BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 461
Author: Achadjian (R)
Amended: 5/1/13 in Assembly
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 11-0, 6/11/13
AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, Correa,
De León, Galgiani, Hernandez, Lieu, Padilla
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 74-0, 5/20/13 - See last page for vote
SUBJECT : Alcoholic beverages: licenses
SOURCE : Author
DIGEST : This bill adds a new Section to the Alcoholic
Beverage Control Act (ABC Act) which authorizes the Department
of Alcoholic Beverage Control (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.
ANALYSIS :
Existing law:
1.Establishes the Department of ABC and grants it exclusive
authority to administer the provisions of the ABC Act in
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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 Department of 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 Department of 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.
2.Caps the number of new on and off-sale general licenses issued
by the Department of 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.
3.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.
4.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.
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5.Provides for 58 counties and 58 "classes" of counties - one
county to each class based on their 1970 Census populations.
This bill adds a new Section to the ABC Act which authorizes the
Department of 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.
Specifically, this bill:
1.Authorizes the Department of ABC, to issue no more than five
new original on-sale general licenses, from January 1, 2014 to
December 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 bill
shall not be transferred from one county to another nor shall
it be transferred to any premise not qualifying under these
provisions.
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
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 sell 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 is done by
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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.
The Department of 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 the Department of ABC, there are approximately
13,560 Type 47 licenses statewide.
Comments
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 this bill.
Under existing 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.
According to the author's office, this bill provides the County
of San Luis Obispo with five additional liquor licenses to be
sold to bona fide eating places of 50 or more diners until
December 31, 2016. Doing so would account for the County's
growing tourism industry and provide relief to the backlog of
businesses trying to obtain the limited licenses.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 6/24/13)
City of Atascadero
OPPOSITION : (Verified 6/24/13)
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City of San Luis Obispo
ARGUMENTS IN SUPPORT : The City of Atascadero contends that
this bill is necessary to accommodate San Luis Obispo County's
tourism industry that accounts for a significant portion of the
local economy.
ARGUMENTS IN OPPOSITION : The City of San Luis Obispo has
expressed concern that this bill could undermine local control
and lead to an overconcentration of alcohol related businesses
in the downtown area.
ASSEMBLY FLOOR : 74-0, 5/20/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell,
Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Jones,
Levine, Linder, Lowenthal, Maienschein, Mansoor, Medina,
Melendez, Mitchell, Morrell, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez,
Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting,
Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, John A.
Pérez
NO VOTE RECORDED: Holden, Jones-Sawyer, Logue, Yamada, Vacancy,
Vacancy
MW:nl 6/25/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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