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Published September 25 2010

Trade Talk: Liquor licenses cheaper in West Fargo

Ever dream of opening your own Fargo neighborhood bar, a little place where everybody knows your name?

Your best bet might be to venture to the other side of 45th Street, where West Fargo is undergoing a tavern mini-boom.

The city has seen four new bars open in the past three years, with two more – a second JL Beers location and Bar Nine – coming down the pike. And while many things determine where new watering holes set up shop, part of West Fargo’s allure is obvious: It’s far easier and far cheaper to get a liquor license there than it is in Fargo.

How big is the difference in costs? More than enough to cover a few rounds. A liquor license for an establishment with a bar in West Fargo costs about $1,250 for the initial application and the first year of fees. A comparable license in Fargo typically costs $100,000 in issuance fees alone.

And Fargo’s available licenses for full bars – the class FA license, which is the only license new owners seeking a liquor bar can reasonably expect to get – require that at least

50 percent of an establishment’s revenue come from food sales. That rule has tripped up a handful of bars in years past, and triggered a few license suspensions.

The city also has unrestricted licenses – about 34 in all for full bars – but those are issued in limited number and, right now, they’re all taken. Unless entrepreneurs can pry one away from an existing owner (likely for a six-figure fee) or snatch one up when an establishment closes (in the face of fierce competition), they’re effectively forced to offer grub to open their pubs. Outside of hotels, six full bars have opened in Fargo since 2007; five have been tied to a food requirement.

The city’s other licenses all come with trade-offs: Beer but no liquor, wine and beer only, liquor in restaurants but no bar, and other niche categories.

West Fargo’s standard retail liquor license has no such limitations and no cap – just zoning laws that dictate where new bars can and can’t go. Any bar that can get the city commission’s approval is good to go.

That may not be enough to sway a bar owner who’s intent on opening on Main Avenue, but it might tip the scales for someone eyeing the western edge of town.

Jim Brownlee, West Fargo’s city administrator, said this week his city’s policies don’t necessarily make it a destination for new bars.

“I’m sure there’s other factors besides the cost of the license,” he says. He points out that some bars have left town even as others have moved in, and estimates the fast-growing city has fewer bars per capita today than it did a decade ago.

But he also acknowledged that bar owners notice the city’s favorable conditions. “We do get a lot of inquiries about licensing,” he says – enough so, in fact, that a few wary residents turned up at West Fargo’s City Commission meeting this week to express concern over the rash of bars at the intersection of 13th Avenue and Ninth Street East. When JL Beers and Bar Nine open, that area will have six bars within walking distance (Brownlee told me he didn’t expect those concerns to derail either project).

Fargo, for its part, isn’t exactly hurting for a place to grab a drink. City Auditor Steve Sprague told me license cost isn’t an issue in attracting bars to Fargo. If an owner is willing to spend the money to open a building, he says, a $100,000 license isn’t a significant impediment.

“If you look at the number of bars we have in Fargo, I don’t think there’s any concern,” he says. “I’ve never had anybody tell me, ‘I’ll go to West Fargo, I’ll go to Moorhead.’ ”

Is the city’s limited supply of licenses a barrier for new bars? Not if they’re willing to meet the food requirement and operate like a restaurant, he says.

On the other hand ...

“I think if we had more unrestricted licenses,” he says, “You’d see more bars open up.”

You can also connect with Trade Talk online at www.tradetalk.areavoices.com. Readers can reach business reporter Marino Eccher at (701) 241-5502.