BILL ANALYSIS Ó
AB 461
Page 1
Date of Hearing: April 24, 2013
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Hall III, Isadore, Chair
AB 461 (Achadjian) - As Amended: March 18, 2013
SUBJECT : Alcoholic beverages: licenses.
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 San Luis Obispo
County. Specifically, this bill :
1) Provides that in a county of the 24th class (San Luis Obispo
County), ABC may issue five additional new original on-sale
general licenses for bona fide public eating places per year,
until January 1, 2017. Not more than a total of 15 on-sale
general licenses shall be issued.
2) Specifies to qualify for a license under this bill, the
premises upon which a bona fide public eating place is operated
shall have a seating capacity for 50 or more diners.
3) Requires 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.
4) Provides that current law does not prohibit a person who
currently holds a valid on-sale general license for seasonal
business from applying for an original on-sale general license,
as defined.
5) Provides that a license issued under this bill shall not be
transferred from one county to another nor shall it be
transferred to any premises not qualifying under this new
statute.
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
AB 461
Page 2
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 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).
AB 461
Page 3
7) An "off-sale" license authorizes the sale of all types of
alcoholic beverages for consumption off the premises in
original, sealed containers.
8) Authorizes 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 Marin County. Provides that no more than a total of 15 such
licenses shall be issued relative to this statute.
9) Authorizes the 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.
Provides that no more than a total of 15 such licenses shall be
issued relative to this statute.
FISCAL EFFECT : Unknown.
COMMENTS :
Background : As noted above, existing law provides for a
limitation on the number of new on-sale general licenses that
may be issued in a given year by ABC based on the population
growth of the county in which the licensed premises are located
(one license for every 2,000 residents). Thus, if a county
grows by 10,000 people in a given year ABC will sell five new
licenses in that county. 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 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 San Luis Obispo County's
population was 270,966 and 271,483 in 2012 there were 126
on-sale general licenses in existence within the county. Based
on those statistics, no new on-sale general licenses were made
AB 461
Page 4
available in 2011or 2012. 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.
Purpose of the bill : In 2012, ABC issued additional liquor
licenses to counties with satisfactory population growth
verified by the Department of Finance (DOF). San Luis Obispo
County was not eligible for additional liquor licenses based on
the set criteria.
According to the author, while the County could not show
satisfactory proof of population growth, the number of
businesses unable to obtain a license each year demonstrates the
County's need for additional liquor licenses.
The author's office states, located between Los Angeles and San
Francisco, San Luis Obispo County is comprised of communities
scattered along the beaches and mountains of the Central Coast.
With such a diverse geography, many tourists make their way to
the County for its various attractions. In conjunction with the
growing wine and tourism industry, San Luis Obispo County has a
flourishing restaurant scene, which requires the additional
liquor licenses.
The author states, although the distribution of liquor licenses
across the County reflect the population, ABC does not take into
account the many tourists who visit San Luis Obispo County each
year, making it even more difficult for entrepreneurs to succeed
in a volatile economic climate.
According to the author, AB 461 will provide San Luis Obispo
County with five additional liquor licenses per year, for three
years, to accommodate for the growing tourism industry that
accounts for a significant portion of the local economy and to
provide relief to the backlog of businesses trying to obtain the
limited licenses.
Prior legislation : 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
AB 461
Page 5
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. Allowed 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 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 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
None on file
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531