PIERRE, S.D. (AP) - Cities and counties should be allowed to issue additional on-sale liquor licenses for full-service restaurants, a South Dakota House committee decided Friday.
The Commerce Committee voted 11-2 to pass the measure after supporters said current limits on liquor licenses need to be relaxed so communities can promote economic development by attracting new restaurants and convention centers.
Yvonne Taylor, executive director of the South Dakota Municipal League, said the bill will give city and county governments the authority to decide whether they need additional liquor licenses.
"You re not jumping off a cliff," Taylor said. "You can trust them to maintain that quality of their community."
But lobbyists for liquor dealers said allowing additional licenses could cause enforcement problems that lead to additional underage drinking and other legal violations.
"We have adequate regulations in this state. If you remove those regulations, there are potentially negative consequences," said Tim Dougherty, a lobbyist for the Licensed Beverage Dealers Association.
The bill, supported by the Municipal League, was passed earlier by the Senate in a slightly different form. The bill next goes to the full House. A similar measure promoted by the liquor industry also remains alive in the legislative process.
The House and Senate will try to agree on a final version of the legislation before the main run of this year s legislative session ends next week.
State law now uses population as the basis for capping the number of licenses available in a community. Because some cities and counties have reached their limits, the only way a business can get a license is to buy it from an existing license holder. The price for those licenses has risen to $250,000 or more in Sioux Falls and Rapid City, officials have said.
The bill would allow cities and counties to issue additional on-sale licenses for restaurants that get less than half their revenue from alcohol sales.
The value of existing licenses would be protected by setting the price of new licenses at market value, which would be determined by the price of the license most recently sold, prior to Jan. 1 of this year, on the private market in each community.
Anyone seeking a license would first have to try to buy an existing license, a provision that is intended to give businesses with existing licenses a chance to sell them without losing money. A new license could be purchased only if an existing license cannot be bought.
Taylor said the current system ties license numbers to population, not to demand. That has led to speculation in licenses, which has made it impossible for some new businesses to open, she said.
David Wiest of the state Revenue Department said his agency supports the bill.
But Bob Riter, a lobbyist for the South Dakota Music and Vending Association, said it could be difficult to determine the market value of existing licenses because they are often sold along with an operating business. It can be difficult to separate the value of the license from the value of the rest of the business, he said.
In addition, the bill guarantees the price of licenses for only 10 years, Riter said.
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