Liquor licenses languish in legal log jamLiquor licenses ordered into receivership as part of foreclosure rulings are limiting the council’s discretion when it comes to deciding who does and doesn’t get one. And state law guiding issuance of liquor licenses into receivership is vague, which has resulted in some non-operational licenses being tied to the sale of a premise for years at a time.
By: Shelley Nelson, The Daily Telegram
Foreclosures are creating a quandary for the city.
Liquor licenses ordered into receivership as part of foreclosure rulings are limiting the council’s discretion when it comes to deciding who does and doesn’t get one. And state law guiding issuance of liquor licenses into receivership is vague, which has resulted in some non-operational licenses being tied to the sale of a premise for years at a time. Since 2004, for instance, the council has repeatedly been asked to address the issue after Louis Café, Braunvieh Cafe, Third Rock, and now possibly Tyomies have closed as a result of foreclosure.
Tuesday night, the council is slated to consider non renewal of one license that has been held for two years by Community Bank in connection with the former Third Rock tavern and restaurants. The council could also issue another liquor license into receivership in connection with Tyomies Bar. A court order grants the license to Equity Funding and Loan LLC in the event the bar’s owner, Paul Orloski, is unable to meet his financial obligations to the lender by today.
Councilor Ed Anderson thinks that unfair. After all, he reasons, someone else may want to open a bar in a building other than the one for which the license is held.
There is no court order involved in the license transfer to Community Bank, said Deputy City Clerk Terri Kalan. In that case, she said, the bank applied for the license in 2006 and it was granted. The council subsequently approved renewal of the license in 2007. At no time in those two years did the bank utilize the license as required by city ordinance. It requires operation a minimum of 180 days per year.
The situation is different, however, under Wisconsin Law. A judge can order a license into receivership as part of a foreclosure action, but the receiver of the license cannot use it, she said.
“The courts in Douglas County, obviously, have seen fit to attach a liquor license to a premise that’s been foreclosed on,” said Councilor Ed Anderson. “I don’t have a problem with that. I understand that license has a value to the premise. But then again, we also have ordinances that we have to follow, and part of that ordinance is talking about non-operation. If a license goes into a point of non-operation, it’s supposed to be returned to the city.”
City Attorney Frog Prell said the council has an obligation to honor the court’s decision concerning a liquor license, but he believes the obligation only extends to the end of the license period, which runs July 1-June 30.
“I would suggest that a liquor license that is ordered into receivership by a court is so ordered only for whatever period of time remains for that licensing period,” he said. “Once that licensing period is up, then I’m of the opinion the council has all the authority and all the power it’s used to in the context of issuing liquor licenses.”
While lien holders could reapply for the license after that period, he said, it would be entirely up to the council whether it reissues the license after the initial license period expires. At that point, Prell said, “the council can take whatever action they want to. I would just suggest to the council that they not take action that is contrary to the court’s order.”
Anderson acknowledges the council has made exceptions to its own rules in extenuating circumstances, such as when site approvals and construction were delayed for High 5’s on 5th, the establishment that replaced the North Star after it was destroyed by fire, for reasons beyond the owner’s control.
But “it’s not fair to the entire liquor community within the city of Superior to hold a license out for years at a time waiting for a premise to be sold. I think that’s improper and unfair ... Holding the liquor license out is unfair to anyone who might be seeking a liquor license,” he said.
Contact Shelley Nelson at (715) 395-5022 or snelson@