BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1558


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          Date of Hearing:  April 6, 2016


                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION


                                  Adam Gray, Chair


          AB 1558  
          (Mathis) - As Amended March 16, 2016


          SUBJECT:  Alcoholic beverages:  licenses


          SUMMARY:  Adds a new Section to the Alcoholic Beverage Control  
          (ABC) Act which authorizes the Department of Alcoholic Beverage  
          Control (ABC) to issue no more than a total of 5 new original  
          on-sale general licenses, over a 2-year period, for bona fide  
          public eating places, public premises, or both in the County of  
          Inyo.  Specifically, this bill:  


          1)  Provides in the County of Inyo, ABC may issue no more than a  
          total of five additional new original on-sale general licenses  
          for bona fide public eating places, public premises, or both  
          from January 1, 2017, to December 31, 2019, inclusive. To  
          qualify for a license, the premises upon which a bona fide  
          public eating-place is operated shall have a seating capacity  
          for 50 or more diners.





          2)  Requires ABC to follow existing "drawing for priority"  
          procedures with respect to the issuance of these new licenses as  
          set forth in ABC Act.








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          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.


          EXISTING LAW:  


          1)  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          in 1933 repealed the 18th Amendment and ended the era of  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.  


          2)  Establishes ABC 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. 










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          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.


          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.


          4)  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.


          5)  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  








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          premises in original, sealed containers.  


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


          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.  ABC holds a drawing 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 or 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.  According to ABC,  
          currently there are approximately 13,360 Type 47 licenses  
          statewide.


          ABC's records from 2015 indicate that Inyo's population was  
          18,574, which translates into 17 on-sale general licenses within  
          the county.  In 2015, ABC issued additional liquor licenses to  
          counties with satisfactory population growth verified by the  
          Department of Finance (DOF).  Inyo County  was not  eligible for  
          additional liquor licenses based on the set criteria.  However,  








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          ABC records indicate  that one new on-sale general license was  
          made available  and issued through the priority drawing process  
          in 2013.





           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 the County of Inyo


          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 states, although the distribution of liquor licenses  
          across Inyo County reflects the population, ABC does not take  
          into account the many tourists who visit the County each year,  
          making it even more difficult for entrepreneurs to succeed in a  
          volatile economic climate.  This bill will provide Inyo County  
          with five additional liquor licenses to accommodate the growing  
          tourism industry that accounts for a significant portion of the  
          local economy.


           Related legislation  : AB 1670 (Dodd) of 2016.  Would authorize  
          ABC to issue a maximum of 25 new original on-sale general  
          licenses, over a five-year period, for bona fide public  
          eating-places in the County of Napa.  (Pending in the Assembly  
          G.O. Committee)









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          SB 1285 (Leno) of 2016.  This bill would, beginning January 1,  
          2017, provide an exception to this limitation for a county of  
          the 6th class, as specified, for 28 new original special on-sale  
          general licenses for bona fide eating places for premises  
          located within specified census tracts in that county, subject  
          to specified requirements.  (Pending in Senate G.O. Committee)


           Prior legislation  :  AB 461 (Achadjian), Chapter 110, Statutes of  
          2013.  Authorized 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.  
           





          AB 1320 (Allen), Chapter 467, Statutes of 2012.  Authorized 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 2266 (Evans), Chapter 130, Statutes of 2008.  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 Napa.





          SB 762 (Cox), Chapter 193, Statutes of 2007.  Authorized ABC to  
          issue 10 new original on-sale general licenses for bona fide  








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          public eating-places in the County of Mono.





          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


          Bishop Area Chamber of Commerce & Visitors Bureau


          City of Bishop


          Inyo County Board of Supervisors








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          Opposition


          None on file







          Analysis Prepared by:Eric Johnson / G.O. / (916) 319-2531