More than 100 Southland restaurants, liquor stores and other alcohol-serving places have had to delay their openings because state staffing cuts have roughly tripled the time it takes to get liquor licenses.
Transferring a liquor license used to take 45 to 60 days. Now it's up to six months
Similar delays are taking place in issuing new liquor licenses, but that situation isn't as bad, said Jerry Jolly, deputy division chief of Southern California for the California Department of Alcoholic Beverage Control.
Due to state budget slashing, the Jolly's agency has half the staff statewide that it did seven months ago. As a result 1,500 Southlanders are waiting for their liquor license applications to be processed, and another 1,500 are waiting to file their forms, Jolly said.
In contrast, a year ago few offices had waiting lists, and those waiting lists stretched out only a week or so, he added.
At least 80 percent of liquor license transfers and new liquor licenses that are issued are for restaurants, said Carl Falletta, acting assistant director of the state department.
In particular, the delay of transferring liquor licenses from one closing restaurant to another opening at the same location is taking its toll on the escrow process, and affecting the plans of both buyers and sellers. Forty-five percent of liquor license transactions are transfers.
The sale of the La Serre restaurant in Studio City is one deal that could be delayed. The deal is currently in escrow and the owners want to open their new restaurant, Pinot, at La Serre's former location Sept. 1.
But the Department of Alcoholic Beverage Control won't commit to a firm date for completing the license transfer, and thus the restaurant would have to consider opening without being able to serve alcohol, said Christine Splichal, co-owner of the new restaurant.
Restaurants, convenience stores, supermarkets and other venues that sell alcohol have the option of opening without a liquor license, but they might not survive for long without being able to keep up with their competition that can serve and sell alcohol, Jolly said.
Until about seven months ago, the state agency's staff topped 400. Liquor license processing was smoothly done and, although appointments for applications were necessary at many offices, restaurateurs could get in within a week or two.
But the department's budget was cut to $19.5 million from $23 million for fiscal 1991-1992, which began July 1, 1991. Rumors of department-wide layoffs and office closures followed, and literally half the staff voluntarily left to find other jobs.
As a result, there was no need for actual layoffs or office closures -- but people weren't replaced either. So, the department now has only about 200 clerical and investigative staff members. Investigators from the department no longer go out into the field to enforce the state's alcohol laws, and the backlog of licensing paperwork is enormous, Jolly said.
Now it takes six months just to get the appointment to file a liquor license application at some Southland offices.
After filing, applicants then get a sheet of paper to post in the restaurant window notifying the public that the license is being transferred and they have 30 days within which to file any objections.
After that period, the application goes to the department's Sacramento office to be cleared. That approval process can take anywhere from one to six weeks, sources say.
And only then is the liquor license officially transferred.
Escrow on the new restaurant cannot close until then. Thus, if the liquor licensing process is delayed, the whole deal hangs up.
A lot can happen during a six-month delay in the escrow process when it is coupled with the several months many restaurants are on the market in the first place, said Dick Carter, senior retail associate with the Sherman Oaks office of Beitler Commercial Realty Services.
For openers, the buyer may get fed up and scrap the deal. Too, with the deal dragging out over nine months, for instance, the restaurant being sold could end up going into bankruptcy or out of business altogether, he said.
Carter is the broker for the sale of Patout's Cajun Restaurant in West Los Angeles. The escrow papers for the deal were drawn up in mid-March. On March 18, the owners called to make an appointment to get a liquor license transfer, but the earliest available appointment was May 18.
It could be mid-July by the time the entire process for transferring the license is completed, Carter noted.
There are bigger delays in the licensing process at some Los Angeles area offices of the state agency than at others, but license-seekers are bound to file at their local office. The offices with the worst backlogs are in El Monte, Inglewood, Long Beach, downtown Los Angeles and Van Nuys. As of April 1, the earliest date for an appointment at these offices ranged from June 3 to Sept. 1.
Jolly said his agency is trying to remedy the situation by transferring staff from other state agencies to this department.
Eighteen investigators have been moved from less affected Northern California offices to the Southern California offices, and 30 clerical workers have been transferred temporarily from the Department of Motor Vehicles to the Southern California offices of the Department of Alcoholic Beverage Control, Jolly said.