Alcohol will be flowing more freely in 11 region communities thanks to the 2010 census.

The Indiana Alcohol and Tobacco Commission uses population figures to apportion liquor licenses to each municipality. The quotas are recalculated every 10 years after the official census.

Cedar Lake, Chesterton, Crown Point, Dyer, Hobart, Lowell, Merrillville, Portage, St. John, Schererville and Valparaiso all gained residents and liquor licenses, a Times analysis of census figures and commission records shows. The quotas in four cities — East Chicago, Gary, Hammond and Lake Station — dropped as a result of population declines.

But a smaller quota doesn't necessarily mean a municipality will have fewer liquor licenses.

By state law, a city's current licenses are grandfathered, and those businesses can continue to hold licenses until they either close or are shuttered because of law violations, said Cpl. Travis Thickstun, spokesman for the Indiana Alcohol and Tobacco Commission and Indiana State Excise Police. The licenses also can be transferred to another entity within city or town limits.

That can lead to a glut of liquor licenses in municipalities that are losing residents.

East Chicago and Hammond, which have been losing population, each have more liquor licenses than they normally would be allowed based on population. As of Jan. 16, Hammond had 165 active liquor licenses — the most in the region.

The imbalance can create extra challenges for police in those communities, one official said.

Hammond Police Chief Brian Miller said there is a correlation between the number of bars in the city and the number of police calls and drunken drivers on Friday and Saturday nights.

"If you have a high number of liquor licenses — i.e., liquor stores and bars — you will have more police calls, there's no doubt," he said. "We could lose 25 or 30, and it wouldn't hurt anybody."

Miller said he isn't suggesting any businesses should shut down. Instead, he said business owners should not be allowed to transfer their licenses if a city is over its quota.

Other region officials criticized the state's "antiquated" quota system for hindering economic development in growing communities, arguing businesses battle for too few permits.

"They have to compete for a regulated permit that is scarce," said John Shepherd, Portage's economic development adviser. "First, it's complex. Second, it's expensive."

The Indiana Alcohol and Tobacco Commission auctioned off its newly created liquor licenses in November. Licenses in Valparaiso, Schererville and Crown Point were the most sought-after in the region, state records show.

Developer Tim Heidbreder, who owns the Buddy and Pal's Place chain, snapped up liquor licenses in Crown Point and Cedar Lake during the auction.

He said the Crown Point-based license will be used for Bella Vista Banquet and Convention Center, a facility he hopes to build on Broadway. Heidbreder said he will bring those plans before the Crown Point Plan Commission in February.

He declined to reveal plans for the Cedar Lake license, saying only, "I have a specific use for it."

Some municipalities use other types of liquor licenses to avoid being confined by the population quotas. The state offers licenses for economic development, gaming, horse tracks, historical districts, civic centers, small wineries and others that are not bound by population.

Valparaiso has 128 active liquor licenses — second-most in the region, records show. More than a dozen of those licenses fall outside the population-based quotas, including nine for historical districts.

Portage and Chesterton also use liquor licenses for economic development.

Portage Township Trustee Brendan Clancy, who owns Clancy's in Portage, said that practice hurts "mom and pop" business owners who bought liquor licenses as an investment. He said city officials offer new businesses economic development liquor licenses rather than making them buy existing licenses that are for sale or in escrow.

Shepherd, Portage's economic development adviser, said Portage offered economic development licenses to businesses when there were not any available or for sale. He said the state needs to find a way to fairly compensate existing liquor license owners and adjust the law so it is more user-friendly to chains and family restaurants.

"Our law is sorely in need of being brought into the 21st century," Shepherd said.

Bart Herriman, former chairman of the Indiana Alcohol Commission, said he believes the state should consider following the lead of some other states that lack quota systems. Herriman now works for an Indianapolis-based law firm dealing with hospitality-related issues.

If Indiana were to scrap its quota system, he said it would have to figure out how to compensate owners who paid hefty amounts of money for their liquor licenses.

"It's tough to change things in this industry when you have a monopolistic system," Herriman said. "I can't say scrap the quota system immediately, but good arguments apply."

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