BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1558| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1558 Author: Mathis (R), et al. Amended: 3/16/16 in Assembly Vote: 21 SENATE GOVERNMENTAL ORG. COMMITTEE: 3-6, 6/14/16 AYES: Bates, Gaines, Vidak NOES: Hall, Block, Galgiani, Glazer, Hill, Lara NO VOTE RECORDED: Berryhill, Hernandez, Hueso, McGuire SENATE GOVERNMENTAL ORG. COMMITTEE: 13-0, 6/28/16 AYES: Hall, Berryhill, Bates, Block, Gaines, Galgiani, Glazer, Hernandez, Hill, Hueso, Lara, McGuire, Vidak SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8 ASSEMBLY FLOOR: 76-0, 4/28/16 (Consent) - See last page for vote SUBJECT: Alcoholic beverages: licenses SOURCE: Author DIGEST: This bill adds a new Section to the Alcoholic Beverage Control (ABC) Act that authorizes the Department of ABC to issue, over a two-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: AB 1558 Page 2 1)Establishes the Department of ABC and grants it exclusive authority to administer the provisions of the ABC 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. 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 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. 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 AB 1558 Page 3 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 January 1, 2017 to December 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 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 AB 1558 Page 4 $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. Alcohol Justice has expressed opposition to AB 1558 and 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." Alcohol Justice believes AB 1558 will "ultimately increase those catastrophic alcohol-related harms and costs in the state." Prior/Related Legislation SB 1285 (Leno, 2016) authorizes, beginning January 1, 2017, the Department of ABC to issue no more than a total of 5 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 the Assembly Rules Committee) AB 1670 (Dodd, 2016), among other things, authorizes the Department of ABC to issue, from January 1, 2017 to December 31, 2017, no more than a total of five additional new original on-sale general licenses for bona fide public eating places in Napa County. (Pending in the Senate Appropriations Committee) AB 461 (Achadjian, Chapter 110, Statutes of 2013) authorized 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 AB 1558 Page 5 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 three-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 five 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 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: (Verified 8/1/16) Bishop Area Chamber of Commerce and Visitors Bureau City of Bishop AB 1558 Page 6 Inyo County Board of Supervisors OPPOSITION: (Verified 8/1/16) Alcohol Justice ASSEMBLY FLOOR: 76-0, 4/28/16 AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon NO VOTE RECORDED: Chávez, Daly, Mathis, Olsen Prepared by:Arthur Terzakis / G.O. / (916) 651-1530 8/3/16 19:20:45 **** END ****