HOUSE BILL REPORT

HB 1434

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Brief Summary of Substitute Bill

Creates a nightclub liquor license for the sale of spirits, beer, and wine by businesses with food sales incidental to the sale of alcohol and whose primary business hours are between 9:00 p.m. and 2:00 a.m.
Provides that the cap on the number of spirits, beer, and wine restaurant licenses in the state applies to the combined total of restaurant and nightclub licenses and raises the cap from one license to each 1,300 people in the state to one license for each 1,200 people in the state.

Background:

The Liquor Control Board (Board) issues a number of types of liquor licenses. A spirits, beer, and wine restaurant license allows the sale of spirits by the glass, beer, and wine for consumption on the premises. To qualify as a "restaurant," the establishment must be maintained in a substantial manner for the preparing, cooking, and serving of complete meals. A cap limits the number of spirits, beer, and wine restaurant licenses to one license for each 1,300 people in the state. In addition, the Board must refuse a license if, in the Board's opinion, the licenses already granted are adequate for the reasonable needs of the community.

Before the Board issues any type of new or renewal license, it must give notice to the Chief Executive Officer of the city, county, or town. Within 20 days, the local government may file written objections and the Board may hold a hearing. In determining whether to grant or renew a license, the Board must give substantial weight to objections from the local government based upon chronic illegal activity associated with the applicant's operation of the premises or of other licensed premises, or the conduct of the applicant's patrons inside or outside the premises.

Before issuing a license, the Board must give consideration to the location of the business with respect to the proximity of churches, schools, and public institutions. The Board must also give written notice to public institutions identified by the Board, churches, and schools within 500 feet of the premises. "Public institution" is defined to mean institutions of higher education, parks, community centers, libraries, and transit centers.

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Summary of Substitute Bill:

A spirits, beer, and wine nightclub license is created. A nightclub license may be issued only to persons whose business has food sales incidental to the sale of alcohol and has primary business hours between 9:00 p.m. and 2:00 a.m. A nightclub is an establishment that: (1) provides entertainment; (2) has as its primary source of revenue the sale of alcohol for consumption on the premises, cover charges, or both; and (3) has an occupancy load of 100 or more. The license allows the holder to sell at retail spirits by the drink, beer, and wine for consumption on the premises. Minors may be allowed on the premises but not in areas where alcohol is served or consumed. The annual fee is $2,000 and the Board may review the fee and set it at a level sufficient to defray the costs of licensing and enforcement.

Local governments may petition the Board to request that further restrictions be imposed on a nightclub license in the interest of public safety. Examples include not allowing minors anywhere on the premises, submitting a security plan, or signing a good neighbor agreement with the local government.

The cap on the number of spirits, beer, and wine restaurant licenses in the state is modified to apply to the combined total of restaurant and nightclub licenses and raised to one license for each 1,200 people in the state. The Board must refuse to grant a nightclub license if the Board determines that the nightclub licenses already granted are adequate for the reasonable needs of the community.

Other liquor provisions, including alcohol server training requirements and tax provisions, are amended to include the spirits, beer, and wine nightclub license.

Substitute Bill Compared to Original Bill:

The original bill removed the cap on the number of spirits, beer, and wine restaurant licenses. The substitute bill restores the cap, provides that the cap applies to the combined total of restaurant and nightclub licenses, and raises the cap from one to each 1,300 people in the state to one to each 1,200 people in the state. In addition, the substitute restores language defining "public institution" for purposes of consideration given by the Liquor Control Board to proximity of liquor licensees and notice of applications.

Staff Summary of Public Testimony:

(In support) Currently, there is no ability to distinguish between a nightclub and a restaurant business model when a liquor license is processed. With the new nightclub license, the local governments will be able to know that a nightclub is being proposed. The new license gives local governments, with their values, the ability to petition for further restrictions. This approach works better than a cap and the state imposing restrictions.

The state is bumping up against the cap. The cap is artificial and removing it will enhance economic development. Removing the cap will not affect the Liquor Control Board's enforcement ability.

Keeping the list of public institutions in section 6(9)(a) is okay.

(With concerns) The new license is supported, but removing the cap is not. The nightclub licenses should be under the cap. The concern is about the Liquor Control Board's ability to enforce current licenses and then adding more licenses. The Board needs more enforcement resources. If the cap is lifted, it is even more critical to keep the list of public institutions in section 6(9)(a).

(Opposed) None.