BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: AB 1558 Hearing Date: 6/28/2016
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|Author: |Mathis |
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|Version: |3/16/2016 Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Arthur Terzakis |
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SUBJECT: Alcoholic beverages: licenses
DIGEST: This bill adds a new Section to the Alcoholic
Beverage Control (ABC) Act that authorizes the Department of ABC
to issue, over a 2-year period, five additional new on-sale
general licenses for restaurants, with a seating capacity of 50
or more, in Inyo County.
ANALYSIS:
Existing law:
1)Establishes the Department of 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.
2)Provides that 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 licenses, 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.
AB 1558 (Mathis) Page 2 of ?
3)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
premises in original, sealed containers.
This bill:
1)Authorizes the Department of ABC to issue, from 1/1/2017 to
12/31/2019, no more than a total of five additional new
original on-sale general licenses in Inyo County for bona fide
public eating places, public premises, or both. In order to
qualify for such a license, the premises must have seating
capacity for 50 or more diners.
2)Requires the Department of ABC to follow existing "drawing for
priority" procedures with respect to the issuance of these new
licenses.
3)Makes it explicit that a person that currently holds a valid
AB 1558 (Mathis) Page 3 of ?
on-sale general license for seasonal business shall not be
prohibited from applying for an original on-sale general
license pursuant to this bill.
4)Stipulates that a license issued pursuant to this bill shall
not be transferred from one county to another, nor shall it be
transferred to any premises not qualifying under the
provisions of this bill.
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 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 issue 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.
Purpose of AB 1558. The author's office points out that Inyo
County has witnessed relatively fixed population growth (18,500
residents) and a swelling tourist economy due to its geographic
location along the eastern slope of the Sierra. The author's
office contends that the existing limitation on the number of
new on-sale general licenses that may be issued in a given year
by the Department of ABC is not conducive for economic growth
within the region nor is it sufficient to sustain the current
demand in a county where tourists outnumber residents by a wide
margin. This bill will provide Inyo County five additional new
on-sale general licenses for restaurants with a seating capacity
of 50 or more diners.
Prior/Related Legislation
AB 1558 (Mathis) Page 4 of ?
SB 1285 (Leno, 2016) authorizes, beginning January 1, 2017, the
Department of ABC to issue no more than a total of 28 new
original "neighborhood-restricted" special on-sale general
licenses, for premises located within specified City and County
of San Francisco neighborhoods, subject to certain requirements
and restrictions. (Pending in Assembly policy committee)
AB 1670 (Dodd, 2016) among other things, authorizes the
Department of ABC to issue a total of 15 additional new original
on-sale general licenses (5 per year for a period of 3 years)
to bona fide public eating places with a seating capacity of 25
or more diners, in Napa County. (Pending in this committee)
AB 461 (Achadjian, Chapter 110, Statutes of 2013) authorized 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.
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 2266 (Evans, Chapter 130, Statutes of 2008) authorized the
Department of ABC 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 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
AB 1558 (Mathis) Page 5 of ?
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).
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT:
Bishop Area Chamber of Commerce and Visitors Bureau
City of Bishop
Inyo County Board of Supervisors
OPPOSITION:
Alcohol Justice
ARGUMENTS IN OPPOSITION: Alcohol Justice states that
"increasing the availability of alcohol is associated with
increased alcohol-related harm. Increasing the number of retail
licenses, no matter how minimal, will increase availability and
therefore impact public health. The state already suffers more
than $22 billion in alcohol-related harm and over 10,000
alcohol-related deaths annually. We believe AB 1558 will
ultimately increase those catastrophic alcohol-related harms and
costs in the state."