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Should there be liquor license restrictions in State College? Borough Council debates

State College Borough Council members discuss possible new restaurant

State College Borough Council discussed a proposed restaurant—tentatively named Queenstown—for downtown State College, Pa. A restaurant liquor license transfer from College Township could complicate plans.
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State College Borough Council discussed a proposed restaurant—tentatively named Queenstown—for downtown State College, Pa. A restaurant liquor license transfer from College Township could complicate plans.

The transfer of a liquor license to service a New Zealand-themed restaurant in the old Spats location in downtown State College is poised to go to a vote next Monday, despite concerns about liquor license restrictions and the borough being over its liquor license quota.

Most members of the State College Borough Council expressed Monday night that they were in favor of transferring a liquor license from College Township to the former Spats location at 138-142 E. College Ave. The license would go to a new, upscale New Zealand-inspired restaurant tentatively called Queenstown, owned by Paul and Deanna Gillespie, both Penn State alumni who grew up in Centre County.

But there was some disagreement on whether the terms of the liquor license transfer approval should include restrictions on the license that limit the ratio of alcohol sale revenue to 35% and food sale revenue to 65%.

Councilman Dan Murphy said he wanted zero restrictions on the liquor license because it places an unnecessary burden on the new restaurant that would adversely affect State College’s growing population of young professionals and retirees.

“I have found ... that we are far too often making decisions about this community based on 75% of the population that live here and right now we’re faced with a decision that would happily benefit the 25% of the population that are often overlooked in the conversation around what we want State College to be,” he said. “If the issue is about a thriving, multigenerational downtown destination, we have to be investing and creating opportunities for businesses to be able to bring that to our community.”

Several members of council also mentioned that they would be fine with allowing 40% of gross revenue in food sales, which the Gillespies’ insurance carrier mandates in order for the establishment to be considered a restaurant.

Councilwoman Janet Engeman — who favored a higher alcohol sale revenue percentage in the transfer agreement — said only two restaurants in State College have restrictions on their liquor license — Faccia Luna Pizzeria and Fuji & Jade Garden. She also mentioned that it is common for even responsible adults dining out to consume more than 35% of their meal cost in alcohol, especially at an upscale eatery.

Theresa Lafer was the only council member strongly in favor of restricting the liquor license to a 65% food sale to 35% alcohol sale ratio, due to concerns about alcohol abuse and out-of-control drinking from the majority-student population in State College.

“We’re short really nice restaurants. And ... I am hoping and rooting for (the new restaurant) to succeed, but I want to see the restrictions,” she said. “There are not many places with restrictions; we will continue to add restrictions.”

State College has 36% more restaurant liquor licenses than allowed by state Liquor Control Board quota, meaning borough council must approve any application for transfer, Assistant Borough Manager Tom King told council last week. But any license restrictions are at the discretion of the municipality, borough solicitor Terry Williams said at Monday’s work session.

Duke Gastiger, the former owner of Spats and the All-American Rathskeller who co-owns the planned RE Farm Cafe, said he was dismayed at borough council’s consideration of an outside liquor license transfer and thinks it’s not good for the borough.

“If you allow other licenses to come in and flood the borough with licenses from outside the borough, all of a sudden the licenses that are existing inside the borough become less valuable,” he said.

Gastiger, who owns an unrestricted liquor license he bought when Spats first opened, said he’s had multiple offers on his license but wants to sell it to someone “who, first of all, will value the license as a limited resource, and also run a business that is worthy of having the second-oldest liquor license in the state of Pennsylvania.”

Liquor licenses in State College have been transferred from anywhere between $375,000-$515,000, he said. But it appears to depend on the municipality — in March, the top 25 bidders for expired restaurant liquor licenses auctioned off by the state Liquor Control Board paid between $28,888 in Elk County and $276,100 in Bucks County.

“It really depends upon the economic vitality of the municipality,” Gastiger said. “Luckily, because of Penn State and its reliance on the visitor trade, the licenses are valued greatly.”

The former Spats and All-American Rathskeller buildings were bought by Neil and Chuck Herlocher in July 2017 for $6.5 million, under their corporation Cornelius LLC, and the new owners did not renew the leases of the two establishments owned and operated by Duke and Monica Gastiger. The former Spats, which ran for 35 years, has sat empty since the Gastigers’ lease expired on Feb. 28, 2018.

Though Borough Council will be down two council members at its July 15 meeting, Council President Evan Myers decided to keep the liquor license transfer resolution vote on the agenda for next week.

“Government making business decisions is often problematic,” he said. “And while it is the purview of government and elected officials to weigh in on the health and welfare of the community ... to legislate what some folks think is morality and other think isn’t is a slippery slope, so I think we need to stay away from that.”

King said council would be able to amend the existing resolution based on discussion at the work session before taking a vote. The vote on the transfer application may take place no later than Aug. 5.

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