What could be obtained for free from the city of Boston several years ago and sold today for as much as $250,000?

An all-alcohol pouring license in the Back Bay.

That’s the high-water mark for licenses purchased by McCarthy’s Bar and Grill, Vinny Testa’s and Planet Hollywood (which has since dumped a Boston location), according to Dennis Quilty, an attorney whose Boston law firm, McDermott, Quilty & Miller, specializes in licensing issues. The $250,000 licenses were purchased from Peking at Prudential, Jack Lynch’s Webster Lounge and the Eliot Lounge, respectively.

“That’s the highest price recently paid for a license and, in my personal experience, it’s the highest ever,” said Quilty, who noted those deals were struck approximately two years ago. “Today, that’s likely to be the start point as opposed to the finish point.”

New all-alcohol licenses are free when issued by the Boston Licensing Board; holders need only pay a $2,000 annual renewal fee. But the board has just three unused all-alcohol licenses remaining in its legislatively set quota of 650, prompting owners of bars, restaurants and hotels to seek costly transfers of already-issued licenses sold on the open market like commodities.

Unless the quota is increased, some believe there could be a crunch when underdeveloped areas such as the Seaport District hit their stride, forcing prices even higher.

Licensing Board chairman Daniel Pokaski, who favors an increased quota, said he fears some Boston neighborhoods will be destabilized when a wave of hotels go up over the next few years and their deep-pocketed owners dangle large cash incentives in front of license holders.

“I think it’s bad policy to have people shopping around for licenses,” said Pokaski, who believes the Boston City Council should request, through the mayor, an increased quota from the Legislature. “The city loses control, and I don’t want to micro-manage neighborhoods. … But, there’s nothing I can do about it because the courts have said there are property rights with these licenses.”

Marty Bloom, chief executive officer of the Newton-based Vinny Testa’s Restaurant Group, said he views the $250,000 that his company spent for its Boylston Street liquor license as “part of the nature of the game.”

“Yeah, it was a lot of money,” Bloom said. “It was just part of what we knew we had to pay to get there. It moves the bar up to make sure you’re a well-financed operation.”

Elsewhere in the city, licenses have been transferring for $90,000 to $140,000 over the last few months.

All-alcohol licenses in the Back Bay are particularly hot items because restaurants and hotels want to be near the heavily trafficked Newbury and Boylston streets–and the Neighborhood Association of the Back Bay doesn’t want a net increase in the number of licenses.

“It would be the community groups that have the most sway with the board,” Pokaski acknowledged. “We don’t always agree with the neighborhood groups, but probably 98 percent of the time we do. We pay great attention specifically for the reason they’re the ones that have to live with it. The board in the past has determined that certain areas in the city are saturated, and no more (licenses) are needed. The public need has been met more than sufficiently.”

Although licenses can be purchased from a business in one neighborhood for transfer to another neighborhood, entrance into the Back Bay is difficult. The Licensing Board has not approved a net increase in all-alcohol licenses for Back Bay street businesses in the five years that Pokaski has been on the board. Licenses for hotels or other enclosed businesses have been approved.

“It’s not a set-in-stone moratorium,” Pokaski said. “We take every applicant individually and determine whether there’s a public need. If they get their stuff together, and they have a neighborhood behind them, is it possible one would be granted? Sure, it’s … what’s acceptable to the neighborhoods. Hotels aren’t going to have lines outside their door waiting to see Evergreen.”

The Licensing Board also has been very careful about issuing licenses in other heavily residential neighborhoods such as Allston-Brighton, the South End, Beacon Hill and North End.

“That maximizes value in those districts,” said broker Jim Holmwood, vice president of Boston-based Restaurant Brokers of America.

Holmwood has an all-alcohol license from the former City Hall Pub on North Street that is available for $100,000. An attempted transfer of the license to the North End was rejected in an informal community meeting. The owner of Restaurant Bricco on Hanover Street wanted to upgrade his beer and wine license to a full liquor license.

“The community rejected it, so he decided not to pursue it,” said attorney Steve Miller, who is also with McDermott, Quilty & Miller.

According to Pokaski, it’s that community fear that impedes serious discussions about raising the city’s quota.

“Sometimes I feel like I’m the only one that talks about it,” Pokaski said.

The last quota change came in 1979 in graduated steps, when the Legislature decided to lower the number from 692 by taking off the market 42 licenses as they were canceled, revoked or not renewed.

Courtesy:  Boston Business Journal, written by Donna L. Goodison