Liquor licenses to flow to restaurants in S.F.

It’s a slow drip turned into a generous pour for San Francisco liquor licenses. After 78 years with no new licenses issued, the city will offer 30 new licenses to local restaurateurs over the next six years.

The uptick comes via AB471, a piece of legislation with a lengthy history. Authored by Assemblyman Phil

Ting, D-San Francisco, it was signed into law on Tuesday by Gov. Jerry Brown. The bill goes into effect Jan. 1, when it will begin to add five new Type 87 liquor licenses to San Francisco a year through 2023. The Type 87 license is a new license that is similar to an existing license, the Type 47, in that it allows for the sale of hard alcohol in restaurants, but only for specific San Francisco neighborhoods.

Currently, 812 restaurants San Francisco have full liquor licenses, allowing them to sell spirits in addition to beer.

City officials see the licenses as a potential boon to some of San Francisco’s underdeveloped commercial corridors: San Bruno Avenue, Ocean Avenue, Third Street in the Bayview, Mission Street in the Excelsior, Taraval Street, Noriega Street and areas of Visitacion Valley.

A drawing will be held on Oct. 12 to choose applicants that applied for the first five Type 87s. The original notice for the drawing said it would only be necessary if more than five businesses applied.

“Successful restaurants are an anchor for commerce because they create jobs, fuel foot traffic for other businesses nearby, and provide social spaces for neighbors to gather,” said Ting in a statement. “This will provide opportunity to a new generation of restaurateurs who previously couldn’t afford a license.”

Ting’s bill is essentially a second act to Senate Bill 1285 authored by then-state Sen. Mark Leno, D-San Francisco, last year, which created the neighborhood-restricted license category and directed the state to issue the original five licenses.

For California restaurants, the more common (and affordable) Type 41 licenses allow a business to sell beer and wine; the Type 47 licenses allow for hard alcohol, which is generally more profitable for businesses. In San Francisco’s longrunning secondary liquor-license market, Type 47 licenses can cost upward of $250,000. More often than not, the restaurants capable of footing the bill pursue locations in areas with heavy foot traffic and lots of tourists.

The quirks of the marketplace stem from a 1939 state law connecting the number of licenses for restaurants and bars to a county’s population. One license was available for every 2,000 residents. When the law was passed, the city grandfathered in more than 1,000 licenses. None were added for nearly 80 years.

In the new program, licenses are priced at $13,800 and cannot be resold by a restaurant. They have to be sold back to the California Department of Alcoholic Beverage Control at the original $13,800 price.

Mark Sutton of the California Restaurant Association sees the program as a way to even the playing field for smaller establishments in a restaurant industry that employs 60,000 in the city and runs a tab of $6 billion a year in consumer spending.

“AB471 is a win for our small mom-and-pop restaurants, and creates economic opportunities in our neighborhoods,” Sutton said.