The license point is exactly the point I was making. Licenses can currently be sold, and if the city has no more licenses to give, the only way to get a license is to buy it from an existing restaurant. I don't know how much they go for but I would imagine it is substantial. The value of that license is part of the total value of your business.
Once the city has an unlimited supply of licenses, new restaurants can just obtain licenses for a relatively small fee from the city. So the licenses existing restaurants have become effectively worthless and that business loses value and the owner loses wealth. If the owner bought the license directly from the city, then they lose on paper only what they gained on paper, but if they bought it from another licensee they will take an actual loss on the money they spent on the license. This kind of thing often leads to resistance from those who stand to lose, often in a backhanded way.
That said, I'm not sure how many cities in the state are bumped up against the cap like we are, so resistance may not be widespread. It seems to be a problem in at least Somerville, Salem, and Haverhill.
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Date: 2014-05-18 03:28 pm (UTC)Once the city has an unlimited supply of licenses, new restaurants can just obtain licenses for a relatively small fee from the city. So the licenses existing restaurants have become effectively worthless and that business loses value and the owner loses wealth. If the owner bought the license directly from the city, then they lose on paper only what they gained on paper, but if they bought it from another licensee they will take an actual loss on the money they spent on the license. This kind of thing often leads to resistance from those who stand to lose, often in a backhanded way.
That said, I'm not sure how many cities in the state are bumped up against the cap like we are, so resistance may not be widespread. It seems to be a problem in at least Somerville, Salem, and Haverhill.