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Liquor stores keep competition at bay

November 30, 2011

SOUTH KINGSTOWN – Battle lines were drawn and the four current liquor stores won the fight for now after the town council decided to keep the number of Class A retail liquor licenses at four.

The council voted 4-1 Monday night with Vice President Carol Hagan McEntee dissenting to keep the current number of licenses, thereby denying the application by an East Greenwich woman Susan Pagliarini to open up Village Liquors, a proposed 1,742 square foot wine boutique in the South County Commons.

The battle began months ago when attorney/husband John Pagliarini for Susan Pagliarini had petitioned the town council in April to expand the number of Class A licenses from four to five after 2010 Census results revealed South Kingstown’s population had exceeded 30,000, making it eligible for a fifth Class A liquor license. State law allows one liquor store for every 6,000 residents. The last license issued was in 1972.
While the town council voted unanimously to keep the number of retail liquor licenses at four, Pagliarini went forward with her plans and received approval from the Planning and Zoning Boards for her development plan review. Village Liquors also received unanimous support from the Economic Development Committee.

It all culminated Monday night when Pagliarini faced off against new applicants Louis and Rachel Northup of Wakefield, owners of Northup Service Center who filed for development plan review for their plans to open a liquor store at 1958 Kingstown Road earlier last month and the four current liquor stores: Sweeney’s Wine and Spirits, Geaber’s Liquors, Patsy’s Package Store and Wakefield Liquors.

For the past eight months, Pagliarini said the owner of South County Commons has held the property for the prospect of Village Liquors, thereby receiving no rent money because they saw the wine boutique as a perfect fit for the Commons.

“When the applicant came to the location, we met with the owners of South County Commons. They embraced it because they felt it complements the Commons. It’s a regional destination,” Pagliarini said.

Pagliarini argued that Village Liquors would not threaten the four current liquor stores. Pagliarini said state law disallows liquor stores less than 2,000 feet of one another, and Village Liquors would be 2,600 feet from the four current stores.

“The question comes down to whether South Kingstown is open for business,” he said. “If I was one of the four liquor store owners, this is one I would support. It’s located in an area that rolls up its sidewalks a lot earlier. From a competitive perspective, this is the least anyone could apply for.”

It is argued by those not in favor of a fifth license that the student population at the University of Rhode Island skewed the census results, inflating the numbers. Pagliarini countered that in 2000, the number of students living in dorms was 4,180. In 2010, after the construction of several new dormitories and apartments like the new 429-bed Hillside Hall, that number jumped to 5,562.

However, the four current liquor store owners argued, as they stated in an April letter, that a new license is unnecessary and would only create more competition in an already difficult economy. At each of the four stores, they collected a total of 400 signatures petitioning against the creation of a fifth license. There are currently nine liquor stores total in South Kingstown, Narragansett and Charlestown.

“There’s a lot of competition for this town,” Mike Sweeney, whose owned Sweeney’s Wine and Spirits on Main Street for 11 years said. “A new job for the town is a good thing, but since 2007, we’ve taken a pounding every year. If I take another 25 percent hit because another store comes in, it knocks me out of the game.”

Attorneys for the four liquor stores argued that the decision by the Pagliarinis to push forward with their application after the town council already decided to keep the number of licenses at four in April violated administrative finality. However, Town Solicitor Michael Ursillo said policy can be changed anytime someone asks the council to consider it. He believed that administrative finality did not apply in this case because in April there was no application before the town council to approve or deny.

Attorney for Wakefield Liquors Keith Kyle argued that the Rhode Island General Laws in creating the process encouraged temperance or moderation through reduced competition. Pagliarini countered that the increase in population allowing for a new license, 6,000 is the temperance standard.
Attorney for Patsy’s Package Store and Sweeney’s Wine and Spirits, Merlin O’Keefe, argued that the applicants for Village Liquors propose a location that is at the sixth worst intersection in the state according to the state Department of Transportation and a location that is nearby the Sylvan Learning Center, a tutor program.

The Northups, on the other hand, hoped that the town council would approve an additional liquor license, but would table their decision on who could receive that license until other applicants like, themselves had a chance to be vetted, an idea Vice President McEntee supported.
Attorney for the Northups, Harry Cesario said the Northups have been interested in applying for the fifth license but held off on throwing their hat into the ring because the council had voted to keep the number of licenses at four in April. Cesario argued that the issue will come before the town council again and again until a fifth license is granted.

“Monopolies are bad. Oligopolies are bad. You have four stores operating as an oligopoly. This retail industry leads a chartered and protected existence. The last license issued was 40 years ago. They’re protected by time and census. They’re protected by the fact that the state doesn’t allow sale of beer and wine at supermarkets. Success should be based on business skill, experience and knowledge and not on government protection. These businesses have to survive and succeed on their own,” Cesario said.

After nearly four hours of public hearings, the town council voted to keep the number of licenses at four, citing that they did not hear any compelling reason or benefit to the town for a fifth liquor store. Village Liquors, along with any other applicant, can reapply and come before the town council again and push for a fifth license.

Like the four liquor store owners, the four owners of the Asian/Japanese restaurants in town, Chen’s Restaurant, Kabuki, China Garden and Shogun Restaurant joined forces against a new Class B victualler license for the Dragon Palace at 733 Kingstown Road. However, the town council approved unanimously an increase in the number of Class B licenses from 23 to 24.

Dragon Palace will replace the former Shamrocks Restaurant. This location has been vacant for three years after the last tenant went bankrupt. Since 1984, the location had a liquor license, but after the last business went bankrupt, property owners lost the license and had been struggling to find an appropriate tenant.

Attorney Matthew Kyle representing the four restaurants cited increased competition in a difficult market as a concern and close proximity to the other restaurants.

Southern Rhode Island Newspapers
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