BILL ANALYSIS Ó AB 1320 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1320 (Allen) As Amended June 11, 2012 Majority vote ---------------------------------------------------------------------- |ASSEMBLY: | |(June 2, 2011) |SENATE: |37-0 |(August 21, 2012) | ---------------------------------------------------------------------- (vote not relevant) ------------------------------------------------------------------------ |COMMITTEE VOTE: |14-0 |(August 29, 2012) |RECOMMENDATION: |concur | |(G.O.) | | | | | ------------------------------------------------------------------------ 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 AB 1320 Page 2 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 AB 1320 Page 3 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 AB 1320 Page 4 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 AB 1320 Page 5 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: 0005814