Wednesday, April 25, 2012

OTR to become City's fifth Community Entertainment District

On May 18, Over-the-Rhine will become Cincinnati's fifth Community Entertainment District, which could lead to explosive growth of an already thriving restaurant scene.

City Council unanimously approved the application at its April 18 meeting, making an additional 15 full liquor licenses available to most of the neighborhood, in an area roughly bounded by Central Parkway, Findlay Street, Vine Street, Liberty Street, and Sycamore Street.

Under Ohio law, the number of full liquor licenses granted to any municipal corporation is based upon population – one license per 2,000 residents. That means that cities that are losing population are also losing liquor licenses. Between 2000 and 2010, Cincinnati lost 17.

Additionally, with liquor licenses so hard to come by, brokerage rates for obtaining one can range from between $25,000 and $30,000, providing a barrier to entry for prospective restaurant operators. Wait times can be four years or more.

In 2005, the State of Ohio passed legislation creating Community Entertainment Districts as a way to promote development in Ohio's struggling Main Streets.

As part of a Community Entertainment District, new food establishments can apply for directly to the state of a liquor license at a drastically reduced rate, usually around $1,500. Applicants still must meet state liquor license requirements, and the licenses cannot be transferred outside of the neighborhood.

Local support

The application included letters of support of such major neighborhood players as the Over-the-Rhine Chamber of Commerce, the Corporation for Findlay Market, the Over-the-Rhine Community Council and the Brewery District Community Urban Redevelopment Corporation.

"With the recent census results and decreased population within the city, it has become increasingly more difficult, not to mention expensive, for small businesses to obtain liquor licenses," said Brian Tiffany, then President of the Over-the-Rhine Chamber of Commerce. "Having worked with hundreds of businesses and community members, we understand the vital need for businesses to acquire a liquor license and the importance of the community to approve each opportunity to insure our neighborhood remains clean and safe."

Findlay Market President and CEO Robert Pickford agreed, saying that the Community Entertainment District would help fill some of the many vacant storefronts surrounding the market house. His organization sponsored the district's application.

"A CED would benefit the market significantly by reducing start-up costs for new businesses that will eventually open in the fifteen vacant storefronts on the market square," he said. "Included are six retail spaces owned by the City of Cincinnati and the former Globe Furniture building owned by my organization. We are working with the city and 3CDC to secure financing for a nearly $1 million redevelopment of the city owned storefronts and, with more than $600,000 in support already pledged by the Schott and Haile foundations, we have begun renovating the Globe building."

Several of those vacant spaces, Pickford said, are suitable for restaurants or cafés.

"Attracting food service establishments to Findlay Market is a key to increasing weekday traffic and to developing evening activity at the market," he said. "Most restaurants and cafés depend on wine, beer, and drinks for their success; for a new restaurant, the cost of purchasing a liquor license on the open market adds significantly to the total capital required to start the business."

One year in, a testimonial

Community Entertainment Districts already have been approved for East Price Hill, Northside, Pleasant Ridge, and The Banks.

In 2010, the City's first approval gave Pleasant Ridge access to an additional five liquor licenses, one of which was snapped up in early 2011 by Emanu East African Restaurant owner Samuel Yhdego.

He was quick to offer a letter of support for Over-the-Rhine's application.

"Three years ago we moved our existing restaurant to a new location in order to expand our business," Yhdego said. "After the relocation of the restaurant, Emanu struggled to grow into the new space because we were unable to obtain a liquor license. Under the liquor license quota system, we could not sell alcohol in our restaurant without waiting several years for an available D-5 liquor license, or paying a broker approximately $25,000 to $30,000 to purchase and transfer an existing license."

Because he was able to keep liquor license costs to a minimum, he was able to use those savings on other costs, he said.

"During this time we have seen the average check price increase and our profits have risen— allowing us to re-invest in and grow our business," Yhdego said. "After obtaining the liquor license, we began the process of purchasing the building where our restaurant is located. Without the designation of the Community Entertainment District, we would be struggling to stay profitable, and we would be unable to make investments in Pleasant Ridge."

Previous reading on BC:
Entertainment district allows Emanu to stay in Pleasant Ridge (3/28/11)