Looking for solutions to Adams Morgan’s ongoing struggle to attract new business while shielding residents from the nuisances of the famously rowdy neighborhood, the D.C. Alcoholic Beverage Control Board voted Wednesday to allow new restaurant liquor licenses for the first time in five years.

By lifting the moratorium on restaurant liquor licenses, Adams Morgan hopes to attract higher-quality establishments to its nightlife-heavy neighborhood. (Sarah L. Voisin/The Washington Post) By lifting the moratorium on restaurant liquor licenses, Adams Morgan hopes to attract higher-quality establishments to its nightlife-heavy neighborhood. (Sarah L. Voisin/The Washington Post)

But board members also renewed the existing moratorium on nightclub and tavern licenses for three years and rejected the Advisory Neighborhood Commission’s proposal to prohibit new entertainment permits for  restaurants looking to operate more like a nightclub. The board members essentially aped their recent decisions in Glover Park and East Dupont Circle, where they renewed moratoriums for three years while allowing more restaurant licenses.

“It is our hope that allowing new restaurants to locate within Adams Morgan without the mantle of artificially inflated licensing costs will bring to the neighborhood the vibrancy it has been missing, without the negative impacts caused by other types of alcohol establishments,” said ABC Board Chair Ruthanne Miller right before the unanimous vote.

The decision to open Adams Morgan to new restaurant licenses follows a study, released last year by the D.C. Fiscal Policy Institute, which noted the neighborhood had stagnated economically since the liquor-license moratorium went into effect. The study claims the moratorium “helped push development to other parts of the city” and raised the “price of obtaining a new license, making it hard for new businesses to start and for existing business owners to expand.” A Washington Post analysis earlier this year showed that, when compared to Adams Morgan, restaurant and tavern licenses were issued at a far greater rate in thriving neighborhoods such as Shaw/Logan between 2008 and 2013.

Adams Morgan’s ANC had also argued, in its proposal to the ABC Board, that allowing new restaurant licenses would “foster competition among existing establishments and raise the level of quality within the commercial district.” The new restaurants, in other words, might eventually push out lesser operators who attract the hard-drinking crowds that spill into the streets early in the morning, starting fights and turning lawns into public urinals.

The Kalorama Citizens Association, in a separate proposal, rejected all these theories and asked the ABC Board to renew the moratorium for five more years.

In making its ruling, the board members essentially agreed with the ANC, while rejecting its plea to ban new entertainment permits (known as “endorsements”) for live music or DJs or similar activities, which frequently transform an Adams Morgan restaurant into a defacto nightclub.

“It is our view that the issuance of entertainment endorsements should be left to the board’s discretion with community input as part of that process,” Miller said at the hearing. “The neighborhood can be assured that the board will scrutinize entertainment endorsement applications on a case by case basis.”

Although he voted for the new rules, ABC Board member Mike Silverstein offered a strongly worded dissent on his colleagues’ decision to reject the prohibition on entertainment permits. ““I concur with the board’s decision as far as it goes, but I think we should do more to protect the residents’ concerns for peace, order and quiet. I fear the board’s order is a triumph of hope over experience,” Silverstein said. “I supported the ANC’s proposal as a means of protecting the neighbors from any more restaurants that morph into late-night clubs.”

Denis James, president Kalorama Citizens Association, was not pleased with the idea of more booze flowing into his neighborhood.

Due of the board’s decision, “we’ll get more places that are faux-restaurants actually acting as nightclubs. They didn’t choose to restrict the entertainment side, which I didn’t think they would,” said James, who attended the hearing. “I expect a 50 percent rate of bad establishments that want to be nightclubs — and the scofflaws along with it.”

Adams Morgan has operated under a liquor license  moratorium of some sort since 2000. During the first nine years of the moratorium, the District continued to issue Class D beer and wine licenses for new restaurants in the neighborhood, but that came to a halt in 2009, when the moratorium was modified to prohibit all new liquor licenses in Adams Morgan. At present, the neighborhood has 58 restaurant and 15 tavern licenses. Nightclub licenses are prohibited in the area. Nine licenses are in so-called “safekeeping,” meaning the owners are holding the licenses until they can use them again or sell them.

The limited number of liquor licenses have made the existing ones quite valuable. Restaurateurs can pay tens of thousands of dollars for a Class C, full-service liquor license, which normally costs between $1,000 and $2,600 annually, depending on the size of the establishment. The board’s move on Wednesday could undermine that black market.

“You have smaller [restaurateurs] that might want to do something, and they have to go find a license and pay money for it. That’s got to factor into their budget,” said Andrew Kline, legislative consultant for the Restaurant Association Metropolitan Washington. “Those that have acquired these licenses and paid a lot of money for them aren’t willing to let them go for nothing. So I think this frees up the marketplace. I think it allows Adams Morgan hopefully to go into the positive direction, where I think we see it going.”