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Local News

Liquor license fees can determine what businesses enter community, McHenry County officials, businesses say

It can cost up to $7,500 for a business to apply for a liquor license in Marengo

In Huntley, there is no liquor license application fee.

The Illinois Liquor Control Act leaves it up to local governments to determine the number, type, cost and classification of liquor licenses allowed in its jurisdiction, which results in a range of fees for businesses and a range of income that municipalities take in per license. 

Some local officials in McHenry County said the freedom to set fees helps control what type of liquor-selling establishments it wants to attract to the community, but for some business owners, higher fees can affect their business. 

Richard Gall has been renovating the former Harley D’z bar in Marengo, with plans to open up Maggie O’Neill’s Public House this month. He paid $5,000 to apply for his liquor license.

“I’d probably be done and open now if I didn’t have to come up with that,” Gall said.

And although the fee set him back, the Marengo resident decided to stay in the city because he already had a strong customer base from a previous business.

The city changed its one-time, nonrefundable application fee for certain types of liquor licenses to $7,500 in March. City Administrator Gary Boden said it was to help encourage “responsible investors and responsible business people to actually pursue a license.”

The increase was prompted by legal fees the city incurred, which Boden said were more than $20,000, after Harley D’z violated its liquor license several times. 

Most municipalities justify having liquor license fees for reasons including the costs to run required background checks on the license holder and to enforce any safety issues that arise from places that sell or serve alcohol.

In Marengo, money from liquor licenses goes to the general fund, Boden said, and although he said an increase in fees wouldn’t account for a large part of the costs of administering liquor licenses, it’s meant to attract serious businesses. 

“If you can get a license for an application fee of say $500, that’s not necessarily the strongest of statements as far as the quality of a business is concerned,” Boden said. 

The city took in an average of $2,225 per liquor license for the 2014-15 budget year, which was the third highest average of the 23 McHenry County municipalities analyzed by the Northwest Herald.

Averages were based off of information received through the Illinois Freedom of Information Act regarding how much money the municipality received in the last fiscal year from liquor licenses and how many active liquor licenses the community had during that time. 

For Huntley, there’s just never been an application fee, Village Clerk Rita McMahon said. The village took in an average of $1,072 per license in the last fiscal year. 

Dan Clausner, executive director of the Illinois Licensed Beverage Association, said municipalities don’t always realize all of the costs associated with running a successful liquor-selling business.

“If the local liquor license fee becomes too high, then it will deter new business from opening in that municipality, and it may cause existing businesses to close,” Clausner said. 

In Woodstock, Mayor Brian Sager said the fees were lowered about five years ago to make the city competitive, reflect the difficult economic times and because some businesses had expressed concerns that it was too high.

Woodstock brought in an average of $1,720 per license in its last budget year, and Sager said there is a benefit to allowing each municipality to determine its own fees. 

“It gives flexibility in terms of the types of businesses that you want to support and promote at a particular time, or a particular environment that might exist,” Sager said. 

Fox Lake had the lowest average of municipalities analyzed, bringing in about $754 per license in the last fiscal year, and Village Administrator Anne Marrin said they look at other municipalities to stay competitive. 

“We want to be good to our businesses and make sure that they could stay in business,” Marrin said.

It’s hard to compare Fox Lake to larger municipalities, Marrin said, and the village is unique in the fact that its businesses are very seasonal. 

“I think it’s great that the community can establish and determine what those fees should be and not have a standard one, because one size does not fit all for the communities,” Marrin said. 

Although fees do vary, Niko Kanakaris said from what he’s seen in McHenry County, the difference isn’t significant enough to affect his decision where to locate. Kanakaris is a Huntley trustee, and the general manager of several alcohol-serving businesses in Woodstock, Huntley and Marengo.

“If you’re really worried about that extra $500 or $1,000, you should think twice about opening a restaurant or bar,” Kanakaris said. 

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