A municipality seeking to acquire an inactive license can only issue it for a premise that is part of an "economic redevelopment plan" or a designated redevelopment, improvement, or revitalization area. These areas include:
- Urban enterprise zones
- Downtown business improvement zones
- Pedestrian malls or special improvement districts
- Transit-oriented developments
- Areas in need of redevelopment
- Areas in need of rehabilitation or new construction not previously used.
A municipality at its population cap for licenses (one per 3,000 residents) can still issue a request for purchase (RFP) to acquire an inactive license from an adjoining municipality for a qualifying project. These municipalities must share a common boundary line, not just be separated by water.
The acquired license would be used in the receiving municipality's qualifying project area and would not count towards its population cap.
Appraisal, Bidding and Awarding of RFP
A RFP must set a minimum bid amount based on either the average sales price of the last three licenses sold in the receiving municipality or an appraisal paid for by the receiving municipality. The higher of these amounts sets the minimum bid.
The appraisal process must consider past transactions in the receiving and nearby municipalities, reflecting a fair market value. Bids must be sealed and confidential, and the license is awarded to the highest qualified bidder.
Before bidding, a license holder with an inactive license in a contiguous sending municipality must get permission from the sending municipality, which requires a resolution passed by a majority vote. The license holder does not need to disclose the proposed location in the receiving municipality.
Notice of Transfer and Resolutions
Once a receiving municipality receives a successful bid and designates the winning bidder, the sending municipality must submit a Notice of Intent to transfer the license to the Director of the Division at least 90 days before the transfer. This notice must include documentation showing compliance with the inter-municipal license transfer statute.
Both municipalities must adopt identical resolutions authorizing the transfer and setting a license transfer fee of at least $25,000, which the inactive license holder pays to the sending municipality. They must also consider whether the license holder made sufficient attempts to use or transfer the license within the sending municipality before adopting the resolutions.
Once the transfer is approved, the receiving municipality can offer the acquired license at public sale for use in a qualifying redevelopment area. ABC will then assign a license number for this new category of retail consumption license.
Limitations and Restrictions
An inter-municipal retail consumption license issued by a receiving municipality will automatically expire if not used within two years and cannot be reissued. Appeals are only allowed if the premises are unusable due to eminent domain, fire, or other casualty, and the license holder is making a good faith effort to resume use of the license.
This license does not allow the sale of alcoholic beverages for off-premises consumption.
A receiving municipality can acquire one inactive license per year, but no more than two in five years.
Expirations of Inactive Licenses
P.L. 2023, C.290 amends N.J.S.A. 33:1-12.39 stating that effective August 1, 2024, states that inactive Class C licenses, including plenary retail consumption licenses, will not be renewed if not used for two consecutive license terms.
The law requires the Director of ABC to divide inactive plenary retail consumption licenses into quartiles based on their inactivity duration:
- First quartile (1993-1994 to 2000-2001) expires August 1, 2025
- Second quartile (2001-2002 to 2008-2009) expires August 1, 2026
- Third quartile (2009-2010 to 2016-2017) expires August 1, 2027
- Fourth quartile (2017-2018 to 2023-2024) expires August 1, 2028
Inactive licenses must be either activated by the holder, transferred for active use, or transferred to a receiving municipality before the statutory deadlines.
The League recommends reviewing AN 2024-05 with your municipal attorney. For specific questions about the notice the ABC recommends contacting Roy Lamboy at Ray.Lamboy@njoag.gov or 609-376-2774.
Contact: Andrew LaFevre, Legislative Analyst, alafevre@njlm.org, 609-695-3481, x116.