BILL ANALYSIS Ó
AB 1670
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
1670 (Dodd)
As Amended August 1, 2016
Majority vote
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|ASSEMBLY: |76-0 |(April 28, |SENATE: |38-0 |(August 15,2016) |
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Original Committee Reference: G.O.
SUMMARY: Authorizes the Department of Alcoholic Beverage
Control (ABC) to issue a maximum of five new original on-sale
general licenses, over a one-year period, for bona fide public
eating-places in the County of Napa. Specifically, this bill:
1)Provides that in Napa County (29th class), from January 1,
2017, to December 31, 2017, ABC, in addition to those licenses
currently issued under the law may issue no more than five
additional new original on-sale general licenses for bona fide
public eating places. Any premises to qualify for a license
under this section shall have a seating capacity for 25 or
more diners.
2)Authorizes ABC to issue a special on-sale general license to
the operator of any for-profit theater located within the
County of Napa, configured with theatrical seating of at least
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800 seats and primarily devoted to live theatrical
performances under the following conditions:
a) The special on-sale general license shall not be issued
until any existing licenses issued by ABC to the operator
for the premises of the for-profit theater are canceled.
b) 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 the
live theatrical performance is completed, as specified.
c) Any special on-sale general license issued shall not be
required to be operated as a bona fide public eating-place.
d) The "for-profit theater" shall not include an adult or
sexually oriented business, as defined.
3)Makes legislative findings and declarations as to the
necessity of a special statute for the County of Napa.
The Senate amendments make changes to the number of new original
on-sale general licenses that may be issued in the County of
Napa. Specifically, the amendments change the number of allowed
licenses from 25 (25 over five years) to five licenses over one
year (from January 1, 2017, to December 31, 2017).
EXISTING LAW:
1)The enactment of the 21st Amendment to the United States
(U.S.) Constitution in 1933 repealed the 18th Amendment and
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ended the era of Prohibition. Accordingly, states were
granted the authority to establish alcoholic beverage laws and
administrative structures to regulate the sale and
distribution of alcoholic beverages.
2)Establishes 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 or occupation
taxes for this purpose.
3)Provides that 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 license, 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.
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
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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.
7)Authorizes ABC to issue a special on-sale general license to
any nonprofit theater company, subject to specified
requirements.
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, this bill will have
negligible state costs.
COMMENTS:
Background: Existing law provides for a limitation on the
number of new on-sale general licenses that may be issued in a
given year by ABC based on the population growth of the county
in which the licensed premises are located (one licensee for
every 2,000 residents). Thus, if a county grows by 10,000
people in a given year, ABC will sell five new licenses in that
county. ABC holds a drawing if there are more buyers than
licenses available. The cost of these new licenses is $13,800
each. According to ABC, currently there are approximately
15,360 (Type 47) licenses statewide. 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
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license. Usually, that is 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
$150,000 to $200,000.
Purpose of the bill: According to the author, Napa County has
become immensely popular over the past few years as a tourist
location. According to Destination Analysts Inc., 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 950,000 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 would authorize ABC to issue a maximum of 25 new
original on-sale general licenses, over a five-year period, for
bona fide public eating-places in the County of Napa.
According to proponents, existing ABC regulations limit the
number of Type 47 licenses to just one license for each 2,000
inhabitants in Napa County. What used to be an adequate number
of Type 47 licenses has now become a significant burden on new
business owners, or those wishing to expand their operations,
forcing them to compete with established businesses. This is
not the intent of the ABC Act but this unintended consequence
prohibits restaurants, especially smaller restaurants with fewer
seats, from being able to obtain a license and inherently
increases barriers to fair competition.
The number of visitors to Napa continues to increase while the
population of the county has not grown. The limited number of
licenses in Napa County does not reflect the tourist population
that includes more than three million visitors to the Napa
Valley each year who enjoy food service as an integral part of
the Napa experience and contribute to the economy.
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The author points out that Napa has a year-round population of
140,362, as of the last census, which translates into 94 Type 47
alcohol retail licenses; however, millions of visitors come to
Napa each year due to its international reputation for producing
fine wines. In August 2015, Napa was granted only one new
off-sale license, and no new on-sale licenses. The author and
proponents believe this bill will lead to an increase in full
service restaurants in the area and provide visitors to Napa
County more restaurant options.
Another provision of the bill would create and authorize ABC to
issue a special on-sale general license to the operator of any
for-profit theater located within the County of Napa, configured
with theatrical seating of at least 800 seats and primarily
devoted to live theatrical performances. This bill would not
require the licensee to operate as a bona fide public
eating-place. Currently, there is only one for-profit theater
that would be eligible. The Uptown Theater is located in
downtown Napa, hosts a variety of live music and comedy shows.
In 2013, a similar type of exemption was granted for the City
and County of San Francisco to the operator of any for-profit
theater, configured with theatrical seating of at least 1,000
seats and primarily devoted to live theatrical performances.
The author states that the movie theater industry has been
facing increasing hardships with the expansion of online media
streaming. Box-office revenues reflect this trend, with ticket
sales in 2015 at their lowest level in seventeen years. One
solution to this issue might be to serve alcohol inside theaters
that are devoted to live theatrical performances. Serving
alcohol could offer financial relief to theaters and allow
customers to fully experience the theater, its amenities, and
the live performance. However, strict limits on ABC licenses
and regulatory barriers have become major obstacles for local
businesses who wish to offer this type of amenity and service.
Related legislation: SB 1285 (Leno) of the current legislative
session. This bill would, beginning January 1, 2017, provide an
exception to this limitation for a county of the 6th class, as
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specified, for 28 new original special on-sale general licenses
for bona fide eating places for premises located within
specified census tracts in that county, subject to specified
requirements. (Pending in Senate Governmental Organization
(G.O.) Committee)
AB 1558 (Mathis) of the current legislative session. Authorizes
ABC to issue no more than a total of five new original on-sale
general licenses, over a two-year period, for bona fide public
eating places, public premises, or both in the County of Inyo.
(Pending in the Assembly G.O. Committee)
Prior legislation: AB 525 (Ting), Chapter 235, Statutes of
2013. Created a new special on-sale general license in the ABC
Act that enables the operator of any for-profit theater, as
specified, located within the City and County of San Francisco,
to serve alcoholic beverages during certain hours in specified
areas of the theater.
AB 461 (Achadjian), Chapter 110, Statutes of 2013. Authorized
ABC to issue no more than a total of five new original on-sale
general licenses, over a three-year period, for bona fide public
eating-places in the County of San Luis Obispo.
AB 1320 (Allen), Chapter 467, Statutes of 2012. Authorized 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 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 Napa.
SB 762 (Cox), Chapter 193, Statutes of 2007. Authorized ABC to
issue 10 new original on-sale general licenses for bona fide
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public eating-places in the County of Mono.
SB 1092 (Berryhill), Chapter 571, Statutes of 1975. Authorized
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
ABC to issue three additional original off-sale general licenses
in a county of the 58th class (Alpine County).
Analysis Prepared by:
Eric Johnson / G.O. / (916) 319-2531 FN:
0004252