The Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. The act also provides for a limitation on the amount of on-sale general licenses that may be issued by the department based on the population of the county in which the licensed premises are located, as provided.

This bill would provide an exception to this limitation for the County of Inyo, as specified.

This bill would make legislative findings and declarations regarding the necessity of a special statute.

The Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. The act also provides for a limitation on the amount of on-sale general licenses that may be issued by the department based on the population of the county in which the licensed premises are located, as provided.

This bill would provide an exception to this limitation for the County of Inyo, as specified.

This bill would make legislative findings and declarations regarding the necessity of a special statute.

The Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. The act also provides for a limitation on the amount of on-sale general licenses that may be issued by the department based on the population of the county in which the licensed premises are located, as provided.

This bill would provide an exception to this limitation for the County of Inyo, as specified.

This bill would make legislative findings and declarations regarding the necessity of a special statute.

The Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. The act also provides for a limitation on the amount of on-sale general licenses that may be issued by the department based on the population of the county in which the licensed premises are located, as provided.

This bill would provide an exception to this limitation for the County of Inyo, as specified.

This bill would make legislative findings and declarations regarding the necessity of a special statute.

The Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. The act also provides for a limitation on the amount of on-sale general licenses that may be issued by the department based on the population of the county in which the licensed premises are located, as provided.

This bill would provide an exception to this limitation for the County of Inyo, as specified.

This bill would make legislative findings and declarations regarding the necessity of a special statute.

The Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. The act also provides for a limitation on the amount of on-sale general licenses that may be issued by the department based on the population of the county in which the licensed premises are located, as provided.

This bill would provide an exception to this limitation for the County of Inyo, as specified.

This bill would make legislative findings and declarations regarding the necessity of a special statute.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1558

Author:(Mathis)

As Amended Ver:August 16, 2016

Majority vote

Original Committee Reference: G.O.

SUMMARY: Adds a new Section to the Alcoholic Beverage Control Act that authorizes the Department of Alcoholic Beverage Control (ABC) to issue, over a two-year period, five additional new on-sale general licenses for restaurants, with a seating capacity of 50 or more, in Inyo County. Specifically, this bill:

1. Authorizes ABC to issue, from January 1, 2017, to December 31, 2019, no more than a total of five additional new original on-sale general licenses in Inyo County for bona fide public eating places, public premises, or both. In order to qualify for such a license, the premises must have seating capacity for 50 or more diners.
2. Requires ABC to follow existing "drawing for priority" procedures with respect to the issuance of these new licenses.
3. Makes it explicit that a person that currently holds a valid on-sale general license for seasonal business shall not be prohibited from applying for an original on-sale general license pursuant to this bill.
4. Stipulates that a license issued pursuant to this bill shall not be transferred from one county to another, nor shall it be transferred to any premises not qualifying under the provisions of this bill.

The Senate amendments renumber the new Section of law proposed to be added by this bill to the Business and Professions Code to avoid a chaptering out issue with SB 1285 (Leno).

EXISTING LAW:

1. The enactment of the 21st Amendment to the United States (U.S.) Constitution in 1933 repealed the 18th Amendment and ended the era of Prohibition. Accordingly, states were granted the authority to establish alcoholic beverage laws and administrative structures to regulate the sale and distribution of alcoholic beverages.
2. Establishes ABC and grants it exclusive authority to administer the provisions of the Act in accordance with laws enacted by the Legislature. This involves licensing individuals and businesses associated with the manufacture, importation and sale of alcoholic beverages in this state and the collection of license fees or occupation taxes for this purpose.
3. Provides that ABC must deny an application for a license if issuance would create a law enforcement problem, or if issuance would result in, or add to, an undue concentration of licenses in the area where the license is desired. For liquor stores and other specified retail license, however, the ABC is authorized to issue a license if the respective local government determines that public convenience or necessity would be served by granting the license.

Caps the number of new on and off-sale general licenses issued by the ABC at one for every 2,500 inhabitants of the county where the establishment is located (2,000:1 for on sale licenses). If no licenses are available from the state due to the population restrictions, those people interested in obtaining a liquor license may purchase one from an existing licensee, for whatever price the market bears. In 1994, the Legislature approved a 3-year moratorium on the issuance of new off-sale beer and wine licenses, which at the time was not bound by any population to license restriction. In 1997, this moratorium was made permanent.

1. Defines "bona fide public eating place" to mean a place which is regularly and in a bona fide manner used and kept open for the serving of meals to guests for compensation and which has suitable kitchen facilities connected therewith, containing conveniences for cooking an assortment of foods which may be required for ordinary meals, the kitchen of which must be kept in a sanitary condition with the proper amount of refrigeration for keeping of food on said premises and must comply with all the regulations of the local Department of Health.
2. Defines an "on-sale" license as authorizing the sale of all types of alcoholic beverages: namely, beer, wine and distilled spirits, for consumption on the premises (such as at a restaurant or bar). An "off-sale" license authorizes the sale of all types of alcoholic beverages for consumption off the premises in original, sealed containers.
3. Provides for 58 counties and 58 "classes" of counties – one county to each class based on their 1970 Census populations.

FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

COMMENTS:

Background: As noted above, existing law provides for a limitation on the number of new on-sale general licenses that may be issued in a given year by ABC based on the population growth of the county in which the licensed premises are located (one license for every 2,000 residents). Thus, if a county grows by 10,000 people in a given year ABC will sell five new licenses in that county. ABC holds a drawing if there are more buyers than licenses available. The cost of an original on-sale general eating-place license (Type 47) is $13,800. Individuals seeking to open a full-service restaurant with a bar or cocktail menu who fail to obtain a liquor license through this process typically must locate an existing licensed owner willing to sell his or her license. Usually, that is done by contacting a liquor license broker. The cost of obtaining a license on the secondary market is driven by supply and demand and potential sellers may ask for upwards of $150,000. According to ABC, currently there are approximately 13,360 Type 47 licenses statewide.

ABC's records from 2015 indicate that Inyo’s population was 18,574, which translates into 17 on-sale general licenses within the county. In 2015, ABC issued additional liquor licenses to counties with satisfactory population growth verified by the Department of Finance (DOF). Inyo County was not eligible for additional liquor licenses based on the set criteria. However, ABC records indicate that one new on-sale general license was made available and issued through the priority drawing process in 2013.

Purpose of the bill: Under current law, the number of liquor licenses issued in a given county is tied to the population of that county which creates a problem for restaurants and hotels that would like to cater to the large number of visitors in the area but are unable to because they do not have a license to serve alcohol. This measure is expected to lead to an increase in full service restaurants in the County of Inyo

According to the author, while the County could not show satisfactory proof of population growth, the number of businesses unable to obtain a license each year demonstrates the County's need for additional liquor licenses.

The author states, although the distribution of liquor licenses across Inyo County reflects the population, ABC does not take into account the many tourists who visit the County each year, making it even more difficult for entrepreneurs to succeed in a volatile economic climate. This bill will provide Inyo County with five additional liquor licenses to accommodate the growing tourism industry that accounts for a significant portion of the local economy.

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531 FN: 0004741

 THIRD READING  

Bill No: AB 1558

Author:

: 8/16/16 Senate

Vote:

SENATE GOVERNMENTAL ORG. COMMITTEE: 3-6, 6/14/16 (FAIL)

AYES: Bates, Gaines, Vidak

NOES: Hall, Block, Galgiani, Glazer, Hill, Lara

NO VOTE RECORDED: Berryhill, Hernandez, Hueso, McGuire

SENATE GOVERNMENTAL ORG. COMMITTEE: 13-0, 6/28/16

AYES: Hall, Berryhill, Bates, Block, Gaines, Galgiani, Glazer, Hernandez, Hill, Hueso, Lara, McGuire, Vidak

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 76-0, 4/28/16 (Consent) - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill adds a new Section to the Alcoholic Beverage Control (ABC) Act that authorizes the Department of ABC to issue, over a two-year period, five additional new on-sale general licenses for restaurants, with a seating capacity of 50 or more, in Inyo County.

Senate Floor Amendments of 8/16/16 renumber the new Section of law proposed to be added by this bill to the Business and Professions Code to avoid a chaptering out issue with SB 1285 (Leno, 2016).

ANALYSIS:

Existing law:

1. Establishes the Department of ABC and grants it exclusive authority to administer the provisions of the ABC Act in accordance with laws enacted by the Legislature. This involves licensing individuals and businesses associated with the manufacture, importation and sale of alcoholic beverages in this state and the collection of license fees.
2. Provides that the ABC must deny an application for a license if issuance would create a law enforcement problem, or if issuance would result in, or add to, an undue concentration of licenses in the area where the license is desired. For liquor stores and other specified retail licenses, however, the ABC is authorized to issue a license if the respective local government determines that public convenience or necessity would be served by granting the license.
3. Caps the number of new on and off-sale general licenses issued by the ABC at one for every 2,500 inhabitants of the county where the establishment is located (2,000:1 for on-sale licenses). If no licenses are available from the state due to the population restrictions, those people interested in obtaining a liquor license may purchase one from an existing licensee, for whatever price the market bears. In 1994, the Legislature approved a three-year moratorium on the issuance of new off-sale beer and wine licenses, which at the time was not bound by any population to license restriction. In 1997 this moratorium was made permanent.
4. Defines “bona fide public eating place” to mean a place which is regularly and in a bona fide manner used and kept open for the serving of meals to guests for compensation and which has suitable kitchen facilities connected therewith, containing conveniences for cooking an assortment of foods which may be required for ordinary meals, the kitchen of which must be kept in a sanitary condition with the proper amount of refrigeration for keeping of food on said premises and must comply with all the regulations of the local Department of Health.
5. Defines an “on-sale” license as authorizing the sale of all types of alcoholic beverages: namely, beer, wine and distilled spirits, for consumption on the premises (such as at a restaurant or bar). An “off-sale” license authorizes the sale of all types of alcoholic beverages for consumption off the premises in original, sealed containers.

This bill:

1. Authorizes the Department of ABC to issue, from January 1, 2017 to December 31, 2019, no more than a total of five additional new original on-sale general licenses in Inyo County for bona fide public eating places, public premises, or both. In order to qualify for such a license, the premises must have seating capacity for 50 or more diners.
   
2. Requires the Department of ABC to follow existing “drawing for priority” procedures with respect to the issuance of these new licenses.
   
3. Makes it explicit that a person that currently holds a valid on-sale general license for seasonal business shall not be prohibited from applying for an original on-sale general license pursuant to this bill.
   
4. Stipulates that a license issued pursuant to this bill shall not be transferred from one county to another, nor shall it be transferred to any premises not qualifying under the provisions of this bill.

Background

As noted above, existing law provides for a limitation on the number of new on-sale general licenses that may be issued in a given year by the Department of ABC based on the population growth of the county in which the licensed premises are located (one license for every 2,000 residents). Thus, if a county grows by 10,000 people in a given year the Department of ABC will issue five new licenses in that county. A drawing is held by ABC if there are more buyers than licenses available. The cost of an original on-sale general eating place license (type 47) is $13,800. Individuals seeking to open a full-service restaurant with a bar or cocktail menu who fail to obtain a liquor license through this process typically must locate an existing licensed owner willing to sell his/her license. Usually, that’s done by contacting a liquor license broker. The cost of obtaining a license on the secondary market is driven by supply and demand and potential sellers may ask for upwards of $150,000. Some of these potential sellers view their license as tickets to a richer retirement.

Purpose of AB 1558. The author’s office points out that Inyo County has witnessed relatively fixed population growth (18,500 residents) and a swelling tourist economy due to its geographic location along the eastern slope of the Sierra. The author’s office contends that the existing limitation on the number of new on-sale general licenses that may be issued in a given year by the Department of ABC is not conducive for economic growth within the region nor is it sufficient to sustain the current demand in a county where tourists outnumber residents by a wide margin. This bill will provide Inyo County five additional new on-sale general licenses for restaurants with a seating capacity of 50 or more diners.

Alcohol Justice has expressed opposition to AB 1558 and states that “increasing the availability of alcohol is associated with increased alcohol-related harm. Increasing the number of retail licenses, no matter how minimal, will increase availability and therefore impact public health. The state already suffers more than $22 billion in alcohol-related harm and over 10,000 alcohol-related deaths annually.” Alcohol Justice believes AB 1558 will “ultimately increase those catastrophic alcohol-related harms and costs in the state.”

Prior Legislation

AB 461 (Achadjian, Chapter 110, Statutes of 2013) authorized the Department of ABC to issue no more than a total of five new original on-sale general licenses, over a three-year period, for bona fide public eating places in the County of San Luis Obispo.

AB 1320 (Allen, Chapter 467, Statutes of 2012) authorized the Department of ABC to issue a maximum of 15 new original on-sale general licenses, over a three-year period, for bona fide public eating places in the County of Marin.

AB 2266 (Evans, Chapter 130, Statutes of 2008) authorized the Department of ABC to issue five additional new original on-sale licenses, per year for a period of three years, for bona fide public eating places having a seating capacity for 50 or more diners in Napa County.

SB 762 (Cox, Chapter 193, Statutes of 2007) authorized the Department of ABC to issue 10 new original on-sale general licenses for bona fide public eating places in the County of Mono.

AB 1252 (N. Waters, Chapter 753, Statutes of 1977) permitted the Director of ABC to authorize the conversion of any on-sale general license for “seasonal business” to an on-sale general license, as specified.

SB 1092 (Berryhill, Chapter 571, Statutes of 1975) authorized the Department of ABC to issue five additional new original on-sale general licenses for bona fide public eating places (seating for 100 or more diners) in any county where the inhabitants number less than 5,000 but more than 3,000 (Mono County) according to the 1970 federal census and where the major economy of that county is dependent upon the year-round use of that county’s recreational facilities.

SB 784 (Berryhill, Chapter 407, Statutes of 1975) authorized the Department of ABC to issue three additional original off-sale general licenses in a county of the 58th class (Alpine County).

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 8/17/16)

Bishop Area Chamber of Commerce and Visitors Bureau

City of Bishop

Inyo County Board of Supervisors

OPPOSITION: (Verified 8/17/16)

Alcohol Justice

ASSEMBLY FLOOR: 76-0, 4/28/16

AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon

NO VOTE RECORDED: Chávez, Daly, Mathis, Olsen

Prepared by:

8/17/16 16:01:36

**** END ****

 THIRD READING  

Bill No: AB 1558

Author:

:

Vote:

SENATE GOVERNMENTAL ORG. COMMITTEE: 3-6, 6/14/16

AYES: Bates, Gaines, Vidak

NOES: Hall, Block, Galgiani, Glazer, Hill, Lara

NO VOTE RECORDED: Berryhill, Hernandez, Hueso, McGuire

SENATE GOVERNMENTAL ORG. COMMITTEE: 13-0, 6/28/16

AYES: Hall, Berryhill, Bates, Block, Gaines, Galgiani, Glazer, Hernandez, Hill, Hueso, Lara, McGuire, Vidak

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 76-0, 4/28/16 (Consent) - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill adds a new Section to the Alcoholic Beverage Control (ABC) Act that authorizes the Department of ABC to issue, over a two-year period, five additional new on-sale general licenses for restaurants, with a seating capacity of 50 or more, in Inyo County.

ANALYSIS:

Existing law:

1. Establishes the Department of ABC and grants it exclusive authority to administer the provisions of the ABC Act in accordance with laws enacted by the Legislature. This involves licensing individuals and businesses associated with the manufacture, importation and sale of alcoholic beverages in this state and the collection of license fees.
2. Provides that the ABC must deny an application for a license if issuance would create a law enforcement problem, or if issuance would result in, or add to, an undue concentration of licenses in the area where the license is desired. For liquor stores and other specified retail licenses, however, the ABC is authorized to issue a license if the respective local government determines that public convenience or necessity would be served by granting the license.
3. Caps the number of new on and off-sale general licenses issued by the ABC at one for every 2,500 inhabitants of the county where the establishment is located (2,000:1 for on-sale licenses). If no licenses are available from the state due to the population restrictions, those people interested in obtaining a liquor license may purchase one from an existing licensee, for whatever price the market bears. In 1994, the Legislature approved a three-year moratorium on the issuance of new off-sale beer and wine licenses, which at the time was not bound by any population to license restriction. In 1997 this moratorium was made permanent.
4. Defines “bona fide public eating place” to mean a place which is regularly and in a bona fide manner used and kept open for the serving of meals to guests for compensation and which has suitable kitchen facilities connected therewith, containing conveniences for cooking an assortment of foods which may be required for ordinary meals, the kitchen of which must be kept in a sanitary condition with the proper amount of refrigeration for keeping of food on said premises and must comply with all the regulations of the local Department of Health.
5. Defines an “on-sale” license as authorizing the sale of all types of alcoholic beverages: namely, beer, wine and distilled spirits, for consumption on the premises (such as at a restaurant or bar). An “off-sale” license authorizes the sale of all types of alcoholic beverages for consumption off the premises in original, sealed containers.

This bill:

1. Authorizes the Department of ABC to issue, from January 1, 2017 to December 31, 2019, no more than a total of five additional new original on-sale general licenses in Inyo County for bona fide public eating places, public premises, or both. In order to qualify for such a license, the premises must have seating capacity for 50 or more diners.
   
2. Requires the Department of ABC to follow existing “drawing for priority” procedures with respect to the issuance of these new licenses.
   
3. Makes it explicit that a person that currently holds a valid on-sale general license for seasonal business shall not be prohibited from applying for an original on-sale general license pursuant to this bill.
   
4. Stipulates that a license issued pursuant to this bill shall not be transferred from one county to another, nor shall it be transferred to any premises not qualifying under the provisions of this bill.

Background

As noted above, existing law provides for a limitation on the number of new on-sale general licenses that may be issued in a given year by the Department of ABC based on the population growth of the county in which the licensed premises are located (one license for every 2,000 residents). Thus, if a county grows by 10,000 people in a given year the Department of ABC will issue five new licenses in that county. A drawing is held by ABC if there are more buyers than licenses available. The cost of an original on-sale general eating place license (type 47) is $13,800. Individuals seeking to open a full-service restaurant with a bar or cocktail menu who fail to obtain a liquor license through this process typically must locate an existing licensed owner willing to sell his/her license. Usually, that’s done by contacting a liquor license broker. The cost of obtaining a license on the secondary market is driven by supply and demand and potential sellers may ask for upwards of $150,000. Some of these potential sellers view their license as tickets to a richer retirement.

Purpose of AB 1558. The author’s office points out that Inyo County has witnessed relatively fixed population growth (18,500 residents) and a swelling tourist economy due to its geographic location along the eastern slope of the Sierra. The author’s office contends that the existing limitation on the number of new on-sale general licenses that may be issued in a given year by the Department of ABC is not conducive for economic growth within the region nor is it sufficient to sustain the current demand in a county where tourists outnumber residents by a wide margin. This bill will provide Inyo County five additional new on-sale general licenses for restaurants with a seating capacity of 50 or more diners.

Alcohol Justice has expressed opposition to AB 1558 and states that “increasing the availability of alcohol is associated with increased alcohol-related harm. Increasing the number of retail licenses, no matter how minimal, will increase availability and therefore impact public health. The state already suffers more than $22 billion in alcohol-related harm and over 10,000 alcohol-related deaths annually.” Alcohol Justice believes AB 1558 will “ultimately increase those catastrophic alcohol-related harms and costs in the state.”

Prior/Related Legislation

SB 1285 (Leno, 2016) authorizes, beginning January 1, 2017, the Department of ABC to issue no more than a total of 5 new original “neighborhood-restricted” special on-sale general licenses, for premises located within specified City and County of San Francisco neighborhoods, subject to certain requirements and restrictions. (Pending in the Assembly Rules Committee)

AB 1670 (Dodd, 2016), among other things, authorizes the Department of ABC to issue, from January 1, 2017 to December 31, 2017, no more than a total of five additional new original on-sale general licenses for bona fide public eating places in Napa County. (Pending in the Senate Appropriations Committee)

AB 461 (Achadjian, Chapter 110, Statutes of 2013) authorized the Department of ABC to issue no more than a total of five new original on-sale general licenses, over a three-year period, for bona fide public eating places in the County of San Luis Obispo.

AB 1320 (Allen, Chapter 467, Statutes of 2012) authorized the Department of ABC to issue a maximum of 15 new original on-sale general licenses, over a three-year period, for bona fide public eating places in the County of Marin.

AB 2266 (Evans, Chapter 130, Statutes of 2008) authorized the Department of ABC to issue five additional new original on-sale licenses, per year for a period of three years, for bona fide public eating places having a seating capacity for 50 or more diners in Napa County.

SB 762 (Cox, Chapter 193, Statutes of 2007) authorized the Department of ABC to issue 10 new original on-sale general licenses for bona fide public eating places in the County of Mono.

AB 1252 (N. Waters, Chapter 753, Statutes of 1977) permitted the Director of ABC to authorize the conversion of any on-sale general license for “seasonal business” to an on-sale general license, as specified.

SB 1092 (Berryhill, Chapter 571, Statutes of 1975) authorized the Department of ABC to issue five additional new original on-sale general licenses for bona fide public eating places (seating for 100 or more diners) in any county where the inhabitants number less than 5,000 but more than 3,000 (Mono County) according to the 1970 federal census and where the major economy of that county is dependent upon the year-round use of that county’s recreational facilities.

SB 784 (Berryhill, Chapter 407, Statutes of 1975) authorized the Department of ABC to issue three additional original off-sale general licenses in a county of the 58th class (Alpine County).

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

(Verified 8/1/16)

Bishop Area Chamber of Commerce and Visitors Bureau

City of Bishop

Inyo County Board of Supervisors

OPPOSITION: (Verified 8/1/16)

Alcohol Justice

ASSEMBLY FLOOR: 76-0, 4/28/16

AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon

NO VOTE RECORDED: Chávez, Daly, Mathis, Olsen

Prepared by:

8/3/16 19:20:45

**** END ****

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Isadore Hall, III

Chair

2015 - 2016 Regular

Bill No: AB Hearing Date: 6/28/2016

SUBJECT:

DIGEST: This bill adds a new Section to the Alcoholic Beverage Control (ABC) Act that authorizes the Department of ABC to issue, over a 2-year period, five additional new on-sale general licenses for restaurants, with a seating capacity of 50 or more, in Inyo County.

ANALYSIS:

Existing law:

1. Establishes the Department of ABC and grants it exclusive authority to administer the provisions of the Alcoholic Beverage Control Act in accordance with laws enacted by the Legislature. This involves licensing individuals and businesses associated with the manufacture, importation and sale of alcoholic beverages in this state and the collection of license fees.
2. Provides that the ABC must deny an application for a license if issuance would create a law enforcement problem, or if issuance would result in, or add to, an undue concentration of licenses in the area where the license is desired. For liquor stores and other specified retail licenses, however, the ABC is authorized to issue a license if the respective local government determines that public convenience or necessity would be served by granting the license.
3. Caps the number of new on and off-sale general licenses issued by the ABC at one for every 2,500 inhabitants of the county where the establishment is located (2,000:1 for on-sale licenses). If no licenses are available from the state due to the population restrictions, those people interested in obtaining a liquor license may purchase one from an existing licensee, for whatever price the market bears. In 1994, the Legislature approved a 3-year moratorium on the issuance of new off-sale beer and wine licenses, which at the time was not bound by any population to license restriction. In 1997 this moratorium was made permanent.
4. Defines “bona fide public eating place” to mean a place which is regularly and in a bona fide manner used and kept open for the serving of meals to guests for compensation and which has suitable kitchen facilities connected therewith, containing conveniences for cooking an assortment of foods which may be required for ordinary meals, the kitchen of which must be kept in a sanitary condition with the proper amount of refrigeration for keeping of food on said premises and must comply with all the regulations of the local Department of Health.
5. Defines an “on-sale” license as authorizing the sale of all types of alcoholic beverages: namely, beer, wine and distilled spirits, for consumption on the premises (such as at a restaurant or bar). An “off-sale” license authorizes the sale of all types of alcoholic beverages for consumption off the premises in original, sealed containers.

This bill:

1. Authorizes the Department of ABC to issue, from 1/1/2017 to 12/31/2019, no more than a total of five additional new original on-sale general licenses in Inyo County for bona fide public eating places, public premises, or both. In order to qualify for such a license, the premises must have seating capacity for 50 or more diners.
   
2. Requires the Department of ABC to follow existing “drawing for priority” procedures with respect to the issuance of these new licenses.
   
3. Makes it explicit that a person that currently holds a valid on-sale general license for seasonal business shall not be prohibited from applying for an original on-sale general license pursuant to this bill.
   
4. Stipulates that a license issued pursuant to this bill shall not be transferred from one county to another, nor shall it be transferred to any premises not qualifying under the provisions of this bill.

Background

As noted above, existing law provides for a limitation on the number of new on-sale general licenses that may be issued in a given year by the Department of ABC based on the population growth of the county in which the licensed premises are located (one license for every 2,000 residents). Thus, if a county grows by 10,000 people in a given year the Department of ABC will issue five new licenses in that county. A drawing is held by ABC if there are more buyers than licenses available. The cost of an original on-sale general eating place license (type 47) is $13,800. Individuals seeking to open a full-service restaurant with a bar or cocktail menu who fail to obtain a liquor license through this process typically must locate an existing licensed owner willing to sell his/her license. Usually, that’s done by contacting a liquor license broker. The cost of obtaining a license on the secondary market is driven by supply and demand and potential sellers may ask for upwards of $150,000. Some of these potential sellers view their license as tickets to a richer retirement.

Purpose of AB 1558. The author’s office points out that Inyo County has witnessed relatively fixed population growth (18,500 residents) and a swelling tourist economy due to its geographic location along the eastern slope of the Sierra. The author’s office contends that the existing limitation on the number of new on-sale general licenses that may be issued in a given year by the Department of ABC is not conducive for economic growth within the region nor is it sufficient to sustain the current demand in a county where tourists outnumber residents by a wide margin. This bill will provide Inyo County five additional new on-sale general licenses for restaurants with a seating capacity of 50 or more diners.

Prior/Related Legislation

SB 1285 (Leno, 2016) authorizes, beginning January 1, 2017, the Department of ABC to issue no more than a total of 28 new original “neighborhood-restricted” special on-sale general licenses, for premises located within specified City and County of San Francisco neighborhoods, subject to certain requirements and restrictions. (Pending in Assembly policy committee)

AB 1670 (Dodd, 2016) among other things, authorizes the Department of ABC to issue a total of 15 additional new original on-sale general licenses (5 per year for a period of 3 years) to bona fide public eating places with a seating capacity of 25 or more diners, in Napa County. (Pending in this committee)

AB 461 (Achadjian, Chapter 110, Statutes of 2013) authorized the Department of ABC to issue no more than a total of 5 new original on-sale general licenses, over a 3-year period, for bona fide public eating places in the County of San Luis Obispo.

AB 1320 (Allen, Chapter 467, Statutes of 2012) authorized the Department of ABC to issue a maximum of 15 new original on-sale general licenses, over a 3-year period, for bona fide public eating places in the County of Marin.

AB 2266 (Evans, Chapter 130, Statutes of 2008) authorized the Department of ABC to issue 5 additional new original on-sale licenses, per year for a period of three years, for bona fide public eating places having a seating capacity for 50 or more diners in Napa County.

SB 762 (Cox, Chapter 193, Statutes of 2007) authorized the Department of ABC to issue 10 new original on-sale general licenses for bona fide public eating places in the County of Mono.

AB 1252 (N. Waters, Chapter 753, Statutes of 1977) permitted the Director of ABC to authorize the conversion of any on-sale general license for “seasonal business” to an on-sale general license, as specified.

SB 1092 (Berryhill, Chapter 571, Statutes of 1975) authorized the Department of ABC to issue five additional new original on-sale general licenses for bona fide public eating places (seating for 100 or more diners) in any county where the inhabitants number less than 5,000 but more than 3,000 (Mono County) according to the 1970 federal census and where the major economy of that county is dependent upon the year-round use of that county’s recreational facilities.

SB 784 (Berryhill, Chapter 407, Statutes of 1975) authorized the Department of ABC to issue three additional original off-sale general licenses in a county of the 58th class (Alpine County).

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

Bishop Area Chamber of Commerce and Visitors Bureau

City of Bishop

Inyo County Board of Supervisors

OPPOSITION:

Alcohol Justice

ARGUMENTS IN OPPOSITION: Alcohol Justice states that “increasing the availability of alcohol is associated with increased alcohol-related harm. Increasing the number of retail licenses, no matter how minimal, will increase availability and therefore impact public health. The state already suffers more than $22 billion in alcohol-related harm and over 10,000 alcohol-related deaths annually. We believe AB 1558 will ultimately increase those catastrophic alcohol-related harms and costs in the state.”

Date of Hearing: April 20, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1558

Author:(Mathis) – As Amended Ver:March 16, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill authorizes the Department of Alcoholic Beverage Control (ABC) to issue additional on-sale general licenses within Inyo County. Specifically, this bill allows up to five additional licenses between January 1, 2017 and December 31, 2019, for bona fide public eating places or public premises, or both, with seating capacity for 50 or more diners.

FISCAL EFFECT:

Any additional licensing and oversight costs for ABC associated with this legislation will be minor and absorbable.

COMMENTS:

1. Purpose and background. According to the author, Inyo County is a popular tourist destination. However, existing ABC regulations that allocate certain alcohol licenses based on county population make it difficult for entrepreneurs to succeed in a volatile economic climate. According to the author, while Inyo County has not seen population growth, the number of businesses unable to obtain a license each year demonstrates the need for additional liquor licenses.
2. Other related legislation. A number of recent bills have created specific license exemptions for individual counties. Those bills are:
   1. AB 461 (Achadjian), Chapter 110, Statutes of 2013: Authorized ABC to issue no more five new original on-sale general licenses, over a three-year period, for bona fide public eating places in San Luis Obispo County.
   2. AB 1320 (Allen), Chapter 467, Statutes of 2012: Authorized ABC to issue no more 15 new original on-sale general licenses, over a three-year period, for bona fide public eating places in Marin County.
   3. SB 1285 (Leno) of 2016. This bill, beginning January 1, 2017, provides an exception to this limitation for a county of the 6th class, as specified, for 28 new original special on-sale general licenses for bona fide eating places for premises located within specified census tracts in that county, subject to specified requirements. (Pending in Senate G.O. Committee)
   4. SB 762 (Cox), Chapter 193, Statutes of 2007: Authorized ABC to issue 10 new original on-sale general licenses for bona fide public eating places in Mono County.

Moreover, AB 1670 (Dodd) of 2016, which passed the Assembly Governmental Organization Committee on April 6, 2016, allows 25 new on-sale general licenses, over a 5-year period, for bona fide public eating places public premises in Napa County. This bill is also on today’s calendar.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: April 6, 2016

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Adam Gray, Chair

ABPCA Bill Id:AB 1558 (

Author:Mathis) – As Amended Ver:March 16, 2016

SUBJECT: Alcoholic beverages: licenses

SUMMARY: Adds a new Section to the Alcoholic Beverage Control (ABC) Act which authorizes the Department of Alcoholic Beverage Control (ABC) to issue no more than a total of 5 new original on-sale general licenses, over a 2-year period, for bona fide public eating places, public premises, or both in the County of Inyo. Specifically, this bill:

1) Provides in the County of Inyo, ABC may issue no more than a total of five additional new original on-sale general licenses for bona fide public eating places, public premises, or both from January 1, 2017, to December 31, 2019, inclusive. To qualify for a license, the premises upon which a bona fide public eating-place is operated shall have a seating capacity for 50 or more diners.

2) Requires ABC to follow existing “drawing for priority” procedures with respect to the issuance of these new licenses as set forth in ABC Act.

3) Provides that a person who currently holds a valid on-sale general license for seasonal business is not prohibited from applying for an original on-sale general license pursuant to this measure.

4) Makes it explicit that a license issued pursuant to this measure shall not be transferred from one county to another nor shall it be transferred to any premise not qualifying under these provisions.

EXISTING LAW:

1) The enactment of the 21^st Amendment to the U.S. Constitution in 1933 repealed the 18th Amendment and ended the era of Prohibition. Accordingly, states were granted the authority to establish alcoholic beverage laws and administrative structures to regulate the sale and distribution of alcoholic beverages.

2) Establishes ABC and grants it exclusive authority to administer the provisions of the Alcoholic Beverage Control Act in accordance with laws enacted by the Legislature. This involves licensing individuals and businesses associated with the manufacture, importation and sale of alcoholic beverages in this state and the collection of license fees or occupation taxes for this purpose.

3) Provides that ABC must deny an application for a license if issuance would create a law enforcement problem, or if issuance would result in, or add to, an undue concentration of licenses in the area where the license is desired. For liquor stores and other specified retail license, however, the ABC is authorized to issue a license if the respective local government determines that public convenience or necessity would be served by granting the license.

Caps the number of new on and off-sale general licenses issued by the ABC at one for every 2,500 inhabitants of the county where the establishment is located (2,000:1 for on sale licenses). If no licenses are available from the state due to the population restrictions, those people interested in obtaining a liquor license may purchase one from an existing licensee, for whatever price the market bears. In 1994, the Legislature approved a 3-year moratorium on the issuance of new off-sale beer and wine licenses, which at the time was not bound by any population to license restriction. In 1997, this moratorium was made permanent.

4) Defines “bona fide public eating place” to mean a place which is regularly and in a bona fide manner used and kept open for the serving of meals to guests for compensation and which has suitable kitchen facilities connected therewith, containing conveniences for cooking an assortment of foods which may be required for ordinary meals, the kitchen of which must be kept in a sanitary condition with the proper amount of refrigeration for keeping of food on said premises and must comply with all the regulations of the local Department of Health.

5) Defines an “on-sale” license as authorizing the sale of all types of alcoholic beverages: namely, beer, wine and distilled spirits, for consumption on the premises (such as at a restaurant or bar). An “off-sale” license authorizes the sale of all types of alcoholic beverages for consumption off the premises in original, sealed containers.

6) Provides for 58 counties and 58 "classes" of counties – one county to each class based on their 1970 Census populations.

FISCAL EFFECT: Unknown

COMMENTS:

Background: As noted above, existing law provides for a limitation on the number of new on-sale general licenses that may be issued in a given year by ABC based on the population growth of the county in which the licensed premises are located (one license for every 2,000 residents). Thus, if a county grows by 10,000 people in a given year ABC will sell five new licenses in that county. ABC holds a drawing if there are more buyers than licenses available. The cost of an original on-sale general eating-place license (Type 47) is $13,800. Individuals seeking to open a full-service restaurant with a bar or cocktail menu who fail to obtain a liquor license through this process typically must locate an existing licensed owner willing to sell his or her license. Usually, that is done by contacting a liquor license broker. The cost of obtaining a license on the secondary market is driven by supply and demand and potential sellers may ask for upwards of $150,000. According to ABC, currently there are approximately 13,360 Type 47 licenses statewide.

ABC's records from 2015 indicate that Inyo’s population was 18,574, which translates into 17 on-sale general licenses within the county. In 2015, ABC issued additional liquor licenses to counties with satisfactory population growth verified by the Department of Finance (DOF).  Inyo County was not eligible for additional liquor licenses based on the set criteria.  However, ABC records indicate that one new on-sale general license was made available and issued through the priority drawing process in 2013.

Purpose of the bill: Under current law, the number of liquor licenses issued in a given county is tied to the population of that county which creates a problem for restaurants and hotels that would like to cater to the large number of visitors in the area but are unable to because they do not have a license to serve alcohol. This measure is expected to lead to an increase in full service restaurants in the County of Inyo

According to the author, while the County could not show satisfactory proof of population growth, the number of businesses unable to obtain a license each year demonstrates the County’s need for additional liquor licenses.

The author states, although the distribution of liquor licenses across Inyo County reflects the population, ABC does not take into account the many tourists who visit the County each year, making it even more difficult for entrepreneurs to succeed in a volatile economic climate. This bill will provide Inyo County with five additional liquor licenses to accommodate the growing tourism industry that accounts for a significant portion of the local economy.

Related legislation: AB 1670 (Dodd) of 2016. Would authorize ABC to issue a maximum of 25 new original on-sale general licenses, over a five-year period, for bona fide public eating-places in the County of Napa. (Pending in the Assembly G.O. Committee)

SB 1285 (Leno) of 2016. This bill would, beginning January 1, 2017, provide an exception to this limitation for a county of the 6th class, as specified, for 28 new original special on-sale general licenses for bona fide eating places for premises located within specified census tracts in that county, subject to specified requirements. (Pending in Senate G.O. Committee)

Prior legislation: AB 461 (Achadjian), Chapter 110, Statutes of 2013. Authorized ABC to issue no more than a total of five new original on-sale general licenses, over a three-year period, for bona fide public eating-places in the County of San Luis Obispo.

AB 1320 (Allen), Chapter 467, Statutes of 2012. Authorized ABC to issue a maximum of 15 new original on-sale general licenses, over a 3-year period, for bona fide public eating-places in the County of Marin.

AB 2266 (Evans), Chapter 130, Statutes of 2008. Authorized ABC to issue a maximum of 15 new original on-sale general licenses, over a three-year period, for bona fide public eating-places in the County of Napa.

SB 762 (Cox), Chapter 193, Statutes of 2007. Authorized ABC to issue 10 new original on-sale general licenses for bona fide public eating-places in the County of Mono.

SB 1092 (Berryhill), Chapter 571, Statutes of 1975. Authorized ABC to issue five additional new original on-sale general licenses for bona fide public eating places (seating for 100 or more diners) in any county where the inhabitants number less than 5,000 but more than 3,000 (Mono County) according to the 1970 federal census and where the major economy of that county is dependent upon the year-round use of that county’s recreational facilities.

SB 784 (Berryhill), Chapter 407, Statutes of 1975. Authorized ABC to issue three additional original off-sale general licenses in a county of the 58th class (Alpine County).

REGISTERED SUPPORT / OPPOSITION:

Support

Bishop Area Chamber of Commerce & Visitors Bureau

City of Bishop

Inyo County Board of Supervisors

Opposition

None on file

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531