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
           ----------------------------------------------------------------- 
          |Author:    |Mathis                                               |
          |-----------+-----------------------------------------------------|
          |Version:   |3/16/2016    Amended                                 |
           ----------------------------------------------------------------- 
           ------------------------------------------------------------------ 
          |Urgency:   |No                     |Fiscal:      |Yes             |
           ------------------------------------------------------------------ 
           ----------------------------------------------------------------- 
          |Consultant:|Arthur Terzakis                                      |
          |           |                                                     |
           ----------------------------------------------------------------- 
          

          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."