BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 1558|
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                                   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:








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          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  







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            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  







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          $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  







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          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







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          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


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