Legislature(2017 - 2018)HOUSE FINANCE 519

02/20/2018 01:30 PM FINANCE

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Audio Topic
01:35:39 PM Start
01:37:16 PM HB273
02:28:48 PM HB299
02:53:04 PM Public Testimony
03:17:20 PM HB301
03:39:11 PM Public Testimony
03:52:26 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony --
Heard & Held
-- Testimony <Invitation Only> --
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 301                                                                                                            
     "An  Act  relating  to  the  renewal  and  transfer  of                                                                    
     ownership   of  a   beverage   dispensary  license   or                                                                    
     restaurant or eating place license."                                                                                       
3:17:20 PM                                                                                                                    
Co-Chair   Seaton   MOVED   to  ADOPT   proposed   committee                                                                    
substitute  for  HB  301,  Work  Draft  30-LS1217\E  (Bruce,                                                                    
Representative Wilson OBJECTED for discussion.                                                                                  
LAURA STIDOLPH,  STAFF, REPRESENTATIVE ADAM  WOOL, indicated                                                                    
that  the changes  were recommended  by DCCED.  She reviewed                                                                    
the changes in the committee substitute (CS):                                                                                   
     Section 3                                                                                                                  
     Page 3, Line 27, remove "established village"                                                                              
     Removes the  phrase established  village from  the room                                                                    
     rental  requirement  calculations. This  is  consistent                                                                    
     with how the statute has  been applied in the past, and                                                                    
     removing  it  maintains  the  status  quo  rather  than                                                                    
     requiring  the recalculation  of  populations and  room                                                                    
     requirements, further disrupting the industry and                                                                          
     current licensees.                                                                                                         
     Page 4, Line 16, remove "on the licensed premises,"                                                                        
     after "holder of the license"                                                                                              
     This was removed to ensure that the entire                                                                                 
     establishment wasn't considered the licensed premises,                                                                     
   otherwise it is possible that a cottage or hotel room                                                                        
Representative Wilson did not  understand why the language "                                                                    
established village" was removed.                                                                                               
Ms. Stidolph deferred to Ms. McConnell.                                                                                         
3:20:12 PM                                                                                                                    
Ms.  McConnell clarified  that  an  established village  was                                                                    
defined  in   statute  as  "to  include   an  unincorporated                                                                    
community  and  organized  borough   that  has  25  or  more                                                                    
permanent residents and is either  on or off the road system                                                                    
depending on  its distance to  a unified  municipality." She                                                                    
explained that  her research determined that  the concept of                                                                    
an established  village was included  in the  calculation of                                                                    
population  for the  application of  license limits  and the                                                                    
number of  rooms for a  beverage dispensary  tourism license                                                                    
but had  never been implemented. Including  the language had                                                                    
a  significant  effect  on  the  location  and  transfer  of                                                                    
licenses and would cause momentous disruption.                                                                                  
Representative Guttenberg  had recently heard that  if there                                                                    
was  a  10-room hotel  a  person  would  be eligible  for  a                                                                    
license  to serve  alcohol. He  wondered whether  the matter                                                                    
was  related   to  the   deleted  language.   Ms.  McConnell                                                                    
explained  that  the  Beverage  Dispensary  Tourism  license                                                                    
cited in  AS.04.11.400d was an  exemption to  the population                                                                    
licenses  if certain  requirements  were  met including  the                                                                    
number  of rooms  a hotel,  motel, or  resort had  available                                                                    
predicated  on the  location of  the hotel.  The larger  the                                                                    
community the more rooms were  required. She understood that                                                                    
in  1985, the  number of  rooms  changed to  more rooms  per                                                                    
larger community  to halt the  increase in  alcohol licenses                                                                    
in   large   communities  like   Anchorage.   Representative                                                                    
Guttenberg   asked  what   effect  eliminating   established                                                                    
village  had on  licensing. Ms.  McConnell answered  that it                                                                    
did not affect  how Title 4 was implemented  since 1980. She                                                                    
delineated that it  appeared that unincorporated communities                                                                    
like Talkeetna  and Nikiski  inside a  borough would  have a                                                                    
population limit  applied to them  that did not  apply prior                                                                    
to the addition of the language.                                                                                                
3:24:29 PM                                                                                                                    
Co-Chair  Seaton   asked  whether  the  definition   of  the                                                                    
population area  established under  (a) of this  section [in                                                                    
the  bill] was  the same  as the  definition DCCED  used for                                                                    
community  assistance and  whether the  list was  inclusive.                                                                    
Ms.  McConnell   suggested  he  was  referring   to  statute                                                                    
concerning established villages as  it related to refunds to                                                                    
municipalities.  Co-Chair  Seaton   clarified  that  he  was                                                                    
referring  to  page  3  of  the bill  and  referred  to  the                                                                    
definition Ms.  McConnell read  for established  village and                                                                    
thought  it sounded  like the  definition  of "a  community"                                                                    
that  was used  to  determine  DCCED's Community  Assistance                                                                    
Program. He wondered whether  the same population parameters                                                                    
applied. Ms.  McConnell was not familiar  with the Community                                                                    
Assistance Program but offered to provide the information.                                                                      
Representative Wilson WITHDREW her OBJECTION.                                                                                   
CSHB 301 (FIN) was adopted as the working draft.                                                                                
3:27:14 PM                                                                                                                    
Representative Wool  explained the bill. He  reiterated that                                                                    
under  the tourism  dispensary license  an establishment  in                                                                    
any size  community could provide  a facility with  10 rooms                                                                    
and  obtain  a  liquor  license   and  the  number  of  bars                                                                    
proliferated. As a result,  the population determinates were                                                                    
added to  statute. He detailed  that the limit  in Anchorage                                                                    
and Fairbanks  was 50  rooms; the  number of  rooms required                                                                    
depended on the size of  the municipality. He qualified that                                                                    
34 establishments obtained  their tourism dispensary license                                                                    
prior to  1985. He communicated  that when the room  law was                                                                    
rewritten the  34 establishments were not  grandfathered in,                                                                    
were in areas  such as Fairbanks and other  locations in the                                                                    
state. Allowing  the establishments  to continue  to operate                                                                    
was challenged and  the ability for the them  to renew their                                                                    
licenses was  in question. House Bill  301 would grandfather                                                                    
hospitality  businesses that  have been  operating prior  to                                                                    
1985 except  for a "couple" business  that obtained licenses                                                                    
in  1986  with  an  inadequate number  of  rooms  that  were                                                                    
included in the  bill. He reported that  many businesses had                                                                    
been operating for  over thirty years and he  wanted them to                                                                    
remain in business.  The legislation primarily grandfathered                                                                    
in the 34 businesses.  In addition, current statute mandated                                                                    
that alchohol licensed businesses  remain open for 30 8-hour                                                                    
days per year. He noted  that some businesses were only open                                                                    
on  weekends, and  one  was being  fined  for not  operating                                                                    
under  the  8-hour day  requirement.  The  bill changed  the                                                                    
statute to  state that the  business had to operate  for 240                                                                    
hours  per   year.  Finally,  a  provision   added  "outdoor                                                                    
recreation  lodge licenses"  to the  list of  establishments                                                                    
that  could be  voter approved.  He noted  the its  omission                                                                    
from  statute was  an oversite  and the  outdoor lodges  had                                                                    
been issued licenses.                                                                                                           
Representative  Thompson  asked  whether  the  grandfathered                                                                    
licenses  were  eligible  to be  sold.  Representative  Wool                                                                    
answered   in   the   affirmative   and   added   that   the                                                                    
establishment  must remain  in the  location and  operate in                                                                    
the same manner.                                                                                                                
3:33:33 PM                                                                                                                    
Representative  Pruitt  wanted   further  clarification.  He                                                                    
wondered  whether the  businesses  would  operate under  the                                                                    
previous  provisions   in  place  at  the   time  they  were                                                                    
licensed. Representative Wool replied in the affirmative.                                                                       
Ms. Stidolph interjected that section  3, lines 8 through 10                                                                    
of the bill  specifically addressed the issue.  She read the                                                                    
      however, an  application may not  be denied  because a                                                                    
     prospective  transferee under  AS 04.11.400(d)(2)  does                                                                    
     not   have  the   qualifications   required  under   AS                                                                    
Representative    Pruitt    asked   if    a    grandfathered                                                                    
establishment could sell  to a newly built  lodge in another                                                                    
location  meeting  the  requirements  of  the  grandfathered                                                                    
licensed. Representative Wool responded in the negative.                                                                        
Representative  Pruitt  asked  for   the  definition  of  an                                                                    
outdoor recreation  lodge. Ms. Stidolph read  the definition                                                                    
from statute:                                                                                                                   
    Sec. 04.11.225.   Outdoor recreation lodge license.                                                                         
          (a)   An   outdoor    recreation   lodge   license                                                                    
     authorizes the holder to sell alcoholic beverages to a                                                                     
     registered  overnight guest  or off-duty  staff of  the                                                                    
     lodge for  consumption on the  licensed premises  or in                                                                    
     conjunction    with   purchased    outdoor   recreation                                                                    
     activities  provided   by  the  licensee.   An  outdoor                                                                    
     recreation lodge license may not be transferred.                                                                           
          (b)  The biennial  fee for  an outdoor  recreation                                                                    
     lodge license is $1,250.                                                                                                   
          (c)  In this  section, "outdoor  recreation lodge"                                                                    
     means  a  licensed  business  that  provides  overnight                                                                    
     accommodations  and  meals,  is primarily  involved  in                                                                    
     offering  opportunities   for  persons  to   engage  in                                                                    
     outdoor recreation activities and  has a minimum of two                                                                    
     guest rooms.                                                                                                               
Representative  Kawasaki  asked  about   the  value  of  the                                                                    
licenses.  Representative Wool  clarified that  the licenses                                                                    
were not separate from beverage  dispensary licenses, and if                                                                    
the business  was sold the  license would have to  remain at                                                                    
the  same  address. He  was  uncertain  of the  sale  price.                                                                    
Representative Kawasaki  was confused because of  the number                                                                    
of  different  types  of  licenses. He  asked  if  all  were                                                                    
considered  beverage  dispensary  licenses and  whether  the                                                                    
tourism  dispensary license  was  not limited  to caps  that                                                                    
were  currently assessed  per community  for other  beverage                                                                    
dispensary  licenses.  Representative  Wool replied  in  the                                                                    
affirmative.  He  affirmed that  there  were  many kinds  of                                                                    
beverage dispensary licenses and agreed it was confusing.                                                                       
^PUBLIC TESTIMONY                                                                                                             
3:39:11 PM                                                                                                                    
DEBBIE   CARY,   SELF,   NINILCHIK   (via   teleconference),                                                                    
supported the legislation. She owned  one of the licenses in                                                                    
question.   She   was  a   bar   owner   and  operated   her                                                                    
establishment  for  28  years; the  license  was  originally                                                                    
issued in 1963.  She argued that the 40-room  update was not                                                                    
possible on  the Kenai Peninsula  due to lack  of supporting                                                                    
infrastructure  such  as  wells   and  septic  systems.  She                                                                    
related that her business served  her community by providing                                                                    
a  meeting place,  hosting weddings  and  funerals. She  had                                                                    
personally provided her  services for fund raisers  as a way                                                                    
of "giving back" to the community.                                                                                              
3:41:17 PM                                                                                                                    
NANCY TRUMP,  LATITUDE 62  LODGE, MATANUSKA  SUSITNA BOROUGH                                                                    
(via teleconference), had owned  her establishment since May                                                                    
1986.  She was  not just  a  bar but  a full-service  motel,                                                                    
restaurant,  and bar.  She characterized  her business  as a                                                                    
"town meeting place" and  hosted weddings, birthday parties,                                                                    
baby  showers,  and much  more.  The  location was  near  an                                                                    
elementary school, which  enabled the lodge to  be listed as                                                                    
a  safe  place  for  school evacuation.  She  operated  year                                                                    
around and employed 15 to  20 people. She maintained that it                                                                    
would  be   difficult  to  stay  in   business  without  the                                                                    
grandfathered  license.   She  thanked  members   for  their                                                                    
3:43:12 PM                                                                                                                    
ALLEN    CHOY,   AL'S    ALASKAN    INN,   ANCHORAGE    (via                                                                    
teleconference),  spoke  in  favor of  the  legislation  and                                                                    
provided a  history of his  business. He explained  that his                                                                    
father moved to Anchorage in 1956  and at the time there was                                                                    
a severe lack  of housing. Anchorage had no  hotels south of                                                                    
13th Avenue. He believed  the tourism dispensary license was                                                                    
provided as an incentive. His  father opened the business in                                                                    
1964 then  called the  Candle Inn. He  spoke to  the 10-room                                                                    
requirement  and  explained  how  it was  changed  based  on                                                                    
population after  Atlantic Richfield Company  discovered oil                                                                    
on the  North Slope in 1968.  He agreed with the  change and                                                                    
did not want a "bar on  every corner." He indicated that the                                                                    
intent of the legislature in  1985 was to grandfather in the                                                                    
prior  tourism licensees.  He believed  that  the ABC  board                                                                    
"misinterpreted" the intent of the  law by deciding that the                                                                    
pre-1985  license holders  were currently  non-compliant. He                                                                    
argued  that it  was not  economically feasible  to add  the                                                                    
rooms  in  Anchorage.  Currently  in  Anchorage  there  were                                                                    
hotels   on   every   corner.   He   emphasized   that   the                                                                    
legislature's intent in 1985 was  for the pre-1985 licensees                                                                    
to be grandfathered in.                                                                                                         
3:50:17 PM                                                                                                                    
PETE HANSON,  ALASKA CHARR, ANCHORAGE  (via teleconference),                                                                    
favored  HB 301.  He  noted that  the  bill supported  long-                                                                    
standing  business.  He  believed  that the  intent  of  the                                                                    
legislature   wanted   grandfathered  protection   for   the                                                                    
existing business and "the  unintended ambiguity" existed in                                                                    
the law. He thanks the legislature for it consideration.                                                                        
3:51:18 PM                                                                                                                    
Co-Chair Seaton CLOSED Public Testimony.                                                                                        
He reviewed the agenda for the following day. He also                                                                           
indicated that amendments for HB 301 were due to Co-Chair                                                                       
Foster's office by Friday, February 22 at 5:00 P.M.                                                                             

Document Name Date/Time Subjects
HB299 Supporting Document Audit 11.17.17.pdf HFIN 2/20/2018 1:30:00 PM
HB 299
HB301 Supporting Documents ABC Memo Tourism BDL 9.13.17.pdf HFIN 2/20/2018 1:30:00 PM
HB 301
HB301 Supporting Documents ABC Memo Duck Inn 1.23.18.pdf HFIN 2/20/2018 1:30:00 PM
HB 301
HB301 Sponsor Statement 1.24.18.pdf HFIN 2/20/2018 1:30:00 PM
HB 301
HB301 Supporting Documents ABC Memo Tourism BDL 1.23.18.pdf HFIN 2/20/2018 1:30:00 PM
HB 301
HB301 Supporting Document Tailgaters Sports Bar Letter 1.31.18.pdf HFIN 2/20/2018 1:30:00 PM
HB 301
CSHB301 ver M Sectional Analysis 2.12.18.pdf HFIN 2/20/2018 1:30:00 PM
HB 301
HB299 Sponsor Statement 1.29.18.pdf HFIN 2/20/2018 1:30:00 PM
HB 299
HB 273 Alcohol and Marijuana Control Office House Finance 2-20-18.pdf HFIN 2/20/2018 1:30:00 PM
HB 273
HB 273 MarijuanaFlowChart.pdf HFIN 2/20/2018 1:30:00 PM
HB 273
HB 273 HB 273 HFIN Followup final.pdf HFIN 2/20/2018 1:30:00 PM
HB 273
CSHB301 Explanation of Changes ver M to ver E 2.19.18.pdf HFIN 2/20/2018 1:30:00 PM
HB 301
CSHB301 ver E 2.16.18.pdf HFIN 2/20/2018 1:30:00 PM
HB 301
CSHB301 ver E Sectional Analysis 2.19.18.pdf HFIN 2/20/2018 1:30:00 PM
HB 301