Existing law, the Alcoholic Beverage Control Act, regulates the application, issuance, and suspension of alcoholic beverage licenses by the Department of Alcoholic Beverage Control. The act provides that a violation of its provisions is a misdemeanor, unless otherwise specified.

The act provides for a limitation on the number 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. However, existing law provides an exception to this limitation for the County of Napa and authorizes the department to issue 5 additional new original on-sale general licenses per year for bona fide public eating places with a seating capacity for 50 or more diners, for a period of 3 years. Existing law prohibits more than 15 of these licenses from being issued pursuant to this exception.

This bill would authorize the department to issue no more than 5 additional new original on-sale general licenses to bona fide public eating places with a seating capacity of 25 or more diners, for a period of 1 year.

Existing law authorizes the Department of Alcoholic Beverage Control to issue a special on-sale general license to any nonprofit theater company, subject to specified requirements.

This bill would authorize the department to issue a special on-sale general license to the operator of any for-profit theater located in the County of Napa, configured with theatrical seating and primarily devoted to live theatrical performances, which would permit sales, service, and consumption of alcoholic beverages in the lobbies and seating areas of the theater at specified times. The bill would not require the licensee to operate as a bona fide public eating place. By expanding the definition of a crime, this bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Napa.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Alcoholic Beverage Control Act, regulates the application, issuance, and suspension of alcoholic beverage licenses by the Department of Alcoholic Beverage Control. The act provides that a violation of its provisions is a misdemeanor, unless otherwise specified.

The act provides for a limitation on the number 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. However, existing law provides an exception to this limitation for the County of Napa and authorizes the department to issue 5 additional new original on-sale general licenses per year for bona fide public eating places with a seating capacity for 50 or more diners, for a period of 3 years. Existing law prohibits more than 15 of these licenses from being issued pursuant to this exception.

This bill would authorize the department to issue no more than 5 additional new original on-sale general licenses to bona fide public eating places with a seating capacity of 25 or more diners, for a period of 1 year.

Existing law authorizes the Department of Alcoholic Beverage Control to issue a special on-sale general license to any nonprofit theater company, subject to specified requirements.

This bill would authorize the department to issue a special on-sale general license to the operator of any for-profit theater located in the County of Napa, configured with theatrical seating and primarily devoted to live theatrical performances, which would permit sales, service, and consumption of alcoholic beverages in the lobbies and seating areas of the theater at specified times. The bill would not require the licensee to operate as a bona fide public eating place. By expanding the definition of a crime, this bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Napa.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Alcoholic Beverage Control Act, regulates the application, issuance, and suspension of alcoholic beverage licenses by the Department of Alcoholic Beverage Control. The act provides that a violation of its provisions is a misdemeanor, unless otherwise specified.

The act provides for a limitation on the number 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. However, existing law provides an exception to this limitation for the County of Napa and authorizes the department to issue 5 additional new original on-sale general licenses per year for bona fide public eating places with a seating capacity for 50 or more diners, for a period of 3 years. Existing law prohibits more than 15 of these licenses from being issued pursuant to this exception.

This bill would authorize the department to issue no more than 5 additional new original on-sale general licenses per year to a to bona fide public eating place places with a seating capacity of 25 or more diners, for a period of 3 years. The bill would prohibit more than 15 of those licenses from being issued. 1 year.

Existing law authorizes the Department of Alcoholic Beverage Control to issue a special on-sale general license to any nonprofit theater company, subject to specified requirements.

This bill would authorize the department to issue a special on-sale general license to the operator of any for-profit theater located in the County of Napa, configured with theatrical seating and primarily devoted to live theatrical performances, which would permit sales, service, and consumption of alcoholic beverages in the lobbies and seating areas of the theater at specified times. The bill would not require the licensee to operate as a bona fide public eating place. By expanding the definition of a crime, this bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Napa.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Alcoholic Beverage Control Act, regulates the application, issuance, and suspension of alcoholic beverage licenses by the Department of Alcoholic Beverage Control. The act provides that a violation of its provisions is a misdemeanor, unless otherwise specified.

The act provides for a limitation on the number 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. However, existing law provides an exception to this limitation for the County of Napa and authorizes the department to issue 5 additional new original on-sale general licenses per year for bona fide public eating places with a seating capacity for 50 or more diners, for a period of 3 years. Existing law prohibits more than 15 of these licenses from being issued pursuant to this exception.

This bill would additionally authorize the department to issue 5 additional new original on-sale general licenses per year to a bona fide public eating place with a seating capacity of 25 or more diners, for a period of 5 3 years. The bill would prohibit more than 25 15 of those licenses from being issued.

Existing law authorizes the Department of Alcoholic Beverage Control to issue a special on-sale general license to any nonprofit theater company, subject to specified requirements.

This bill would authorize the department to issue a special on-sale general license to the operator of any for-profit theater located in the County of Napa, configured with theatrical seating, seating and primarily devoted to live theatrical performances, which would permit sales, service, and consumption of alcoholic beverages in the lobbies and seating areas of the theater at specified times. The bill would not require the licensee to operate as a bona fide public eating place. By expanding the definition of a crime, this bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Napa.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Alcoholic Beverage Control Act, regulates the application, issuance, and suspension of alcoholic beverage licenses by the Department of Alcoholic Beverage Control. The act provides that a violation of its provisions is a misdemeanor, unless otherwise specified.

The act provides for a limitation on the number 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. However, existing law provides an exception to this limitation for the County of Napa and authorizes the department to issue 5 additional new original on-sale general licenses per year for bona fide public eating places with a seating capacity for 50 or more diners, for a period of 3 years. Existing law prohibits more than 15 of these licenses from being issued pursuant to this exception.

This bill would additionally authorize the department to issue 5 additional new original on-sale general licenses per year to a bona fide public eating place with a seating capacity of 25 or more diners, for a period of 5 years. The bill would prohibit more than 25 of those licenses from being issued.

Existing law authorizes the Department of Alcoholic Beverage Control to issue a special on-sale general license to any nonprofit theater company, subject to specified requirements.

This bill would authorize the department to issue a special on-sale general license to the operator of any for-profit theater located in the County of Napa, configured with theatrical seating, and primarily devoted to live theatrical performances, which would permit sales, service, and consumption of alcoholic beverages in the lobbies and seating areas of the theater at specified times. The bill would not require the licensee to operate as a bona fide public eating place. By expanding the definition of a crime, this bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Napa.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1670

Author:(Dodd)

As Amended Ver:August 1, 2016

Majority vote

Original Committee Reference: G.O.

SUMMARY: Authorizes the Department of Alcoholic Beverage Control (ABC) to issue a maximum of five new original on-sale general licenses, over a one-year period, for bona fide public eating-places in the County of Napa. Specifically, this bill:

1. Provides that in Napa County (29th class), from January 1, 2017, to December 31, 2017, ABC, in addition to those licenses currently issued under the law may issue no more than five additional new original on-sale general licenses for bona fide public eating places. Any premises to qualify for a license under this section shall have a seating capacity for 25 or more diners.
2. Authorizes ABC to issue a special on-sale general license to the operator of any for-profit theater located within the County of Napa, configured with theatrical seating of at least 800 seats and primarily devoted to live theatrical performances under the following conditions:
   1. The special on-sale general license shall not be issued until any existing licenses issued by ABC to the operator for the premises of the for-profit theater are canceled.
   2. The special on-sale general license shall permit sales, service, and consumption of alcoholic beverages in the lobbies and seating areas of the for-profit theater for the period beginning two consecutive hours prior to a live theatrical performance and ending three hours after the live theatrical performance is completed, as specified.
   3. Any special on-sale general license issued shall not be required to be operated as a bona fide public eating-place.
   4. The "for-profit theater" shall not include an adult or sexually oriented business, as defined.
3. Makes legislative findings and declarations as to the necessity of a special statute for the County of Napa.

The Senate amendments make changes to the number of new original on-sale general licenses that may be issued in the County of Napa. Specifically, the amendments change the number of allowed licenses from 25 (25 over five years) to five licenses over one year (from January 1, 2017, to December 31, 2017).

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 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 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.

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.
4. Authorizes ABC to issue a special on-sale general license to any nonprofit theater company, subject to specified requirements.

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

COMMENTS:

Background: 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 licensee 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 these new licenses is $13,800 each. According to ABC, currently there are approximately 15,360 (Type 47) licenses statewide. 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 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 $150,000 to $200,000.

Purpose of the bill: According to the author, Napa County has become immensely popular over the past few years as a tourist location. According to Destination Analysts Inc., the number of tourists that visited Napa increased from 2.94 million people in 2012 to 3.3 million people in 2014. While a majority of the visitors to Napa take day trips, nearly 950,000 of these visitors spend at least one night in local lodgings. Tourism has therefore become one of the major economic drivers in the region, generating $1.6 billion in 2014 in the Napa Valley.

This bill 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.

According to proponents, existing ABC regulations limit the number of Type 47 licenses to just one license for each 2,000 inhabitants in Napa County. What used to be an adequate number of Type 47 licenses has now become a significant burden on new business owners, or those wishing to expand their operations, forcing them to compete with established businesses. This is not the intent of the ABC Act but this unintended consequence prohibits restaurants, especially smaller restaurants with fewer seats, from being able to obtain a license and inherently increases barriers to fair competition.

The number of visitors to Napa continues to increase while the population of the county has not grown. The limited number of licenses in Napa County does not reflect the tourist population that includes more than three million visitors to the Napa Valley each year who enjoy food service as an integral part of the Napa experience and contribute to the economy.

The author points out that Napa has a year-round population of 140,362, as of the last census, which translates into 94 Type 47 alcohol retail licenses; however, millions of visitors come to Napa each year due to its international reputation for producing fine wines. In August 2015, Napa was granted only one new off-sale license, and no new on-sale licenses. The author and proponents believe this bill will lead to an increase in full service restaurants in the area and provide visitors to Napa County more restaurant options.

Another provision of the bill would create and authorize ABC to issue a special on-sale general license to the operator of any for-profit theater located within the County of Napa, configured with theatrical seating of at least 800 seats and primarily devoted to live theatrical performances. This bill would not require the licensee to operate as a bona fide public eating-place. Currently, there is only one for-profit theater that would be eligible. The Uptown Theater is located in downtown Napa, hosts a variety of live music and comedy shows. In 2013, a similar type of exemption was granted for the City and County of San Francisco to the operator of any for-profit theater, configured with theatrical seating of at least 1,000 seats and primarily devoted to live theatrical performances.

The author states that the movie theater industry has been facing increasing hardships with the expansion of online media streaming. Box-office revenues reflect this trend, with ticket sales in 2015 at their lowest level in seventeen years. One solution to this issue might be to serve alcohol inside theaters that are devoted to live theatrical performances. Serving alcohol could offer financial relief to theaters and allow customers to fully experience the theater, its amenities, and the live performance. However, strict limits on ABC licenses and regulatory barriers have become major obstacles for local businesses who wish to offer this type of amenity and service.

Related legislation: SB 1285 (Leno) of the current legislative session. 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 Governmental Organization (G.O.) Committee)

AB 1558 (Mathis) of the current legislative session. Authorizes ABC to issue no more than a total of five new original on-sale general licenses, over a two-year period, for bona fide public eating places, public premises, or both in the County of Inyo. (Pending in the Assembly G.O. Committee)

Prior legislation: AB 525 (Ting), Chapter 235, Statutes of 2013. Created a new special on-sale general license in the ABC Act that enables the operator of any for-profit theater, as specified, located within the City and County of San Francisco, to serve alcoholic beverages during certain hours in specified areas of the theater.

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 three-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).

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531 FN: 0004252

 THIRD READING  

Bill No: AB 1670

Author:

:

Vote:

SENATE GOVERNMENTAL ORG. COMMITTEE: 12-0, 6/28/16

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

NO VOTE RECORDED: Galgiani

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 authorizes the Department of Alcoholic Beverage Control (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 with a seating capacity of 25 or more diners, in Napa County. This bill also authorizes the Department of ABC to issue a special on-sale general license to the operator of any for-profit theater located within Napa County, subject to certain requirements and conditions.

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 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.
6. Provides for 58 counties and 58 "classes" of counties – one county to each class based on their 1970 Census populations. (Government Code Section 28020)

This bill:

1. 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 with a seating capacity of 25 or more diners, in Napa County (County of the 29th class).
2. Authorizes the Department of ABC to issue a special on-sale general license to the operator of any for-profit theater located within Napa County, configured with theatrical seating of at least 800 seats and primarily devoted to live theatrical performances.
3. Stipulates that the special on-sale general license for the for-profit theater shall not be issued until any existing licenses issued by the Department of ABC to the operator for the premises of the theater are canceled.
4. Provides that the special on-sale general license shall permit sales, service, and consumption of alcoholic beverages in the lobbies and seating areas of the for-profit theater for the period beginning two consecutive hours prior to a live theatrical performance and ending three hours after completion of the performance.
5. Provides that any special on-sale general license issued for a for-profit theater pursuant to this bill shall: (a) not be subject to existing “drawing for priority” procedures, (b) not be required to be operated as a bona fide public eating place, and (c) not be subject to existing provisions of law relating to the issuance or transfer of public premises licenses.
6. Makes it explicit that for purposes of this bill a “for-profit theater” shall not include an adult or sexually oriented business, as defined in Section 318.5 of the Penal Code.
7. Contains legislative findings and declarations as to the necessity of a special statute for Napa County.

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 the Department of 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.

In 2008, AB 2266 (Evans, Chapter 130) granted Napa County the privilege of 15 additional on-sale general licenses (over a three-year period) due to the fact that the County had a relatively fixed year-round population yet millions of visitors travelled to Napa each year because of its international reputation of producing fine wines. AB 2266 led to an increase in full liquor service restaurants in the area and provided visitors to Napa County more dining options.

Purpose of AB 1670. The author’s office notes that the number of visitors to Napa continues to increase while the population of the county has not grown. 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 in Napa 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.

According to Destination Analysts Inc., a tourism research group, the number of tourists that visited Napa increased from 2.94 million people in 2012 to 3.3 million people in 2014. While a majority of the visitors to Napa take day trips, nearly one million of these visitors spend at least one night in local lodgings. Tourism has therefore become one of the major economic drivers in the region, generating $1.6 billion in 2014 in the Napa Valley.

This bill authorizes the Department of ABC to issue a maximum of five additional new original on-sale general licenses, over a one-year period, for bona fide public eating places in the County of Napa.

In addition to authorizing the five new original on-sale general licenses for restaurants in the County of Napa, this bill adds a new Section of law to the ABC Act that permits the Department of ABC to issue a new special on-sale general license for the operator of any for-profit theater located in Napa County with at least 800 seats configured with theatrical seating. This new license will permit the sale and consumption of alcoholic beverages in the lobbies and seating areas of the theater for the period of time beginning two hours prior to a live theatrical performance and ending three hours after completion of the performance. Additionally, the licensed premises are not required to operate as a restaurant. Furthermore, this bill prohibits the issuance of this new special on-sale general license for the theater until any existing licenses for the premises of the theater are canceled.

Only one for-profit theater in Napa County, the Uptown Theater, would be eligible for this special on-sale general license. The Uptown Theater, a historic landmark built in 1937, is located in downtown Napa and hosts a variety of live music and comedy shows. The theater consists of 9,960 square feet with seating capacity of 857 and an additional 980 square feet of lobby area with 200-person capacity. Located adjacent to the theater is the Courtyard Café which is open for lunch Monday-Friday and for dinner before the start of a performance. The Courtyard Café currently has an on-sale beer & wine license (Type 41). Under the provisions of this bill, the existing Type 41 license will have to be canceled prior to the issuance of the new on-sale general license.

The author's office states that movie theaters and live theatrical performances have experienced declining box-office revenues in recent years as a result of an expansion of online media streaming. The author’s office believes that a solution to this dilemma might be the option to sell and consume alcoholic beverages before and during live theatrical performances. The author’s office contends that existing limitations on licensees and regulatory barriers have become major obstacles for local businesses that wish to offer such an amenity and service. Under current law, patrons generally must consume their drinks in a segregated, partitioned-off space and they are not allowed to take alcoholic beverages to their seats.

In 2013, a similar type of exemption was granted for the operator of any for-profit theater in San Francisco, configured with theatrical seating of at least 1,000 seats and primarily devoted to live theatrical performances. [AB 525 (Ting, Chapter 235, Statutes of 2013)]

Related/Prior Legislation

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.

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

SUPPORT:

(Verified 8/9/16)

Atlas Social Napa

City of American Canyon

City of Calistoga

City of Napa

County of Napa

Downtown Napa Association

Family Winemakers of California

JAX White Mule Diner

Napa Chamber of Commerce

Napa Valley Development Corporation

Square 1 Tasting Bar

St. Helena Chamber of Commerce

Town of Yountville

Zapolski Real Estate, LLC

OPPOSITION: (Verified 8/9/16)

Alcohol Justice

Wine and Water Watch

Several Napa County residents

ARGUMENTS IN SUPPORT: Writing in support, Family Winemakers of California states that “AB 1670 reflects the growing popularity of Napa as a wine destination, and allows for smaller restaurants, with seating capacity of 25 or more, to apply for on-sale licenses. We believe that a measured increase in the number of on-sale licenses, with an overall cap, as proposed, provides local enforcement agencies the ability to adapt to increased responsibilities.”

Also writing in support, several cities within the County (Calistoga, Napa, American Canyon, and the Town of Yountville), including Napa County, note that what used to be a challenging, but inadequate number of Type 47 licenses has now become a significant burden on new business owners, or those wishing to expand their operations, competing with established businesses. These local entities state that “the going price for a Type 47 license has increased significantly in the past seven years resulting in an ‘aftermarket’ of approximately $400,000 for Type 47 licenses. This is not the intent of the ABC laws and regulations, and the unintended consequence prohibits restaurants, especially smaller restaurants with fewer seats, from being able to obtain a license and inherently increases barriers to fair competition.” These local entities emphasize that it is not their intent to create more stand-alone bars and lounges but to encourage new and expanded dining establishments to strengthen the local economy.

ARGUMENTS IN OPPOSITION: Writing 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 1670 will ultimately increase those catastrophic alcohol-related harms and costs in the state.”

Also writing in opposition, Wine and Water Watch states that “AB 1670 would allow further alcohol saturation in an area that is experiencing many problems, largely associated with the alcohol industry in Napa County. We urge you strongly to reject this bill until a complete study is done on how to mitigate the cumulative impacts of further alcohol based tourism and come up with a fair solution for the public and the visitors. Without such a study, passage of this bill will only further diminish the quality of life for the residents with no solutions.”

Several Napa County residents have also expressed their dissatisfaction with this bill. These residents note that Napa County is primarily a rural county with two-lane roads that connect many of the surrounding communities. These lands and rural infrastructure are inadequate to handle much of the recent and continuing large scale commercial tourism promotion and development, and the associated cumulative impacts. These residents are not necessarily opposed to wine or alcohol use, however, they emphasize that such use must remain in balance with the health, welfare and safety considerations of their communities. They believe that AB 1670 fails to fully analyze or address the extent of the impacts of what it proposes, particularly the entertainment/theatrical component of the bill.

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:

8/10/16 15:49:15

**** 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 authorizes the Department of Alcoholic Beverage Control (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. This bill also authorizes the Department of ABC to issue a special on-sale general license to the operator of any for-profit theater located within Napa County, subject to certain requirements and conditions.

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.
   
6. Provides for 58 counties and 58 "classes" of counties – one county to each class based on their 1970 Census populations. (Government Code Section 28020)

This bill:

1. Authorizes the Department of ABC, beginning January 1, 2017, to issue a maximum of 15 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 (a County of the 29th class).
   
2. Authorizes the Department of ABC to issue a special on-sale general license to the operator of any for-profit theater located within Napa County, configured with theatrical seating of at least 800 seats and primarily devoted to live theatrical performances.
   
3. Stipulates that the special on-sale general license for the for-profit theater shall not be issued until any existing licenses issued by the Department of ABC to the operator for the premises of the theater are canceled.
   
4. Provides that the special on-sale general license shall permit sales, service, and consumption of alcoholic beverages in the lobbies and seating areas of the for-profit theater for the period beginning two consecutive hours prior to a live theatrical performance and ending three hours after completion of the performance.
   
5. Provides that any special on-sale general license issued for a for-profit theater pursuant to this bill shall: (a) not be subject to existing “drawing for priority” procedures, (b) not be required to be operated as a bona fide public eating place, and (c) not be subject to existing provisions of law relating to the issuance or transfer of public premises licenses.
   
6. Makes it explicit that for purposes of this bill a “for-profit theater” shall not include an adult or sexually oriented business, as defined in Section 318.5 of the Penal Code.
   
7. Contains legislative findings and declarations as to the necessity of a special statute for Napa County.

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.

In 2008, AB 2266 (Evans, Chapter 130) granted Napa County the privilege of 15 additional on-sale general licenses (over a 3-year period) due to the fact that the County had a relatively fixed year-round population yet millions of visitors travelled to Napa each year because of its international reputation of producing fine wines. AB 2266 led to an increase in full liquor service restaurants in the area and provided visitors to Napa County more dining options.

Purpose of AB 1670. The author’s office notes that the number of visitors to Napa continues to increase while the population of the county has not grown. 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 in Napa 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.

According to Destination Analysts Inc., a tourism research group, the number of tourists that visited Napa increased from 2.94 million people in 2012 to 3.3 million people in 2014. While a majority of the visitors to Napa take day trips, nearly one million of these visitors spend at least one night in local lodgings. Tourism has therefore become one of the major economic drivers in the region, generating $1.6 billion in 2014 in the Napa Valley.

This bill authorizes ABC to issue a maximum of 15 additional new original on-sale general licenses, over a 3-year period, for bona fide public eating places in the County of Napa.

In addition to authorizing the 15 new original on-sale general licenses for restaurants in the County of Napa, this bill adds a new Section of law to the ABC Act that permits the Department of ABC to issue a new special on-sale general license for the operator of any for-profit theater located in Napa County with at least 800 seats configured with theatrical seating. This new license will permit the sale and consumption of alcoholic beverages in the lobbies and seating areas of the theater for the period of time beginning two hours prior to a live theatrical performance and ending three hours after completion of the performance. Additionally, the licensed premises are not required to operate as a restaurant. Furthermore, this bill prohibits the issuance of this new special on-sale general license for the theater until any existing licenses for the premises of the theater are canceled.

Only one for-profit theater in Napa County, the Uptown Theater, would be eligible for this special on-sale general license. The Uptown Theater, a historic landmark built in 1937, is located in downtown Napa and hosts a variety of live music and comedy shows. The theater consists of 9,960 square feet with seating capacity of 857 and an additional 980 square feet of lobby area with 200 person capacity. Located adjacent to the theater is the Courtyard Café which is open for lunch Monday-Friday and for dinner before the start of a performance. The Courtyard Café currently has an on-sale beer & wine license (Type 41). Under the provisions of this bill, the existing Type 41 license will have to be canceled prior to the issuance of the new on-sale general license.

The author's office states that movie theaters and live theatrical performances have experienced declining box-office revenues in recent years as a result of an expansion of online media streaming. The author’s office believes that a solution to this dilemma might be the option to sell and consume alcoholic beverages before and during live theatrical performances. The author’s office contends that existing limitations on licensees and regulatory barriers have become major obstacles for local businesses that wish to offer such an amenity and service. Under current law, patrons generally must consume their drinks in a segregated, partitioned-off space and they are not allowed to take alcoholic beverages to their seats.

In 2013, a similar type of exemption was granted for the operator of any for-profit theater in San Francisco, configured with theatrical seating of at least 1,000 seats and primarily devoted to live theatrical performances. [AB 525 (Ting, Chapter 235, Statutes of 2013)]

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 2739 (Chiu, 2016) deletes an existing requirement that prohibits the Department of ABC from issuing a special on-sale general license for certain for-profit theaters located in San Francisco until any existing licenses for the premises are cancelled. (Pending in Senate Appropriations Committee)

AB 1558 (Mathis, 2016) adds a new provision to the ABC Act that authorizes the Department of ABC to issue five new additional on-sale general licenses for restaurants in Inyo County with a seating capacity of 50 or more diners. (Pending in this committee)

AB 525 (Ting, Chapter 235, Statutes of 2013) created a new special on-sale general license in the ABC Act that enabled the operator of any for-profit theater, configured with theatrical seating of at least 1,000 seats and primarily devoted to live theatrical performances, located within the City and County of San Francisco to serve alcoholic beverages in the lobbies and seating areas of the theater for the period beginning two consecutive hours prior to a live theatrical performance and ending one hour after the performance.

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: Yes

SUPPORT:

Atlas Social Napa

City of American Canyon

City of Calistoga

City of Napa

County of Napa

Downtown Napa Association

Family Winemakers of California

JAX White Mule Diner

Napa Chamber of Commerce

Napa Valley Development Corporation

Square 1 Tasting Bar

St. Helena Chamber of Commerce

Town of Yountville

Zapolski Real Estate, LLC

OPPOSITION:

Alcohol Justice

Wine and Water Watch

And, Napa residents

ARGUMENTS IN SUPPORT: Writing in support, Family Winemakers of California states that “AB 1670 reflects the growing popularity of Napa as a wine destination, and allows for smaller restaurants, with seating capacity of 25 or more, to apply for on-sale licenses. We believe that a measured increase in the number of on-sale licenses, with an overall cap, as proposed, provides local enforcement agencies the ability to adapt to increased responsibilities.”

Also writing in support, several cities within the County (Calistoga, Napa, American Canyon, and the Town of Yountville), including Napa County, note that what used to be a challenging, but inadequate number of Type 47 licenses has now become a significant burden on new business owners, or those wishing to expand their operations, competing with established businesses. These local entities state that “the going price for a Type 47 license has increased significantly in the past seven years resulting in an ‘aftermarket’ of approximately $400,000 for Type 47 licenses. This is not the intent of the ABC laws and regulations, and the unintended consequence prohibits restaurants, especially smaller restaurants with fewer seats, from being able to obtain a license and inherently increases barriers to fair competition.” These local entities emphasize that it is not their intent to create more stand-alone bars and lounges but to encourage new and expanded dining establishments to strengthen the local economy.

ARGUMENTS IN OPPOSITION: Writing 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 1670 will ultimately increase those catastrophic alcohol-related harms and costs in the state.”

Also writing in opposition, Wine and Water Watch states that “AB 1670 would allow further alcohol saturation in an area that is experiencing many problems, largely associated with the alcohol industry in Napa County. We urge you strongly to reject this bill until a complete study is done on how to mitigate the cumulative impacts of further alcohol based tourism and come up with a fair solution for the public and the visitors. Without such a study, passage of this bill will only further diminish the quality of life for the residents with no solutions.”

Several Napa County residents have also contacted the Committee expressing their dissatisfaction with AB 1670. These residents note that Napa County is primarily a rural county with two-lane roads that connect many of the surrounding communities. These lands and rural infrastructure are inadequate to handle much of the recent and continuing large scale commercial tourism promotion and development, and the associated cumulative impacts. These residents are not necessarily opposed to wine or alcohol use however they emphasize that such use must remain in balance with the health, welfare and safety considerations of the their communities. They believe that AB 1670 fails to fully analyze or address the extent of the impacts of what it proposes, particularly the entertainment/theatrical component of the bill.

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Isadore Hall, III

Chair

2015 - 2016 Regular

Bill No: 1670 Hearing Date: 6/14/2016

SUBJECT: Alcoholic beverages: licenses

DIGEST: This bill authorizes the Department of Alcoholic Beverage Control (ABC) to issue a total of 25 additional new original on-sale general licenses (5 per year for a period of 5 years) to bona fide public eating places with a seating capacity of 25 or more diners, in Napa County. This bill also authorizes the Department of ABC to issue a special on-sale general license to the operator of any for-profit theater located within Napa County, subject to certain requirements and conditions.

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.
   
6. Provides for 58 counties and 58 "classes" of counties – one county to each class based on their 1970 Census populations. (Government Code Section 28020)

This bill:

1. Authorizes the Department of ABC, beginning January 1, 2017, to issue a maximum of 25 new original on-sale general licenses (5 per year for a period of 5 years) to bona fide public eating places, with a seating capacity of 25 or more diners, in Napa County (a County of the 29th class).
   
2. Authorizes the Department of ABC to issue a special on-sale general license to the operator of any for-profit theater located within Napa County, configured with theatrical seating of at least 800 seats and primarily devoted to live theatrical performances.
   
3. Stipulates that the special on-sale general license for the for-profit theater shall not be issued until any existing licenses issued by the Department of ABC to the operator for the premises of the theater are canceled.
   
4. Provides that the special on-sale general license shall permit sales, service, and consumption of alcoholic beverages in the lobbies and seating areas of the for-profit theater for the period beginning two consecutive hours prior to a live theatrical performance and ending three hours after completion of the performance.
   
5. Provides that any special on-sale general license issued for a for-profit theater pursuant to this bill shall: (a) not be subject to existing “drawing for priority” procedures, (b) not be required to be operated as a bona fide public eating place, and (c) not be subject to existing provisions of law relating to the issuance or transfer of public premises licenses.
   
6. Makes it explicit that for purposes of this bill a “for-profit theater” shall not include an adult or sexually oriented business, as defined in Section 318.5 of the Penal Code.
   
7. Contains legislative findings and declarations as to the necessity of a special statute for Napa County.

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.

In 2008, AB 2266 (Evans, Chapter 130) granted Napa County the privilege of 15 additional on-sale general licenses (over a 3-year period) due to the fact that the County had a relatively fixed year-round population yet millions of visitors travelled to Napa each year because of its international reputation of producing fine wines. AB 2266 led to an increase in full liquor service restaurants in the area and provided visitors to Napa County more dining options.

Purpose of AB 1670. The author’s office notes that the number of visitors to Napa continues to increase while the population of the county has not grown. 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 in Napa 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.

According to Destination Analysts Inc., a tourism research group, the number of tourists that visited Napa increased from 2.94 million people in 2012 to 3.3 million people in 2014. While a majority of the visitors to Napa take day trips, nearly one million of these visitors spend at least one night in local lodgings. Tourism has therefore become one of the major economic drivers in the region, generating $1.6 billion in 2014 in the Napa Valley.

This bill authorizes ABC to issue a maximum of 25 additional new original on-sale general licenses, over a five-year period, for bona fide public eating places in the County of Napa.

In addition to authorizing the 25 new original on-sale general licenses for restaurants in the County of Napa, this bill adds a new Section of law to the ABC Act that permits the Department of ABC to issue a new special on-sale general license for the operator of any for-profit theater located in Napa County with at least 800 seats configured with theatrical seating. This new license will permit the sale and consumption of alcoholic beverages in the lobbies and seating areas of the theater for the period of time beginning two hours prior to a live theatrical performance and ending three hours after completion of the performance. Additionally, the licensed premises are not required to operate as a restaurant. Furthermore, this bill prohibits the issuance of this new special on-sale general license for the theater until any existing licenses for the premises of the theater are canceled.

Only one for-profit theater in Napa County, the Uptown Theater, would be eligible for this special on-sale general license. The Uptown Theater, a historic landmark built in 1937, is located in downtown Napa and hosts a variety of live music and comedy shows. The theater consists of 9,960 square feet with seating capacity of 857 and an additional 980 square feet of lobby area with 200 person capacity. Located adjacent to the theater is the Courtyard Café which is open for lunch Monday-Friday and for dinner before the start of a performance. The Courtyard Café currently has an on-sale beer & wine license (Type 41). Under the provisions of this bill, the existing Type 41 license will have to be canceled prior to the issuance of the new on-sale general license.

The author's office states that movie theaters and live theatrical performances have experienced declining box-office revenues in recent years as a result of an expansion of online media streaming. The author’s office believes that a solution to this dilemma might be the option to sell and consume alcoholic beverages before and during live theatrical performances. The author’s office contends that existing limitations on licensees and regulatory barriers have become major obstacles for local businesses that wish to offer such an amenity and service. Under current law, patrons generally must consume their drinks in a segregated, partitioned-off space and they are not allowed to take alcoholic beverages to their seats.

In 2013, a similar type of exemption was granted for the operator of any for-profit theater in San Francisco, configured with theatrical seating of at least 1,000 seats and primarily devoted to live theatrical performances. [AB 525 (Ting, Chapter 235, Statutes of 2013)]

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 2739 (Chiu, 2016) deletes an existing requirement that prohibits the Department of ABC from issuing a special on-sale general license for certain for-profit theaters located in San Francisco until any existing licenses for the premises are cancelled. (Pending in this committee)

AB 1558 (Mathis, 2016) adds a new provision to the ABC Act that authorizes the Department of ABC to issue five new additional on-sale general licenses for restaurants in Inyo County with a seating capacity of 50 or more diners. (Pending in this committee)

AB 525 (Ting, Chapter 235, Statutes of 2013) created a new special on-sale general license in the ABC Act that enabled the operator of any for-profit theater, configured with theatrical seating of at least 1,000 seats and primarily devoted to live theatrical performances, located within the City and County of San Francisco to serve alcoholic beverages in the lobbies and seating areas of the theater for the period beginning two consecutive hours prior to a live theatrical performance and ending one hour after the performance.

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: Fiscal Com.: Local:

SUPPORT:

Atlas Social Napa

City of American Canyon

City of Calistoga

City of Napa

County of Napa

Downtown Napa Association

Family Winemakers of California

JAX White Mule Diner

Napa Chamber of Commerce

Napa Valley Development Corporation

Square 1 Tasting Bar

Town of Yountville

Zapolski Real Estate, LLC

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 1670 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 1670

Author:(Dodd) – As Introduced Ver:January 15, 2016

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

SUMMARY:

This bill authorizes the Department of Alcoholic Beverage Control (ABC) to issue additional on-sale general licenses within Napa County. Specifically, this bill:

1. Allows for a maximum of 25 new original on-sale general licenses, within Napa County, over a five-year period starting on January 1, 2017, for bona fide public eating places with a seating capacity of 25 or more.
2. Authorizes ABC to issue a special on-sale general license to the operator of any for-profit theater located within Napa County with theatrical seating of at least 800 seats and primarily devoted to live theatrical performances under certain conditions.

FISCAL EFFECT:

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

COMMENTS:

1. Purpose and background: On-sale general licenses. According to the author, Napa County has become immensely popular over the past few years as a tourist destination. Each year, millions of people visit Napa due to its international reputation for producing fine wines. However, existing ABC regulations that allocate certain alcohol licenses based on county population limit Napa’s ability to offer tourists additional restaurant options. In August 2015, Napa was granted one new off-sale license and no new on-sale licenses.

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.

1. Purpose and background: Special on-sale general license for theaters. According to the author, authorizing ABC to issue a special on-sale general license to a for-profit theater offering live performance would provide a boost to a local business facing increasing hardships with the expansion of online media streaming. Currently, the Uptown Theater in downtown Napa is the only theater that meets the requirements defined in this bill. The theater hosts a variety of live music and comedy shows. The author argues that that the ability to serve alcohol could offer financial relief to the theater industry.

AB 1670 follows the footsteps of AB 525 (Ting), Chapter 235, Statutes of 2013, which issued a similar type of exemption for to any for-profit theater in San Francisco that was devoted to live theatrical performance and had at least 1,000 seats.

1. Other related legislation. In addition to the related bills described above, 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 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 1558 (Mathis) of 2016, which passed the Assembly Governmental Organization Committee on April 6, 2016, would allow 5 new on-sale general licenses, over a 2-year period, for bona fide public eating places public premises, or both, in Inyo County. This bill is also on calendar today.

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 1670 (

Author:Dodd) – As Introduced Ver:January 15, 2016

SUBJECT: Alcoholic beverages: licenses

SUMMARY: Authorizes the Department of Alcoholic Beverage Control (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. Specifically, this bill:

1) Provides that in Napa County (29th class), commencing January 1, 2017, ABC, in addition to those licenses currently issued under the law may issue five additional new original on-sale general licenses for bona fide public eating places per year, for a period of five years. Any premises to qualify for a license under this section shall have a seating capacity for 25 or more diner. In no event shall more than 25 on-sale general licenses for bona fide eating-places be issued under this provision.

2) Authorizes ABC to issue a special on-sale general license to the operator of any for-profit theater located within the County of Napa, configured with theatrical seating of at least 800 seats and primarily devoted to live theatrical performances under the following conditions:

a) The special on-sale general license shall not be issued until any existing licenses issued by ABC to the operator for the premises of the for-profit theater are canceled.

b) The special on-sale general license shall permit sales, service, and consumption of alcoholic beverages in the lobbies and seating areas of the for-profit theater for the period beginning two consecutive hours prior to a live theatrical performance and ending three hours after the live theatrical performance is completed, as specified.

c) Any special on-sale general license issued shall not be required to be operated as a bona fide public eating-place.

d) The “for-profit theater” shall not include an adult or sexually oriented business, as defined.

3) Contains an urgency clause.

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.

7) Authorizes ABC to issue a special on-sale general license to any nonprofit theater company, subject to specified requirements.

FISCAL EFFECT: Unknown

COMMENTS:

Background: 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 licensee 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 these new licenses is $13,800 each. According to ABC, currently there are approximately 15,360 (Type 47) licenses statewide. 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 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 $150,000 to $200,000.

Purpose of the bill: According to the author, Napa County has become immensely popular over the past few years as a tourist location. According to Destination Analysts Inc., the number of tourists that visited Napa increased from 2.94 million people in 2012 to 3.3 million people in 2014. While a majority of the visitors to Napa take day trips, nearly 950,000 of these visitors spend at least one night in local lodgings. Tourism has therefore become one of the major economic drivers in the region, generating $1.6 billion in 2014 in the Napa Valley.

AB 1670 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.

According to proponents, existing ABC regulations limit the number of Type 47 licenses to just one license for each 2,000 inhabitants in Napa County. What used to be an adequate number of Type 47 licenses has now become a significant burden on new business owners, or those wishing to expand their operations, forcing them to compete with established businesses. This is not the intent of the ABC Act but this unintended consequence prohibits restaurants, especially smaller restaurants with fewer seats, from being able to obtain a license and inherently increases barriers to fair competition.

The number of visitors to Napa continues to increase while the population of the county has not grown. The limited number of licenses in Napa County does not reflect the tourist population that includes more than three million visitors to the Napa Valley each year who enjoy food service as an integral part of the Napa experience and contribute to the economy.

The author points out that Napa has a year-round population of 140,362, as of the last census, which translates into 94 Type 47 alcohol retail licenses; however, millions of visitors come to Napa each year due to its international reputation for producing fine wines. In August 2015, Napa was granted only one new off-sale license, and no new on-sale licenses. The author and proponents believe this bill will lead to an increase in full service restaurants in the area and provide visitors to Napa County more restaurant options.

Another provision of the bill would create and authorize ABC to issue a special on-sale general license to the operator of any for-profit theater located within the County of Napa, configured with theatrical seating of at least 800 seats and primarily devoted to live theatrical performances. AB 1670 would not require the licensee to operate as a bona fide public eating-place. Currently, there is only one for-profit theater that would be eligible. The Uptown Theater is located in downtown Napa, hosts a variety of live music and comedy shows. In 2013, a similar type of exemption was granted for the City and County of San Francisco to the operator of any for-profit theater, configured with theatrical seating of at least 1,000 seats and primarily devoted to live theatrical performances.

The author states that the movie theater industry has been facing increasing hardships with the expansion of online media streaming. Box-office revenues reflect this trend, with ticket sales in 2015 at their lowest level in seventeen years. One solution to this issue might be to serve alcohol inside theaters that are devoted to live theatrical performances. Serving alcohol could offer financial relief to theaters and allow customers to fully experience the theater, its amenities, and the live performance. However, strict limits on ABC licenses and regulatory barriers have become major obstacles for local businesses who wish to offer this type of amenity and service.

Related legislation: 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)

AB 1558 (Mathis) of 2016. Would authorize 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. (Pending in the Assembly G.O. Committee)

Prior legislation: AB 525 (Ting), Chapter 235, Statutes of 2013. Created a new special on-sale general license in the ABC Act that enables the operator of any for-profit theater, as specified, located within the City and County of San Francisco, to serve alcoholic beverages during certain hours in specified areas of the theater.

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

Napa County Board of Supervisors

City of American Canyon

City of Napa

City of Calistoga

Family Winemakers of California

Napa Downtown Association

Napa Chamber of Commerce

Napa Property Based Improvement District

Town of Yountville

Opposition

None on file

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