, May 30 – August 15, 2013

While the main purpose of the summer blog was to inform the public of how the Liquor Board works, it also served as an important data-driven follow-up to the Audit, providing specific information on how the Audit findings did and did not affect Liquor Board practices.  This is a summary of the 62 hearings from May 30 – August 15, 2013:

Note: As all information was not available for all cases, the total numbers are not consistent across categories.

Length of hearing:

Hearings ranged in length from 2 minutes to 3 hours and 43 minutes, with a median of 12 minutes and a mean of 20 minutes.

License Type (and neighborhoods in which they are located): 

22 BD7 Beer, Wine & Liquor licenses (tavern, alcohol may be sold for consumption on site or off premises from 6 am to 2 am)

(Fells Point (3 licenses), Hollins Market (2 licenses), Arlington, Brooklyn, Canton, Carrollton Ridge, Downtown, Federal Hill, Franklin Square, Hampden, Inner Harbor, Little Italy, Locust Point, Madison-Eastend, Rosebank, Sandtown-Winchester, Upper Fells Point, Washington Village/Pigtown.

15 B Beer, Wine & Liquor licenses (all alcohol may be sold from 6 am to 2 am)

(Downtown (3 licenses), Hampden (2 licenses), Belvedere, Canton, Charles North, Chinquapin Park, Hollins Market, Inner Harbor, Locust Point, Mt. Vernon / Mid-town Belvedere, Rosebank)

8 A Beer, Wine & Liquor licenses (package goods store, all alcohol may be sold for consumption off-premises from 6 am to midnight, no Sunday sales)

Better Waverly, Federal Hill, Midtown-Edmondson, Mount Vernon, North Harford Road, Upton, Westfield

6 D Beer & Wine licenses (tavern, beer and wine may be sold from 6 am to 1 am, no Sunday sales)

(Federal Hill (2 licenses), Canton Industrial Area, Highlandtown, Mount Washington, Riverside)

2 BHM Beer, Wine, & Liquor licenses (hotel with 100 or more rooms and at least $500,000 in capital investment, privilege granted from 6 am to 2 am)

(Downtown, Downtown West)

1 B Beer & Wine license (beer and wine may be sold from 6 am to 2 am)

(Hampden)

1 C Beer, Wine & Liquor license (non-profit private club, all alcohol may be served from 6 am to 2 am, 7 days/week)

(Brewers Hill)

1 Video Lottery Facility Beer, Wine & Liquor license (Beer, wine, and liquor may be sold on video lottery facility premises and on grounds controlled by the licensee, sale for off-site consumption not permitted)

(Carroll-Camden Industrial Area)

 Reason for Hearing and Result:

  • 12 Requests for hardship extension: 6 Granted, 5 Postponed, 1 Avoided with an order of a transfer application
  • 11 Transfers of ownership: 9 Approved, 1 Approved contingent upon occupancy permit & letter of non-objection from neighborhood association, 1 Denied
  • 8 Transfers of ownership and location: 6 Postponed, 2 Approved
  • 3 New licenses with live entertainment: 3 Approved
  • 3 New licenses with live entertainment, outdoor table service, and off-premises catering: 3 Approved
  • 3 Requests for Outdoor seating: 3 Approved
  • 2 Hearings to Determine status of license: 1 License deemed valid, 1 Hardship extension granted
  • 2 New licenses: 1 Approved, 1 Postponed
  • 2 New licenses and outdoor seating: 2 Approved
  • 2 Transfers of ownership, add live entertainment & outdoor table service (2 hearings): 2 Approved
  • 2 Transfers of ownership, add live entertainment, outdoor table service, & off-premises catering: 1 Approved, 1 Approved with order to amend application
  • 2 Violations hearings: 1 License revoked, 1 Fine of $1125
  • 2 Requests for live entertainment: 2 Approved, subject to MOUs with community associations
  • 1 New license with live entertainment, outdoor tables, & off-premises catering: Approved
  • 1 Request to reopen after being closed for 3 months: Granted
  • 1 Transfer of license location: Approved
  • 1 Transfer of license held by “secured creditor” & change of license class: Approved
  • 1 Transfer of ownership & add live entertainment: Approved
  • 1 Transfer of ownership & add outdoor table service: Transfer Approved, applicant asked to return in 6 months to request outdoor table service
  • 1 Transfer of ownership and expand license, add live entertainment, and add off-premises catering: Approved
  • 1 Review of pending transfer: Approved

Zoning of Establishment (according to Baltimore CityView):

  • Community Business District (B-1-2, B-2-2, or B-2-3): 27 establishments
  • General Residence District (R-6 or R-8): 11 establishments
  • Central Business District (B-4-1 or B-4-2): 8 establishments
  • Central Commercial District (B-5-1 or B-5-2): 3 establishments
  • Neighborhood Business District (B-1-2): 2 establishments
  • Community Commercial District (B-3-2): 2 establishments

Neighborhood (according to Baltimore CityView):

  • Downtown (6 establishments)
  • Federal Hill (5)
  • Hampden (4)
  • Canton (3)
  • Fells Point (3)
  • Hollins Market (3)
  • Inner Harbor (2)
  • Locust Point (2)
  • Mt. Vernon / Mid-town Belvedere (2)
  • Rosebank (2)
  • Arlington (1)
  • Belvedere (1)
  • Better Waverly (1)
  • Brewers Hill (1)
  • Brooklyn (1)
  • Canton Industrial Area (1)
  • Carrollton Ridge (1)
  • Charles North (1)
  • Chinquapin Park (1)
  • Downtown West (1)
  • Franklin Square (1)
  • Highlandtown (1)
  • Little Italy (1)
  • Madison-Eastend (1)
  • Midtown-Edmondson (1)
  • Mount Washington (1)
  • North Harford Road (1)
  • Riverside (1)
  • Sandtown-Winchester (1)
  • Upper Fells Point (1)
  • Upton (1)
  • Washington Village/Pigtown (1)
  • Westfield (1)

Does the associated corporate entity exist and is it in good standing (according to the website of the Maryland State Department of Assessments and Taxation (SDAT))?

  • Exists:  46 Yes, 4 No
  • Of those that exist, are they in good standing?  37 Yes, 9 No

 Location of associated corporate entity’s principal office:

  • Baltimore City (26 cases)
  • Dover, DE (1)
  • Rockville, MD (1)

 Does at least one of the applicants reside in Baltimore City?

  • Yes (23 applications)
  • No (5)
  • Unclear (1)

 Pecuniary interest of Baltimore City resident in establishment:

  • 100% (11 cases)
  • 0% (2)
  • 50% (2)
  • 1% (1)

Does the application contain 3 signatures from Baltimore City property owners who are registered to vote and who have known the applicant(s) for at least 2 years?

  • No (5 applications)
  • Yes (4)

Attorney for licensee:

  • Melvin Kodenski (17 cases)
  • None (13)
  • Pete Prevas (6)
  • Gary Maslan (4)
  • Jae Sung Bae (2)
  • Stanley Fine, Rosenberg Martin Greenberg LLP (2)
  • Adam Block, Gallagher Evelius & Jones LLP (1)
  • Shawn Harby (1)
  • Caroline Hecker, Rosenberg Martin Greenberg LLP (1)
  • D. Dusky Holman, Smith, Gildea & Schmidt (1)
  • John A. Pica, Harris Jones Malone LLC (1)
  • Stephen L. Prevas (1)
  • Joshua Whitaker (1)

# of people there in support of license:

  • 1 (20 hearings)
  • 2 (18)
  • Zero (3)
  • 3 (3)
  • 4 (3)
  • 6 (3)

Attorney for community:

  • None (48 cases)
  • Brooke Lierman, Brown, Goldstein & Levy (1)

# of protestants:

  • None (38 hearings)
  • 4 (2)
  • 1 (1)
  • 9 (1)
  • 71 (1)

# of inspectors present:

  • 1 (36 hearings)
  • 2 (5)
  • Zero (4)

What the vote was:

  • 2 of 2 (19 hearings)
  • Unanimous (15)
  • ? (9)
  • 2:1 (1)

Portions of state law and/or Board Rules and Regulations Commissioners cited in decision:

  • 33 times: MD Code Art. 2B § 10-202(a): “Before approving an application and issuing a license, the board shall consider: 1) The public need and desire for the license; 2) The number and location of existing licensees and the potential effect on existing licensees of the license applied for; 3) The potential commonality or uniqueness of the services and products to be offered by the applicant’s business; 4) The impact on the general health, safety, and welfare of the community, including issues relating to crime, traffic conditions, parking, or convenience; and 5) Any other necessary factors as determined by the board.”
  • 6 times: None.
  • 4 times: Md Code Article 2B § 10-504(d).
  • 2 times: Md Code Art. 2B § 9-204.1(d)(2)(ii): New Class B beer, wine & liquor restaurant licenses may only be issued in the 40th, 41st, and 43rd-46th legislative districts of 2002 if the establishment has (1) “A minimum capital investment, no including the cost of land and buildings, of $200,000 for restaurant facilities except in the 46th alcoholic beverages district” and (2) “a minimum seating capacity of 75 persons….”
  • 1 time: Board of Liquor License Commissioners for Baltimore City Rules 4.18 and 3.02.

Other reasons Commissioners gave for decision:

    • 4 times: Community association did not come forward with opposition
    • Twice: Pending transfer
    • Once:

      Agreement with Downtown Partnership
      Applicant is investing in Baltimore
      Applicant met with nearby community associations
      Applicant’s experience
      Councilperson appeared in support of application
      Letter of support from community association
      Licensee’s testimony
      Inspector’s testimony
      More letters of support from nearby residents than letters of opposition
      MOU with community association
      Postponement to give applicant a chance to meet with community members

      Issues raised in the audit present in cases:

        • Corporate standing (issue arose 9 times) – Audit Finding 3 states that “BLLC lacked documentation that certain State law and BLLC licensing requirements were met.”  Specifically, 9 of 30 “judgmentally selected” licenses lacked the required documentation indicating that the licensed business was in good standing with the State Department of Assessments and Taxation (i.e. that the business has filed all required documents and is not delinquent with any State agency).  The Audit recommends that “staff verif[y] that applicants are in good standing with SDAT and include relevant documentation in the licensee files.”
        • Three Citizen Signatures (issue arose 8 times) – Addressed in Audit Finding 3, stating that “BLLC lacked documentation that certain State law and BLLC licensing requirements were met.”  Md Code Art. 2B § 10-104(d) requires that three citizens who are Baltimore City residents and property owners attest to the validity of the application.
        • Expired license (issue arose 5 times) – Audit finding 19 states that “[s]tate law requires that, 180 days after a licensed establishment has closed or has ceased active alcoholic beverage operations, the alcoholic beverage license shall expire except under defined circumstances….Licensees may also submit a written request for a hardship extension within the 180-day period.  The law further states that its intent is that the total time for which a license may be deemed unexpired is 180 days, or 360 days if an undue hardship extension has been granted.”  The Audit also recommended “that the Board discontinue granting additional hardship extensions beyond that permitted by law.”  The Executive Secretary’s response to this Recommendation was that the Board would “continue to rely upon balanced judgment, case law [none cited] and appellate review, until instructed to do otherwise by an appropriate legal authority.”  In response, the Auditor cited the clear language of the Md Code Article 2B § 10-504(d), stating that all licenses expire by operation of law after 360 days from the date of closure, and advised that should the Liquor Board wish “to continue its current practices, it should obtain formal independent legal advice to support its practices.”
        • Residency (issue arose 5 times): Addressed in Audit Finding 3, stating that “BLLC lacked documentation that certain State law and BLLC licensing requirements were met.”  Md Code Art. 2B § 10-103(4)(i) requires that at least one liquor license applicant on each application reside in Baltimore City.
        • Expired Transfer (issue arose three times):  Audit finding 6 is that “BLLC did not always ensure that license transfers were completed within 180 days of receiving Board approval” and reports that of 10 licenses tested, 4 transfers did not occur within the 180-day period required by state law.  Independent counsel advised the Liquor Board “that this law was directory and not mandatory,” but the auditors recommended that the Liquor Board obtain an Attorney General Opinion on this matter, which the Liquor Board committed to doing.
        • Conferences (issue arose twice): Audit Finding 17 states that “BLLC used alternatives to the Board hearing process to address violations and infractions and the Board had not formally approved these alternatives.
        • Pecuniary Interest (issue arose twice): Addressed in Audit Finding 3.  Md Code Art. 2B § 10-103(b)(10) requires that applicants for liquor licenses complete a statement that they have a “pecuniary interest in the business to be conducted under [the] license.”
        • Zoning (issue arose once): Audit Finding 3 states that “detailed testing of the licensing process disclosed that BLLC lacked documentation that certain State law and BLLC licensing requirements were met” and recommends that “all licensee files include documentation of compliance with zoning laws that has been reviewed and verified by BLLC personnel.”  Maryland law (Article 2B  § 9-103) provides that “[n]o license….shall be issued in violation of any zoning rule or regulation.”  The audit found that in 2 out of 10 transfer files tested, there was no zoning approval documented on the application.
        • Reconsideration (issue arose once): In Audit Finding 18, the auditors state that “BLLC lacked written policies and procedures for the disciplinary process.”  Specifically, the auditors found that the Board did not have any formal process for decision modifications or appeals after public hearings, and “[d]ue to a lack of documentation, [they] could not readily determine the number of post-hearing modifications made by the Board…however, [their] review of case files found evidence that this does occur.”  State law provides that the proper forum for appealing a Liquor Board decision following a public hearing is in Baltimore City Circuit Court.  State law does not make any mention of “reconsiderations,” in which the Board reverses a decision it announced at a public hearing.
        • Proximity to a school (issue arose once): Audit Finding 3 found that the Liquor Board did not always complete a report documenting an establishment’s proximity to schools and churches. Md Code Art. 2B § 9-204.3 provides that “no new license, or removal of an existing license, shall be granted to sell alcoholic beverages in any building located within 300 feet of the nearest point of the buildings of a church or school, but the license of any person now holding a license for any building located within such distance of the building grounds of a church or school may be renewed or extended for the same building.”