Brothers Jeff and Tracy Socwell say they followed all the rules when they asked for a club license to serve alcohol at the Top Shelf Sports bar in Ogden.
But even though the city approved the Socwell's application and they had no liquor law violations since they sank their life savings into their establishment on Washington Boulevard, they went away empty-handed Tuesday when appearing before state regulators.
Liquor-control commissioners denied licenses to the Socwells and two other bar owners because there are no more permits to give. And with only 14 restaurant liquor licenses left, eatery owners are uneasy.
Commissioner Gordon Strachan acknowledged that the Socwells' Top Shelf, as well as Studio 27 in Salt Lake City and Bandits Grill & Bar in Park City, completed all requirements, "but we've used up all licenses that the Legislature has authorized. We can't grant any more."
The Socwells say they knew there were a limited number of club licenses, but they add that staff from the Department of Alcoholic Beverage Control assured them that they would be given priority because they had a full-service restaurant license that allowed them to serve all types of alcohol as long as diners ordered a meal.
But rather than renew their restaurant license last month, they opted to wait a few weeks to get a club license -- saving $2,000 it would cost for a new restaurant permit. They would have used the restaurant license for only a month, until they could get a club license, which costs $2,500. A club license would allow them to serve alcohol, with or without a customer ordering food.
Now, the only beverage they can serve is beer. Unlike club and restaurant licenses, beer permits are not based on the state's population.
"I don't know what we're going to do or how we'll compete," said Jeff Socwell, 50. "We had no reason to think we wouldn't get a license, since we had done everything we needed to do."
Jeff Socwell, who works in real estate, and 48-year-old brother Tracy, a social worker, said they put $100,000 in remodeling costs alone. They wanted a club license when they opened in January but Ogden puts restrictions on the number of bars, so they had to wait until a nearby club closed.
In 2008, state lawmakers adjusted populations quotas for club permits, shrinking requirements from one per 7,300 to one per 7,850. Liquor officials expect that population estimates will shake loose one additional club permit in December.
Sen. John Valentine, R-Orem, said he fears that the limited number of licenses is evidence that the state may have gone too far in loosening restrictions last legislative session. Valentine sponsored legislation earlier this year that did away with membership requirements and fees patrons had to pay before they could order a drink.
"I am concerned, like some of my colleagues, that we must not lose sight of public safety issues surrounding alcohol consumption, such as drunk driving and underage drinking," he said. "I don't think we'll see the Legislature repealing caps on liquor licenses."
Valentine said that in his more than 20 years of service in the Legislature "I haven't seen a demand for liquor licenses to increase outside the scope of the population formula until now. It appears the demand for licenses is growing, and that is a cause for concern."
Yet the fear that doing away with club memberships would spawn drunken revelries or other public dangers so far has not become a reality. Since July 1, when clubs no longer were required to charge fees, club liquor sales have declined by $243,00 -- 9.2 percent -- through August, when compared with the same period last year.
Those numbers run contrary to results at state-controlled liquor stores, where sales have climbed by $1.3 million, for a 3 percent increase during the same two-month comparison, according to a DABC report.
As the license pool dwindles, club and restaurant owners collectively are spending thousands of extra dollars to increase the odds of landing a permit to serve alcoholic beverages.
In September, Kanab restaurateur Son Foster paid $500 for a permit that was valid for only a few days when all licenses had to be renewed for the upcoming year. He then paid $350 in renewal fees.
State alcohol regulators were split Tuesday on whether to grant three single-event liquor licenses for concerts at a Salt Lake venue in November and December.
By a 3-2 vote, the State Room, 638 S. State, was granted the permits with the understanding that the board would not look favorably on similar applications next year.
Commissioners feared that because the state has run out of club licenses, other establishments would ask for single-event permits to skirt the law. Groups are allowed 12 single-event permits each year; the State Room has received 13 permits for 35 events under related business entities.
But owner Dari Piccoli said the State Room has staged many alcohol-free events, adding, "We are not a wolf in sheep's clothing."
Commissioners Sam Granato, Bobbie Coray and newly appointed board member Jeff Wright voted to allow the three single-event permits. Granato said the owners must work with lawmakers for a new liquor designation because available permits for the theater "is like putting a square peg into a round hole."
Gordon Strachan and new commissioner Richard Sperry voted no.
