Aldermen propose liquor license refunds for struggling Chicago bars and restaurants

The ordinance includes full reimbursement for the 90 shutdown days when liquor licenses could not be used at all and partial reimbursement for days when liquor sales were restricted by reduced capacity, limited hours or both.

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The dining booths at Formento’s Italian restaurant in Chicago’s West Town neighborhood in August.

The dining booths at Formento’s Italian restaurant in Chicago’s West Town neighborhood in August.

Tyler LaRiviere/Sun-Times file

Chicago restaurant and bar owners forced to shell out $4,400 for a two-year liquor license they couldn’t fully use during the coronavirus pandemic would get a refund under a $40 million relief program proposed Monday.

Aldermen Michael Rodriguez (22nd) and Byron Sigcho-Lopez (25th) want to spend a chunk of the $1.8 billion in federal aid headed to Chicago on direct relief to restaurants and bars that have managed to keep their doors open during the pandemic.

For more than a year, they’ve either been shut down entirely or had indoor capacity and hours limited. Chicago restaurants and bars remain restricted to 50% capacity.

At Wednesday’s City Council meeting, Rodriguez and Sigcho-Lopez plan to introduce an ordinance that would reimburse liquor license holders in full for the 90 days they were shut down entirely, and also offer partial refunds for days they operated at limited capacity or with shortened hours.

Sigcho-Lopez pegged the cost of the refunds at $40 million.

“Those are fees that should be [given] back to those small businesses that were not using the licenses — at least for the 90 days last year when there was absolutely no activity, but also given the limitations of capacity, given the restrictions on hours,” the alderman said.

Rodriguez said his local chamber of commerce recently surveyed 438 businesses along the once-bustling 26th Street commercial strip better known as Chicago’s “Second Magnificent Mile.” They found 36 of those struggling businesses have already closed.

“That means 36 times five, 10 or 20 jobs [apiece] potentially that are no longer there. So we need to do everything we can to support these businesses staying open. And this seems to me like a practical solution to do that,” Rodriguez said.

Despite the cancelation of St. Patrick’s Day celebrations in Chicago amid COVID-19 concerns, people barhop in River North on Saturday, March 14, 2020.

Patrons were still hitting River North bars last year on the weekend before St. Patrick’s Day. But once all bars were shut down, the owners took a financial hit. Some aldermen want to do something to help.

Tyler LaRiviere/Sun-Times file

Phillip Bernstein, owner of Artisan Cellar Restaurant, 222 Merchandise Mart Plaza, applauded the aldermen for “understanding the plight of small business” in a way others haven’t.

Bernstein said he wrote eight letters to Mayor Lori Lightfoot and other top city officials early on, articulating the problem posed by costly, up-front fees for licenses that could not be fully used during the pandemic.

Business Affairs and Consumer Protection Commissioner Rosa Escareno was the only one to answer his plea — and it wasn’t the response Bernstein wanted to hear. 

“Her response basically was, ‘The city won’t compensate you for the lost days of your liquor license. We need the money, in essence, to pay our salaries,’” Bernstein said.

The two-year, $4,400 fee for a liquor license is a “significant financial impact on small business owners,” even during the best of times, Bernstein said. It is particularly burdensome when, “because of one decree or another … either you’re not able to operate at all … for months at a time or you’re able to operate only under very limited conditions, a few hours a day, [with] minimal amounts of attendance in your restaurant.”

Typically, Bernstein added, “people don’t have the capital to pay up-front, so they’re financing the license. They’re paying for the license and, at the same time, they’re not able to use the license. It’s just a grossly unfair system. And it really just adds more expenses to the already heavy ongoing operational expenses that a typical restaurant has,” Bernstein said.

Jose Cruz, owner of Azul 18 Restaurant, 1236 W. 18th Street, said he got his liquor license in January of last year. Less than two months later, Gov. J.B. Pritzker ordered a stay-at-home shutdown.

“I had to pay almost $500 [toward] the liquor license and the restaurant was closed. … For a couple of months, we didn’t make any money at all,” Cruz said.

“It would be awesome if we get some [refund] for the days that we were closed.”

Business Affairs and Consumer Protection spokesman Isaac Reichman said the city has “worked closely with aldermen” to deliver “financial support and regulatory relief to thousands of businesses” impacted by the pandemic — work that is “not over,” he added.

“While we are still reviewing this ordinance, we remain committed to doing everything possible to support businesses in a fair, straightforward and comprehensive way,” Reichman said in a statement.

Last month, Lightfoot warned Chicago aldermen to keep their wish lists in their back pockets because the new avalanche of stimulus funds will have strings attached.

“This is not $1.9 trillion of a slush fund that we can use every way that we can,” the mayor said then, referring to the total cost, nationally, of the bill President Joe Biden signed.

Even so, Sigcho-Lopez hopes the Lightfoot administration supports the refunds.

“This is an ordinance that does reflect the equity that we talk [about] oftentimes,” he said.

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