Municipal Approval of an Economic Development Liquor License

The Pennsylvania Liquor Control Board (LCB) ordinarily issues liquor licenses on a county-by-county basis grounded on a ratio of one license for every 3,000 inhabitants. After this cap is reached, new businesses may only typically purchase existing licenses. The LCB, however, may issue an economic development liquor license outside the quota if certain requirements are met.

The purpose of economic development liquor licenses is to promote economic development within the county in which the licenses are issued. They are, however, sparingly granted. Only two of these licenses may be issued per county in first through fourth class counties each calendar year, and only one per county for fifth through eighth class counties each calendar year. They are viewed as a last resort to obtain a license. Economic development licenses are typically only issued once an applicant can show that he or she has exhausted all other reasonable means of acquiring a liquor license within the county. This means contacting existing license holders in the county to attempt to negotiate a sale or explaining why sales of preexisting licenses available in the county would not be feasible.

Successful applicants for this type of license are eligible to receive either a restaurant or eating place retail dispenser license. This comes with the same restrictions as liquor licenses obtained within the quota (i.e., that sales of food and non-alcoholic beverages must equal 50% or more of sales of food and alcoholic beverages for the previous year). Further, these licenses are only available for premises located in an Enterprise Zone (EZ), as designated by the Department of Community and Economic Development; a Keystone Opportunity Zone (KOZ), as established under the authority of the Keystone Opportunity Zone and Keystone Opportunity Expansion Zone Act; or in a municipality which has approved the issuance of such a license for the purpose of economic development. Municipal approval is required before applicants can apply to the LCB for a license for EZ, KOZ, or municipality-approved areas if the number of existing retail licenses in the municipality is equal to or exceeds one license for every 3,000 citizens. Approval is required from the municipality at all times, however, before an applicant can seek a license in an area where the municipality has pre-approved such licenses.

To begin the process for obtaining an economic development license where municipal approval is required, applicants should submit an application to the municipality. Such application should include the appropriate fees and a written certification that the proposed licensed premises fall within the municipality’s zone designated for economic development. The municipality must then hold at least one public hearing on the issuance of the license where the general public can attend and voice comments on the proposal. Municipalities should hold their hearings in accordance with normal municipal procedures since the Pennsylvania Code is silent on the type of hearing required for these licenses. After the hearing, the municipality has 45 days to provide a decision via ordinance or resolution to approve or deny the applicant’s request for an economic development liquor license. The municipality may approve the applicant’s request for a license if it finds that issuing the license would promote economic development. After receiving municipal approval, the applicant is then eligible to apply to the LCB for a provisional license. Provisional licenses last for 90 days, after which time applicants can apply to the LCB for a permanent license.

Applicants’ requests for such a license must be denied if the municipality finds that issuing the license would adversely affect the welfare, health, peace, and morals of the municipality or its residents. If the municipality denies an applicant’s request for a license, there is an appeals process. The applicant can appeal the municipality’s decision to the court of common pleas in the county where the proposed licensed premises would be located. Likewise, a municipality which did not initially grant its approval can challenge the issuance of a license by filing a written protest within 30 days of an applicant filing an application with the LCB. The LCB then has discretion to refuse to issue a license based on the municipality’s protest. Further, a municipality also has standing to appeal LCB decisions involving an economic development license application.

Municipalities can consider approving the issuance of economic development liquor licenses within their jurisdictions to further economic development therein. This could be a good option to increase the amount of liquor licenses available in a municipality while simultaneously promoting economic development.

With contribution from Sarah Rothermel, J.D. Widener Law Commonwealth.

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