BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: AB 1670 Hearing Date: 6/28/2016
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|Author: |Dodd |
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|Version: |6/21/2016 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 authorizes the Department of Alcoholic
Beverage Control (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. This bill also authorizes
the Department of ABC to issue a special on-sale general license
to the operator of any for-profit theater located within Napa
County, subject to certain requirements and conditions.
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
AB 1670 (Dodd) Page 2 of ?
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 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.
6)Provides for 58 counties and 58 "classes" of counties - one
county to each class based on their 1970 Census populations.
(Government Code Section 28020)
This bill:
1)Authorizes the Department of ABC, beginning January 1, 2017,
to issue a maximum of 15 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 (a County of the 29th class).
AB 1670 (Dodd) Page 3 of ?
2)Authorizes the Department of ABC to issue a special on-sale
general license to the operator of any for-profit theater
located within Napa County, configured with theatrical seating
of at least 800 seats and primarily devoted to live theatrical
performances.
3)Stipulates that the special on-sale general license for the
for-profit theater shall not be issued until any existing
licenses issued by the Department of ABC to the operator for
the premises of the theater are canceled.
4)Provides that the special on-sale general license shall permit
sales, service, and consumption of alcoholic beverages in the
lobbies and seating areas of the for-profit theater for the
period beginning two consecutive hours prior to a live
theatrical performance and ending three hours after completion
of the performance.
5)Provides that any special on-sale general license issued for a
for-profit theater pursuant to this bill shall: (a) not be
subject to existing "drawing for priority" procedures, (b) not
be required to be operated as a bona fide public eating place,
and (c) not be subject to existing provisions of law relating
to the issuance or transfer of public premises licenses.
6)Makes it explicit that for purposes of this bill a "for-profit
theater" shall not include an adult or sexually oriented
business, as defined in Section 318.5 of the Penal Code.
7)Contains legislative findings and declarations as to the
necessity of a special statute for Napa County.
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
AB 1670 (Dodd) Page 4 of ?
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.
In 2008, AB 2266 (Evans, Chapter 130) granted Napa County the
privilege of 15 additional on-sale general licenses (over a
3-year period) due to the fact that the County had a relatively
fixed year-round population yet millions of visitors travelled
to Napa each year because of its international reputation of
producing fine wines. AB 2266 led to an increase in full liquor
service restaurants in the area and provided visitors to Napa
County more dining options.
Purpose of AB 1670. The author's office notes that the number
of visitors to Napa continues to increase while the population
of the county has not grown. 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 in Napa 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.
According to Destination Analysts Inc., a tourism research
group, the number of tourists that visited Napa increased from
2.94 million people in 2012 to 3.3 million people in 2014.
While a majority of the visitors to Napa take day trips, nearly
one million of these visitors spend at least one night in local
lodgings. Tourism has therefore become one of the major
economic drivers in the region, generating $1.6 billion in 2014
in the Napa Valley.
This bill authorizes ABC to issue a maximum of 15 additional new
original on-sale general licenses, over a 3-year period, for
bona fide public eating places in the County of Napa.
In addition to authorizing the 15 new original on-sale general
licenses for restaurants in the County of Napa, this bill adds a
new Section of law to the ABC Act that permits the Department of
ABC to issue a new special on-sale general license for the
AB 1670 (Dodd) Page 5 of ?
operator of any for-profit theater located in Napa County with
at least 800 seats configured with theatrical seating. This new
license will permit the sale and consumption of alcoholic
beverages in the lobbies and seating areas of the theater for
the period of time beginning two hours prior to a live
theatrical performance and ending three hours after completion
of the performance. Additionally, the licensed premises are not
required to operate as a restaurant. Furthermore, this bill
prohibits the issuance of this new special on-sale general
license for the theater until any existing licenses for the
premises of the theater are canceled.
Only one for-profit theater in Napa County, the Uptown Theater,
would be eligible for this special on-sale general license. The
Uptown Theater, a historic landmark built in 1937, is located in
downtown Napa and hosts a variety of live music and comedy
shows. The theater consists of 9,960 square feet with seating
capacity of 857 and an additional 980 square feet of lobby area
with 200 person capacity. Located adjacent to the theater is
the Courtyard Café which is open for lunch Monday-Friday and for
dinner before the start of a performance. The Courtyard Café
currently has an on-sale beer & wine license (Type 41). Under
the provisions of this bill, the existing Type 41 license will
have to be canceled prior to the issuance of the new on-sale
general license.
The author's office states that movie theaters and live
theatrical performances have experienced declining box-office
revenues in recent years as a result of an expansion of online
media streaming. The author's office believes that a solution
to this dilemma might be the option to sell and consume
alcoholic beverages before and during live theatrical
performances. The author's office contends that existing
limitations on licensees and regulatory barriers have become
major obstacles for local businesses that wish to offer such an
amenity and service. Under current law, patrons generally must
consume their drinks in a segregated, partitioned-off space and
they are not allowed to take alcoholic beverages to their seats.
In 2013, a similar type of exemption was granted for the
operator of any for-profit theater in San Francisco, configured
with theatrical seating of at least 1,000 seats and primarily
devoted to live theatrical performances. [AB 525 (Ting, Chapter
235, Statutes of 2013)]
AB 1670 (Dodd) Page 6 of ?
Prior/Related Legislation
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 2739 (Chiu, 2016) deletes an existing requirement that
prohibits the Department of ABC from issuing a special on-sale
general license for certain for-profit theaters located in San
Francisco until any existing licenses for the premises are
cancelled. (Pending in Senate Appropriations Committee)
AB 1558 (Mathis, 2016) adds a new provision to the ABC Act that
authorizes the Department of ABC to issue five new additional
on-sale general licenses for restaurants in Inyo County with a
seating capacity of 50 or more diners. (Pending in this
committee)
AB 525 (Ting, Chapter 235, Statutes of 2013) created a new
special on-sale general license in the ABC Act that enabled the
operator of any for-profit theater, configured with theatrical
seating of at least 1,000 seats and primarily devoted to live
theatrical performances, located within the City and County of
San Francisco to serve alcoholic beverages in the lobbies and
seating areas of the theater for the period beginning two
consecutive hours prior to a live theatrical performance and
ending one hour after the performance.
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
AB 1670 (Dodd) Page 7 of ?
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: Yes
SUPPORT:
Atlas Social Napa
City of American Canyon
City of Calistoga
City of Napa
County of Napa
Downtown Napa Association
Family Winemakers of California
JAX White Mule Diner
Napa Chamber of Commerce
Napa Valley Development Corporation
Square 1 Tasting Bar
St. Helena Chamber of Commerce
Town of Yountville
AB 1670 (Dodd) Page 8 of ?
Zapolski Real Estate, LLC
OPPOSITION:
Alcohol Justice
Wine and Water Watch
And, Napa residents
ARGUMENTS IN SUPPORT: Writing in support, Family Winemakers of
California states that "AB 1670 reflects the growing popularity
of Napa as a wine destination, and allows for smaller
restaurants, with seating capacity of 25 or more, to apply for
on-sale licenses. We believe that a measured increase in the
number of on-sale licenses, with an overall cap, as proposed,
provides local enforcement agencies the ability to adapt to
increased responsibilities."
Also writing in support, several cities within the County
(Calistoga, Napa, American Canyon, and the Town of Yountville),
including Napa County, note that what used to be a challenging,
but inadequate number of Type 47 licenses has now become a
significant burden on new business owners, or those wishing to
expand their operations, competing with established businesses.
These local entities state that "the going price for a Type 47
license has increased significantly in the past seven years
resulting in an 'aftermarket' of approximately $400,000 for Type
47 licenses. This is not the intent of the ABC laws and
regulations, and the unintended consequence prohibits
restaurants, especially smaller restaurants with fewer seats,
from being able to obtain a license and inherently increases
barriers to fair competition." These local entities emphasize
that it is not their intent to create more stand-alone bars and
lounges but to encourage new and expanded dining establishments
to strengthen the local economy.
ARGUMENTS IN OPPOSITION: Writing 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
1670 will ultimately increase those catastrophic alcohol-related
harms and costs in the state."
AB 1670 (Dodd) Page 9 of ?
Also writing in opposition, Wine and Water Watch states that "AB
1670 would allow further alcohol saturation in an area that is
experiencing many problems, largely associated with the alcohol
industry in Napa County. We urge you strongly to reject this
bill until a complete study is done on how to mitigate the
cumulative impacts of further alcohol based tourism and come up
with a fair solution for the public and the visitors. Without
such a study, passage of this bill will only further diminish
the quality of life for the residents with no solutions."
Several Napa County residents have also contacted the Committee
expressing their dissatisfaction with AB 1670. These residents
note that Napa County is primarily a rural county with two-lane
roads that connect many of the surrounding communities. These
lands and rural infrastructure are inadequate to handle much of
the recent and continuing large scale commercial tourism
promotion and development, and the associated cumulative
impacts. These residents are not necessarily opposed to wine or
alcohol use however they emphasize that such use must remain in
balance with the health, welfare and safety considerations of
the their communities. They believe that AB 1670 fails to fully
analyze or address the extent of the impacts of what it
proposes, particularly the entertainment/theatrical component of
the bill.