BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                AB 1320
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        CONCURRENCE IN SENATE AMENDMENTS
        AB 1320 (Allen)
        As Amended  June 11, 2012
        Majority vote
         
         
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        |ASSEMBLY: |     |(June 2, 2011)  |SENATE: |37-0 |(August 21, 2012)    |
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                         (vote not relevant)


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        |COMMITTEE VOTE:  |14-0 |(August 29, 2012)   |RECOMMENDATION: |concur    |
        |(G.O.)           |     |                    |                |          |
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        Original Committee Reference:    P.E.,R. & S.S.  

         SUMMARY  :  Adds a new Section to the Alcoholic Beverage Control Act 
        (Act) which authorizes the Department of Alcoholic Beverage Control 
        (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.

         The Senate amendments  delete the Assembly version of this bill, and 
        instead:

        1)Authorize ABC, to issue five new original on-sale general 
          licenses per year, until January 1, 2016, for bona fide public 
          eating places having a seating capacity for 50 or more diners in 
          a county of the 18th class.  Also, provides that no more than a 
          total of 15 such licenses shall be issued relative to this 
          measure.

        2)Require ABC to follow existing "drawing for priority" procedures 
          with respect to the issuance of these new licenses as set forth 
          in Business and Professions Code Section 23961 of the Act.

        3)Provide 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)Make it explicit that a license issued pursuant to this measure 
          shall not be transferred from one county to another nor shall it 








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          be transferred to any premise not qualifying under these 
          provisions. 

         EXISTING LAW  :

        1)Grants states the authority, with the enactment of the 21st 
          Amendment to the U.S. Constitution in 1933 repealing the 18th 
          Amendment and ending the era of Prohibition, 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.

        4)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.

        5)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 








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          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.

        6)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.  

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

         AS PASSED BY THE ASSEMBLY  , this bill established, for each employer 
        within the California Public Employees' Retirement System (CalPERS) 
        and the twenty retirement systems established under the County 
        Employees Retirement Act of 1937 ('37 Act) a Rate Stabilization 
        Account (RSA) in the Employer Rate Stabilization Fund (also 
        established by this bill), for the purpose of stabilizing employer 
        retirement contributions.

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

         COMMENTS  :  This bill was substantially amended in the Senate and 
        the Assembly-approved provisions of this bill were deleted.

         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 Marin 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 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.  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 








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        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 upwards of 
        $150,000.  Some of these potential sellers view their license as 
        tickets to a richer retirement.  

        ABC's records from 2011 indicate that Marin County's population was 
        254,692 and there were 136 on-sale general licenses in existence 
        within the county.  Based on those statistics, no new on-sale 
        general licenses were made available in 2011.  However, ABC records 
        indicate that one new on-sale general license was made available 
        and issued through the priority drawing process in 2008 and another 
        in 2009.  According to ABC, currently there are approximately 
        13,560 Type 47 licenses statewide.  Licenses are selling on the 
        open market in Marin County for $75,000 to $100,000.

         Related legislation  :  AB 2560 (Allen) of 2012, was identical to 
        this bill.  (Held in Assembly policy committee at author's 
        request.)

         Prior legislation  :  AB 2266 (Evans), Chapter 130, Statutes of 2008, 
        authorized ABC, commencing January 1, 2009, 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.  (According to ABC 
        staff, the department has issued 14 of the 15 new licenses in Napa 
        County as authorized by AB 2266 of 2008 - one license is still 
        pending due to the fact that the establishment is under 
        construction.)

        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.

        AB 1252 (Waters), Chapter 753, Statutes of 1978, 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 ABC 
        to issue five additional new original on-sale general licenses for 
        bona fide public eating places (seating for 100 or more diners) in 








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        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


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