My past columns have always tried to cast a positive light on our current and future hopes for a hospitality and restaurant economic recovery.

The governor’s welcome news Wednesday lifting some COVID-19 restrictions on the hospitality industries looks to be the proverbial light at the end of the tunnel.

That said, as a new hotel owner in 1986, under the terms of the then-current law, I had to purchase in the open market a full-service license for just under $100,000 to be granted permission to serve liquor.

To me, the proposed changes to the existing licensing laws are an eminent-domain condemnation, or “taking” of the invested value of my asset.

While governments can use eminent domain to seize property, doing so requires just compensation. Drastically changing the existing liquor laws the state of New Mexico has enforced and recognized for decades is to me a condemnation or “taking” of the current market value of my investment.

New Mexico has relied on a market-driven valuation of liquor licenses for decades and needs to honor those of us who supported the market-driven license valuation system.

A good analogy might be that the state threw a party and we in the industry were all invited — but the open-market valuation system was the only name allowed on our dance cards. For my hotel, the state required me to purchase a license from a third party at the then-market-driven value, and I had no avenue to purchase it from the state.

The state should therefore accept financial responsibility for tacitly endorsing the annual renewal of my now-valued $350,000 license.

The Legislature is discussing using state tax credits as compensation for the reduction in value of current licenses, and this will not work for us. Due to the economic impact of COVID-19, state tax credits won’t be of value until we are profitable again.

Tax credits require taxable profits, and it is highly unlikely I will be able to utilize these credits anytime in the near future, as I will have ample operating losses to carry forward due to the catastrophic financial impact of COVID-19 on my hotel business.

A tax credit offsets income taxes generated dollar for dollar, and until my hotel starts generating state taxes due, these tax credits will not have any remunerative value. Some economists and industry experts are predicting that 2019 revenue levels could not return until 2024.

Therefore, considering all of the underlying circumstances, the only fair compensation for those of us who paid excessive liquor license purchases is for the state to write each of us a reimbursement check for that overnight loss in value at the moment of the enactment of new liquor licensing laws.

Joe Schepps is president and co-owner of the Inn on the Alameda and has lived in New Mexico for 50 years.

(1) comment

Joshua Rosen

You make some excellent valid points. The dichotomy of privilege vs property of a liquor license is very interesting. A liquor license has "characteristics of property" when convenient (i.e. paying taxes, having a lien, using as collateral, etc.) by the State. Yet we are consistently told by the State it is not property; from a State that established the system and the high costs of liquor licenses. Thanks for your insight.

Welcome to the discussion.

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