Salisbury limits number of dealers
SALISBURY — The dust hadn't settled on the bankruptcy auction two weeks ago that liquidated the assets of Fraser Automotive's used-car dealership and service center, when another businessman petitioned selectmen to revoke Chris Fraser's license to sell used cars and transfer it to him.
The reason for such swift action is that used-car, or Class II, business licenses are in high demand in Salisbury, since the town limits the number it issues. The history of restricting used-car dealerships in Salisbury goes back to 1996 when a bylaw was passed at the October Town Meeting limiting the number to 15, Town Clerk Wilma McDonald said.
But questions are arising over whether the town's policy is legal. Some argue that state law doesn't allow towns to arbitrarily limit the number of licenses.
In Salisbury, holders of those licenses rarely give them up, even though they may appear to be used-car dealers in name only, selling few if any cars a year. But demands for licenses has been heavy, with business owners trying to get around the limit in creative ways, without much luck.
In October 2010, Town Manager Neil Harrington petitioned Town Meeting to raise the number from 15 to 17, which was done. But no sooner had the additional two licenses been approved, then demand was back again.
Selectmen tabled the request to revoke Fraser's license, questioning the legality of such an action. Instead, they decided they would discuss the request and the overall issue of the Class II and III licenses at their workshop planned for Monday. The hope is that selectmen will be able to clarify the concerns involved and move forward.
Chuck Takesian, a former Salisbury selectman and current chairman of the Salisbury Chamber of Commerce, said there was little opposition against limiting used-car dealerships in 1996. Although the state restricts the number of liquor licenses in all communities, Salisbury doesn't put a cap on any other type of business in town.
"I wasn't on the Board of Selectmen at the time," Takesian said. "I believe the reason to limit (used-car dealerships) was because people just didn't want any more used-car dealerships in town. Unsightliness was one of the reasons, but some said they didn't want Salisbury to become a town of used-car dealers.
"If I had been on the Board of Selectmen at the time, I would have opposed it. I've always been one to say that the free market should decide. If the Registry of Motor Vehicles approves the dealer plates, I don't think there should be a limit on the number of licenses."
Takesian's comments are not without foundation, based on the nation's free market system, which advocates that competition, consumers, and supply and demand regulate the economy. In 1890, Congress passed the Sherman Anti-Trust Act to prevent the limitation of competition and ensure that consumers would benefit from its effect on prices, quality and the economy.
Paul Harris, an automotive and business attorney with Boston law firm Burns and Levinson, said that Salisbury is not alone in its attempt to keep car dealers — new or used — out of their communities. A number of municipalities attempt to do the same, but the trend bucks the law, he said.
"A lot of towns say they just don't want any more car dealers in town, and they refuse them," Harris said. "But, legally, they can't. It's just bullying."
Without violating attorney/client privilege by using names, Harris said that he once took a community to court about 20 years ago after it refused to allow a new-car dealer to locate within its borders. The business had met all the requirements under state laws that regulate new, used and salvage car dealers, called Class I, II and III licenses, but the town wouldn't let it in, Harris said.
"When we got before the judge, he looked at everything, saw all the qualifications were met, and said, 'What's the problem? Issue the license,'" Harris said.
State law demands that those who want to sell new cars have franchises from legitimate car manufacturers and proper facilities to perform repairs, among other requirements, Harris said. For Class II used-car requirements, the law states that businesses must prove financial responsibility, usually with a $25,000 bond, and demonstrate the business has "access to repair facilities" to satisfy the used-car "lemon law," he said. Also, the sale of the used cars should be the primary business conducted at the site, he said.
The state does allow communities to limit the number of Class III, or salvage car dealers, licenses, probably because of the nature and appearance of the "junk yard" businesses, Harris said.
Communities can use zoning to restrict the types of businesses in certain areas, by declaring them residential, commercial or industrials zones, Harris said. And planning boards often have site-plan regulations that require businesses to honor setbacks, density, drainage, landscaping and other aesthetic regulations. But if land is available in the appropriate zone, and a business owner satisfies all the community's site plan requirements and the state criteria, Harris said he believes selectmen can't refuse to issue a license.
"Business licenses are not zoning," Harris said. "Cities and towns that have regulations that restrict new- and used-car dealerships usually back down when pushed. They may enter into negotiations with the dealer and come to some compromise. They may ask for something like a traffic light or money for a stoplight or for a piece of equipment.
"Dealers usually comply, because it's less expensive than going to court," Harris said.
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