BILL ANALYSIS Ó
Bill No: AB
461
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2013-2014 Regular Session
Staff Analysis
AB 461 Author: Achadjian
As Amended: May 1, 2013
Hearing Date: June 11, 2013
Consultant: Art Terzakis
SUBJECT
Alcoholic Beverages
DESCRIPTION
AB 461 adds a new Section to the Alcoholic Beverage Control
(ABC) Act which authorizes 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 . Specifically, this
measure:
1)Authorizes the Department of ABC, to issue no more than 5
new original on-sale general licenses, from
01/01/2014 to 12/31/2016, for bona fide public eating
places having a seating capacity for 50 or more diners in
a county of the 24th class.
2)Requires the Department of ABC to follow existing
"drawing for priority" procedures with respect to the
issuance of these new licenses as set forth in Section
23961 of the ABC Act.
3)Provides that a person who currently holds a valid
on-sale general license for seasonal business is not
prohibited from applying for an original on-sale general
license pursuant to this measure.
4)Makes it explicit that a license issued pursuant to this
measure shall not be transferred from one county to
another nor shall it be transferred to any premise not
qualifying under these provisions.
AB 461 (Achadjian) continued
Page 2
EXISTING LAW
The enactment of the 21st 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Constitution in 1933 repealed the 18th Amendment and ended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.
Existing law establishes the Department of Alcoholic
Beverage Control 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.
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 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.
Existing law 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.
Existing law 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
AB 461 (Achadjian) continued
Page 3
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.
Existing law 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.
Existing law (Government Code Section 28020) provides for
58 counties and 58 "classes" of counties - one county to
each class based on their 1970 Census populations.
BACKGROUND
Purpose of AB 461: According to the author's office, San
Luis Obispo County is comprised of communities scattered
along the beaches and mountains of the Central Coast which
leads to many tourists visiting the county for its various
attractions. In conjunction with the growing wine and
tourism industry, San Luis Obispo County has a flourishing
restaurant scene as well, which requires the additional
liquor licenses proposed in AB 461. 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.
Writing in support of AB 461, the City of Atascadero
contends that this measure is necessary to accommodate the
county's tourism industry that accounts for a significant
portion of the local economy.
Writing in opposition, the City of San Luis Obispo has
expressed concern that this measure could undermine local
control and lead to an overconcentration of alcohol related
businesses in the downtown area.
Staff Comments: 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
AB 461 (Achadjian) continued
Page 4
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 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'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.
ABC's most recent records indicate that San Luis Obispo
County's population growth has been relatively stagnant
over the past few years resulting in no new on-sale general
licenses being made available and as of 2012 there were 126
on-sale general licenses in existence within the county.
According to ABC, there are approximately 13,560 Type 47
licenses statewide.
PRIOR/RELATED LEGISLATION
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 2560 (Allen) 2011-12 Session. Identical to AB 1320
(Allen) of 2011-12. (Held in Assembly policy committee at
author's request.)
AB 2266 (Evans), Chapter 130, Statutes of 2008. Authorized
the Department of ABC, commencing 01/01/2009, 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
AB 461 (Achadjian) continued
Page 5
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).
SUPPORT: As of June 7, 2013:
City of Atascadero
OPPOSE: As of June 7, 2013:
City of San Luis Obispo
FISCAL COMMITTEE: Senate Appropriations Committee
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