Legislation is in the works to expand the Division of Alcoholic Beverage Control’s authority to issue liquor licenses to hotels, restaurants or bars in developments in "smart growth" areas of New Jersey.

Current statutes and regulations limit a municipality to one consumption license per every 3,000 people and one distribution license per every 7,500 people, not counting licenses issued before 1948 and thus grandfathered.

The bill, A-3991, sponsored by John Burzichelli, D-Gloucester, and Albert Coutinho, D-Essex, would allow the ABC division to issue up to three consumption licenses in smart-growth developments expected to generate up to $10 million in private investments, and up to six licenses for $20 million in investments.

Smart-growth areas are those that have been designated by the State Planning Commission, the Highlands Commission or the Pinelands Commission as being desirable areas for mixed-use development. The number of smart-growth areas vary by county.

The number of licenses also would be based on a development’s square footage.

The bill would remove the prohibition of selling a liquor license to any establishment within 200 feet of a school or church, provide that at least 50 percent of the floor space of the establishment is devoted to food service and all alcoholic beverages are consumed on-site.

Not having a liquor license puts a restaurant at a competitive disadvantage and often is the reason why a particular location is not chosen, Burzichelli says.

"The number of licenses is very restricted at the moment. Owners are members of a very exclusive club," he says.

The bill, now assigned to the Assembly Law and Public Safety Committee, is likely to undergo changes before any action is taken. "Right now, it’s just a statement of an issue the Legislature should be engaged in," Burzichelli says.

Among the factors that will have to be addressed is that current owners’ license values — now based in part on their rarity — will be diluted by the new issues. "There has to be some formula for compensation," he says.

Another issue, raised by the powerful New Jersey State League of Municipalities, is that the bill has no mechanism for the local governing body to have a role in deciding how many licenses would be issued to a particular project.

"That would be a problem for us," says Jon Moran, the league’s senior legislative analyst, who adds that the league hasn’t taken a position on the bill.

Officials from the New Jersey Restaurant Association and the New Jersey Licensed Beverage Association, two organizations whose members would be affected by any change in liquor license laws, were not available for comment.