Happy Hour for Xanadu! N.J. Appellate Division Upholds ABC Director’s Decision on Special Concessionaire Permits
On August 6, 2010, the Appellate Division upheld the decision of the Director of the New Jersey Division of Alcoholic Beverage Control (“ABC”) to issue a special concessionaire permit to the proposed Benihana restaurant in the controversial Meadowlands Xanadu Project. The ruling will allow Xanadu bars and restaurants to avoid acquiring costly plenary retail consumption licenses from existing East Rutherford licensees.
Typically, to serve alcoholic beverages in New Jersey, a bar or restaurant must obtain a plenary retail consumption license. State law caps the number of plenary retail consumption licenses available in each municipality, with fewer than 20 plenary retail consumption licenses currently in circulation in East Rutherford, where Xanadu is located. Instead of purchasing one of the existing licenses, which The Record reports would have set back each Xanadu restaurant $500,000 (if the existing licensees were even willing to sell), the Xanadu businesses will now qualify for a $2,000 special concessionaire permit issued directly from the State ABC.
To obtain a special concessionaire permit, a business must still must meet three basic criteria:
- be located on property owned or controlled by the State;
- enter into a contract with the State or a political subdivision authorizing the sale of alcoholic beverages; and
- demonstrate its fitness to serve alcohol.
Thus, although the ruling is good news for public/private development partnerships on State-owned or controlled property, it does not open the flood gates for the issuance of special concessionaire permits for every large entertainment complex.