After a long winded back and forth in the comments Don O. Provided a what may be the reason for all of the sales. His comment is below the original post.
Boise Liquor License For Sale - $150000
Date: 2008-05-29, 9:34AM MDTSeasoned Boise liquor license for sale. Excellent ROI (13+%) Currently leased to popular and well known business. Continuation of lease possible if not needed immediately. Please, serious inquires only.This is the forth or fifth Liqour License That has been on Criaglist lately. Wonder why so many for sale? What do these owners know? It seems a little like when the CEO of a big corporate sells out just before his company stock price tanks.
A lot of angst in the repartee but what of the question? Are the actions of the Legislature diluting the value of current liquor licenses? Should liquor licenses be traded on the open market or does the license belong to the state?BACKGROUND:
Idaho Code specifies that owning a liquor license is a privilege not a property right. In essence, a franchise granted by the public (the state) to a licensee to sell liquor-by-the- drink in a specified area. The number of licenses that can be issued is established in Code. There are presently 754 city licenses and 199 specialty licenses, 19 of which we specifically granted in the legislature. Even though liquor licenses are a privilege, they have been treated as though they had been purchased from the state with “ownership†allowed to be transferred at will for primarily the licensee’s financial benefit. These licenses have been used as collateral for loans and included in “owner’s†wills and estates. The highest price paid for a license is $435,000, but the average is less than $100,000, depending on location. When licenses are transferred, 10% of the fair market value of the license is remitted to the state with the licensee keeping 90%. The State Alcohol and Beverage Control Bureau has a long list of citizens applying to receive liquor licenses - issued first-come, first-served. Some of these people have no interest in getting a license except to sell it.PURPOSE OF LEGISLATION: The purpose of this legislation is to take a major step toward eliminating state sanctioned private trafficking of liquor licenses and return the value of the license to the public who owns it. This legislation reverses the 90-10 split in sales proceeds (10% is allowed for a licensee to cover transaction costs). For licensees who purchase and resell their license, a 15 year license purchase price amortization period authorized by the IRS will apply. In those cases, 90% of the purchase price would be split between the state and selling licensee. The portion of the 15 years amortized times 90% of the sales price will go to the state with the reciprocal amount going to the selling licensee.
FISCAL NOTE In 1998, 135 liquor licenses changed hands at a total value of $1.5 million. In theory, had this law been in effect, general fund revenues would have increased by 80% of that amount (10% already received), net of the effect of the 15 year amortization split discussed above (the net 1998 effect and the number and value of future transfers cannot be determined).
Comment by Don O