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During the warm months of the year, Toscani offers outdoor dining.

Attracting eateries

Unlimited three-way liquor licenses sought for downtown

Photos by Samuel Hoffman | The Journal Gazette
Toscani Pizzeria, 120 W. Wayne St., is one of the sit-down restaurants downtown.

If you want fries with that, you have several downtown dining options.

But fast food – which is sold on dozens of street corners around town – isn’t enough to draw people to the city’s core.

That’s why some local officials want to encourage entrepreneurs to open more upscale restaurants downtown. They want to draw the diners who prefer to round out meals with a whiskey sour or lime margarita.

Fort Wayne officials are considering issuing an unlimited number of three-way liquor licenses in a designated area downtown to spur economic development.

The idea, which must first be approved by City Council, is to create a Downtown Dining District. Supporters hope it would become a destination, drawing diners who might stay downtown for theater productions, art openings and music performances.

The strategy is already being used in numerous Indiana cities, including Indianapolis, South Bend, Valparaiso, Evansville, West Lafayette, Elkhart, Anderson and Mishawaka.

“We’re not blazing a new trail here,” said Karl Bandemer, a senior development officer with the Fort Wayne-Allen County Economic Development Alliance, now part of Greater Fort Wayne Inc.

How it works

Indiana statute limits the number of three-way liquor licenses available in a county, based on its population. Three-way licenses allow businesses to sell beer, wine and spirits.

Now, licenses are sold on the private market from one restaurateur to another. The last one that changed hands in Allen County sold for $60,000, Bandemer said. The next one could sell for less or considerably more – it all depends on supply and demand.

But in 2004 the General Assembly modified that rule to allow cities to designate a district within three blocks or 1,500 feet of downtown rivers where it can award an unlimited number of three-way liquor licenses.

Tom Smith, R-1st, plans to introduce a bill to create such a district at Fort Wayne City Council in July. The proposal must be debated and voted on by the full council before it could become an official ordinance.

Smith is City Council’s representative on the Downtown Improvement District board. He agreed to introduce the bill after the DID board – including Ben Hall, general manager of Don Hall’s Old Gas House downtown – discussed the plan and decided to support it.

“We looked at this once before, years back,” Smith said. “But we really didn’t have our act together.”

The current proposal puts restrictions on the additional liquor licenses. The permit would be good only for the address that it’s issued for. Existing three-way licenses are moveable, but these aren’t.

The new establishment’s total sales must be at least half from food. That prevents a lot of bars from opening in the designated dining area.

Also, anyone receiving one of the new licenses would have to pay a $2,500 annual fee, an ongoing expense existing license holders don’t have. The money would go into a pool to pay for a downtown dining marketing campaign.

Smith hopes local entrepreneurs would find the deal too good to pass up. But, he said, nothing in the ordinance would prevent an Applebee’s, for example, from taking advantage of the incentive.

Any downtown restaurant with an existing three-way license wouldn’t be able to sell it and replace it with one of the new, free licenses.

Building a district

Smith remembers that the last time the proposal was considered, some restaurant owners were worried about additional competition.

“Parkview Field has been a game-changer,” he said of the more than $75 million Harrison Square project.

Numerous existing businesses have benefited from baseball fans coming downtown, Smith said.

Cristina Ray, part owner of El Azteca, said she wasn’t an early supporter of Harrison Square, but she’s changed her mind after seeing the effects on her popular Mexican restaurant on State Boulevard.

“When there’s more activity downtown, we see more business here,” she said.

Ray didn’t initially embrace the idea that some restaurant owners would pay less for their liquor licenses than her family did, but she’d like to see how a Downtown Dining District works.

“I’ve got really mixed emotions about it,” she said. “(But) any economic growth we can bring to the city helps all of us.”

Bandemer, who works on economic development from several angles, sees the proposal as yet another way of luring residents and visitors downtown. More fine dining spots could create an irresistible draw in a city known for its restaurants.

“I don’t think there’s going to be a rush but, hopefully, it will spur new activity as it has in other communities,” he said.

Tamara Nicholl-Smith, director of South Bend’s Downtown Business Recruitment, is an enthusiastic supporter of her city’s riverfront municipal development district, which was formed in June 2012.

Critics of the plan included liquor license holders, who worried those assets would become less valuable. South Bend officials reassured them there would still be plenty of demand to resell existing licenses because the district, where the new licenses must remain, is small compared with the overall county.

The city’s attorneys were another group that harbored serious doubts about the plan, Nicholl-Smith said. They argued it hadn’t been long since South Bend had repurchased liquor licenses that belonged to some rowdy downtown bars. They didn’t want to be back in the same position.

South Bend officials decided to require that alcohol be sold in glass containers to discourage so-called “drunk bars,” where alcohol is served in plastic cups because the management anticipates customers will become so drunk that they’ll spill their drinks.

Officials there also require annual membership in an organization that markets downtown South Bend dining spots.

Within a month of adopting the ordinance, South Bend saw renewed business activity in its downtown, including the sale of a coffee bar that had been on the market for two years. Nicholl-Smith said the new owner cited the liquor license incentive as important in sparking his interest in creating a nightspot at the business that previously didn’t attract customers after 5 p.m.

She’s in conversation with three new restaurants right now and just issued a license for a speakeasy-style whiskey bar in the basement of a downtown office building.

“I think I’m getting great results,” Nicholl-Smith said. “Good luck to (Fort Wayne). It’s been good for us.”

Councilman Smith is prepared for some resistance to the measure. But he’s ready to push back.

“If you want to say it’s an unlevel playing field, technically, it is,” he said. “Our downtown is so important and vital to this city that it’s worth doing.”