Legislature(1995 - 1996)
03/20/1996 03:17 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE March 20, 1996 3:17 p.m. MEMBERS PRESENT Representative Pete Kott, Chairman Representative Norman Rokeberg, Vice Chairman Representative Kim Elton Representative Jerry Sanders Representative Beverly Masek Representative Brian Porter Representative Gene Kubina MEMBERS ABSENT All members present COMMITTEE CALENDAR HOUSE BILL NO. 372 "An Act relating to liquor licenses issued to a restaurant or eating place; and providing for an effective date." - PASSED OUT OF COMMITTEE HOUSE BILL NO. 482 "An Act relating to state procurement practices and procedures; and providing for an effective date." - HEARD AND HELD HOUSE BILL NO. 533 "An Act relating to the board of directors of the Alaska Aerospace Development Corporation." - SCHEDULED BUT NOT HEARD SENATE BILL NO. 197 "An Act prohibiting increases in health insurance premiums if the insured is a victim of domestic violence." - SCHEDULED BUT NOT HEARD *HOUSE BILL NO. 497 "An Act relating to chiropractic peer review; and providing for an effective date." - SCHEDULED BUT NOT HEARD *HOUSE BILL NO. 278 "An Act relating to the enhanced 911 emergency reporting systems." - BILL CANCELLED (* FIRST PUBLIC HEARING) PREVIOUS ACTION BILL: HB 372 SHORT TITLE: RESTAURANT LIQUOR LICENSES SPONSOR(S): REPRESENTATIVE(S) ROKEBERG, B.Davis, Brown JRN-DATE JRN-PG ACTION 12/29/95 2363 (H) PREFILE RELEASED 01/08/96 2363 (H) READ THE FIRST TIME - REFERRAL(S) 01/08/96 2363 (H) STATE AFFAIRS, LABOR & COMMERCE 01/10/96 2405 (H) COSPONSOR(S): BROWN 03/07/96 (H) STA AT 8:00 AM CAPITOL 102 03/07/96 (H) MINUTE(STA) 03/09/96 (H) STA AT 10:00 AM CAPITOL 102 03/09/96 (H) MINUTE(STA) 03/11/96 3056 (H) STA RPT 1DP 2NR 2AM 03/11/96 3057 (H) DP: GREEN 03/11/96 3057 (H) NR: JAMES, IVAN 03/11/96 3057 (H) AM: PORTER, ROBINSON 03/11/96 3057 (H) ZERO FISCAL NOTE (REV) 03/20/96 (H) L&C AT 3:00 PM CAPITOL 17 BILL: HB 482 SHORT TITLE: STATE PROCUREMENT PRACTICES & PROCEDURES SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR JRN-DATE JRN-PG ACTION 02/09/96 2686 (H) READ THE FIRST TIME - REFERRAL(S) 02/09/96 2686 (H) L&C, STATE AFFAIRS, FINANCE 02/09/96 2687 (H) 2 FISCAL NOTES (ADM, DOT) 02/09/96 2687 (H) 5 ZERO FNS (2-ADM, DCED, DCRA, CORR) 02/09/96 2687 (H) 5 ZERO FNS (DOE, DEC, F&G, GOV, DHSS) 02/09/96 2687 (H) 5 ZERO FNS (LABOR, LAW, DMVA, DNR, DPS) 02/09/96 2687 (H) 2 ZERO FNS (REV, UA) 02/09/96 2687 (H) GOVERNOR'S TRANSMITTAL LETTER 03/18/96 (H) L&C AT 3:00 PM CAPITOL 17 03/18/96 (H) MINUTES(L&C) 03/20/96 (H) L&C AT 3:00 PM CAPITOL 17 WITNESS LIST DON DAPCEVICH, Executive Director Governor's Advisory Board on Alcoholism and Drug Abuse P.O. Box 110608 Juneau, Alaska 99801-0608 Telephone: (907)465-8920 POSITION STATEMENT: Testified in support of HB 372 DON SKEWIS, Owner Crossroads Restaurant and Bar 1402 Gambell Anchorage, Alaska 99501 Telephone: (907)276-9017 POSITION STATEMENT: Testified in support of HB 372 DOUG GRIFFIN, Chairman Alcoholic Beverage Control Board 550 West 7th Avenue, Suite 350 Anchorage, Alaska 99501 Telephone: (907)277-8638 POSITION STATEMENT: Testified in support of HB 372, with concerns MAURICE MCDONALD, Vice President Cabaret Hotel and Restaurant Retailers Association 341 East 56th Avenue Anchorage, Alaska 99501 Telephone: (907)563-8133 POSITION STATEMENT: Testified in support of HB 372 JACK LEWIS, President Anchorage Restaurant and Beverage Association 1347 East 2nd Avenue Anchorage, Alaska 99501 Telephone: (907)563-8133 POSITION STATEMENT Testified in support of HB 372 PAT FULLERTON, President Spenard Community Council 301 East Fireweed Lane, Suite 101 Anchorage, Alaska Telephone:(907)563-1156 POSITION STATEMENT: Testified in support of HB 372 DUGAN PETTY, Director Division of General Services Department of Administration State of Alaska P.O. Box 110210 Juneau, Alaska 99811-0210 Telephone: (907)465-225- POSITION STATEMENT: Provided information with regard to HB 482 ACTION NARRATIVE Tape 96-25, SIDE A Number 0008 The House Labor and Commerce Standing Committee was called to order by Chairman Pete Kott at 3:17 p.m. Members present at the call to order were Representatives Kott, Rokeberg, Elton, Sanders, Masek, and Kubina. Representative Porter joined the meeting at 3:20 p.m. HB 372 - RESTAURANT LIQUOR LICENSES Number 0043 CHAIRMAN KOTT announced that the first order of business to come before the committee was HOUSE BILL NO. 372, "An Act relating to liquor licenses issued to a restaurant or eating place; and providing for an effective date." REPRESENTATIVE NORMAN ROKEBERG spoke as the sponsor of HB 372. He stated that he had introduced the legislation at the request of the Spenard Community Council, which is part of his district in the Anchorage area. The community council had passed a resolution asking for the repeal of taverns. The council is concerned because the Spenard area has 27 percent of all the liquor licenses in Anchorage, and 6 percent of the population. The council has an ongoing concern about the spread of liquor dispensing in the community. They believe that alcohol contributes to the high level of crime in the area. Secondly, Representative Rokeberg stated that he wanted the opportunity to right a wrong vote. Last year, SB 87, which passed the House by a vote of 39 - 0, authorized the establishment of taverns. He explained that the House members were told the pertinent section was put into the law because of Alcoholic Beverage Control (ABC) Board concerns about Cyrano's bookstore in Anchorage. The business was unable to operate under the existing statutory scheme, so remedial legislation was needed. However, Representative Rokeberg asserted that the House members were misinformed. In fact, SB 87 created a whole new class of taverns. His third reason for introducing the bill was the economic impact of SB 87. In the Anchorage area, a beverage dispensary license sold for as much as $400,000, during the 1980's. Now, those licenses are valued from $100,000 to $150,000. A restaurant license, which only permits the sale of beer and wine, at the peak was valued at about $25,000. Now they have no secondary value. It is also interesting to note that the bi-annual renewal fee for a beverage dispensary license is $2,500. By passing SB 87, the legislature allowed 10 percent of all restaurant licenses in a particular geographic jurisdiction to be converted to exempt licenses. Basically, this created a special interest exemption in the statute, which should be removed. The bill passed last year expands the availability of alcohol without substantial food sales. It allows 10 percent of restaurant licenses to be exempt from the 50 percent food provision which is presently in the regulations. In these exempt establishments, beer and wine can be sold with a menu approved by the ABC board, and entertainment is allowed past 9 p.m. These are the primary elements of an exempt license. Under SB 87, local approval is required for an exempt establishment. Under the regular statutory scheme, a liquor license is subject only to an advisory vote by a municipal government. Number 0478 REPRESENTATIVE ROKEBERG further noted that the Anchorage Municipal Assembly recently passed a resolution in support of HB 372. Then, on reconsideration, they repealed the resolution by a vote of 6 - 5. He stated that he believes there is a member who has a vested interest in a pending license application. His understanding is that the assembly will reconsider the matter. They have formally instituted a moratorium on granting any exempt licenses, pending the outcome of HB 372. Representative Rokeberg noted that he would offer a small amendment, which would add "physical dance floor," to the provisions of CSHB 372(STA). Number 0780 CHAIRMAN KOTT stated that the committee members did not have the CS in their packets. REPRESENTATIVE ROKEBERG corrected himself. He stated that the CS he had was version CSHB 372(G). CHAIRMAN KOTT responded that the members did not have that version, either. Copies of CSHB 372(G) were then distributed to the committee members. REPRESENTATIVE ROKEBERG indicated that the testimony before the State Affairs Committee was such that he had provided a CS, to deal with some of their concerns. The CS contains a provision to "grandfather in" three existing exempt licenses. The three establishments would have to demonstrate to the ABC board that they serve a sufficient menu to meet the provisions of the law. Also, live performances could only be conducted between the hours of 6 p.m. and 9 p.m. He apologized that the committee had not had the opportunity to review version G. Representative Rokeberg also noted that the provisions on page 2, lines 8 and 10, should probably read "200 feet" rather than "1,000." Number 0789 REPRESENTATIVE BRIAN PORTER made a motion that the committee adopt CSHB 372(G). REPRESENTATIVE SANDERS asked if his understanding was correct. Last year, the legislature passed a bill, SB 87, that created taverns. Three people have opened taverns under the provisions of the bill. Now, the committee wants to pass a bill so that no one else can open such an establishment, except the three who have already done so. REPRESENTATIVE ROKEBERG responded that the entire category could not be repealed, because businesses have already made investments based on this new exempt license. That is why he agreed to include a grandfather clause. REPRESENTATIVE SANDERS then asked, "You want to grandfather in three new people, and grandfather out everybody else?" REPRESENTATIVE ROKEBERG reiterated that he would have preferred to repeal the entire section, but because of testimony that people could be injured, he inserted the grandfather provision. Number 0906 REPRESENTATIVE GENE KUBINA asked for an explanation of the unfair advantage. REPRESENTATIVE ROKEBERG responded that the entire structure of the alcohol laws in the state of Alaska is predicated on only two types of licenses: a beverage dispensary license, which has a significant secondary value and limited access, and a restaurant license. Anyone wishing to set up a cabaret or bistro type establishment has to purchase a beverage dispensary license. In the major urban areas, populations would have to be expanded before additional licenses could be granted. Therefore, the only way to get into the business is to purchase an already existing license. Because there are restrictions on restaurant licenses, these do not compete with beverage dispensary licenses. The beverage dispensary industry is very concerned about the impact of this new class of exempt licenses. REPRESENTATIVE ROKEBERG further noted that he has been accused of having a vested interest in HB 372, and asserted that he has no interest in any bar or other establishment of that nature. In his youth, he was the owner of a beverage dispensary license, but that was sold in 1968. The proposed legislation is an issue of economics and fairness. Number 1139 REPRESENTATIVE PORTER asked if the original bill included a limitation on the number of exempt licenses. REPRESENTATIVE ROKEBERG responded that the limit is 10 percent of all licenses in a geographic area. In Anchorage, for instance, there could be 14 or 15 exempt licenses. Number 1159 REPRESENTATIVE KIM ELTON noted that section 2 of the proposed bill contains several prohibitions. He asked if, for example, live entertainment can only take place between the hours of 6 p.m. and 9 p.m. That would preclude entertainment at an afternoon fund raiser. REPRESENTATIVE ROKEBERG responded that his proposed Amendment 1 would take care of that problem. REPRESENTATIVE ELTON replied that he was not sure if it did. If an establishment had to apply to the chairman of the ABC board for an exemption from this provision, would it really be worth the trouble? REPRESENTATIVE ROKEBERG stated that the existing regulations contain this requirement. REPRESENTATIVE ELTON then asked, if that is the existing regulation, why is the proposed language needed? Number 1335 REPRESENTATIVE ROKEBERG responded that this language remains in for the grandfathered, exempt licensees. REPRESENTATIVE ELTON said he still didn't understand why the section was needed. REPRESENTATIVE ROKEBERG stated that the existing regulations were written for restaurant licenses, but this section refers to exempt licenses. CHAIRMAN KOTT noted that the beer and wine licenses presently existing would have to go to the director to receive this permit. The section being amended refers only to the new class of taverns that was created by SB 87. REPRESENTATIVE ROKEBERG stated that he would be happy to circulate the existing restaurant regulations. REPRESENTATIVE ELTON responded that that would be helpful. REPRESENTATIVE ROKEBERG reiterated that the current regulations apply to existing restaurant licenses. They specifically require that a restaurant wishing to have live entertainment on its premises before 6 p.m. must have the permission of the ABC board. Number 1432 REPRESENTATIVE BEVERLY MASEK stated that she had sent a memo to Representative Rokeberg regarding his proposed HB 372, outlining her concerns. She referred to the fact that Anchorage currently has 108 package liquor license, 147 dispensary licenses, 24 club licenses, and 146 restaurant or eating places, with six licenses applied for. Under the provisions of SB 87, Anchorage is limited to a maximum of 15 exempt establishments. One reason for creating the exemption was so that restaurants could have entertainment past 9 p.m. Representative Masek asked why Representative Rokeberg considered entertainment past 9 p.m. to be a problem. REPRESENTATIVE ROKEBERG responded that it would be an unfair competitive advantage. The exempt licensee does not have to make the monetary investment required of a beverage dispensary licensee. He reiterated that some establishments in Anchorage have paid over $400,000 for a beverage dispensary license. Yet, an exempt license can now be obtained for free. The liquor laws of the state were not designed to allow this situation. It is very much an economic issue. Number 1576 REPRESENTATIVE MASEK then noted that the exempt establishments can only serve beer and wine, as opposed to a full liquor license. So, there is a difference. Also, they are not competing with restaurants, since they do not have full kitchens. REPRESENTATIVE ROKEBERG responded that in order to have a full kitchen menu, a restaurant must make a substantial investment. If an establishment only serves a token menu, no such investment is required. He stated that he had recently spoken with the ABC board members, and that the standards for approving a menu under the provisions of SB 87 are minimal. In subsequent conversations, ABC board members stated their concern that the standards for grandfathered establishments were not high enough. REPRESENTATIVE MASEK then commented that the exempt licenses must be approved by the local governing body. REPRESENTATIVE ROKEBERG replied that most people in the alcoholic beverage industry were unaware of what happened when SB 87 passed last year. There has been a late recognition of what occurred. He asserted that the Anchorage Municipal Assembly approved licenses without realizing the full impact of the legislation, which is why they have now put a moratorium on the issuance of any more exempt licenses in Anchorage. Number 1744 REPRESENTATIVE MASEK stated that she had received a written response from the ABC board regarding the type of menu required. The requirement goes well beyond chips and dip. REPRESENTATIVE ROKEBERG responded that he had inserted the menu provisions because of the five exempt applications still pending, and reiterated that he would be happy to strengthen the provision. Number 1809 REPRESENTATIVE SANDERS again asked about SB 87. Was it the same bill that allowed restaurants which serve wine and liquor to play music in the evening for private parties? REPRESENTATIVE ROKEBERG responded that SB 87 was a major, omnibus liquor bill. It created the category of exempt licenses. REPRESENTATIVE SANDERS reiterated that he had not understood the full impact of the bill when he voted for it. REPRESENTATIVE ROKEBERG stated that the House "got sold a bill of goods" by their colleagues across the way. REPRESENTATIVE SANDERS reiterated that he had thought SB 87 applied only to private parties. REPRESENTATIVE ROKEBERG responded that it did not. Number 1903 CHAIRMAN KOTT called on the first witness, Don Dapcevich. DON DAPCEVICH, Executive Director of the Governor's Advisory Board on Alcoholism and Drug Abuse, stated that the board supports HB 372. He noted that he is less concerned about the economic impact of SB 87 than he is about the creation of a new industry, which has the potential to raise Alaska's already high consumption rate of alcohol, with all the attendant problems and costs. He noted that SB 87 actually creates an industry where none existed before. This flies in the face of the state plan for alcoholism and drug abuse prevention. Number 2030 REPRESENTATIVE SANDERS asked about the three existing businesses which would be grandfathered in. MR. DAPCEVICH said that he assumed the reason for allowing those three to continue would be to prevent litigation. REPRESENTATIVE SANDERS then asked if the other 15 applicants had not also started business. MR. DAPCEVICH responded that he did not believe they had. They have applied, with the intent to start a business in the future. REPRESENTATIVE SANDERS then asked who the three businesses are. MR. DAPCEVICH responded that he did not have that information. Number 2120 CHAIRMAN KOTT called on the next witness, Don Skewis. MR. DON SKEWIS, owner of the Crossroads Restaurant and Bar in Anchorage, stated that he has been a beverage dispensary license holder in the state for 20 years. He reiterated that restaurant licenses were never intended to compete with dispensary licenses. He also stated that the new exempt licenses do not compete with his business, but that he feels they are unfair. Most of the new establishments intend to seat over 300 people, which would hurt downtown bars in Anchorage. He also noted that the city of Anchorage is trying to shut down bars on Fourth and Fifth Avenues, yet they are about to put three large, new, establishments downtown. Many people in the alcohol industry are only marginally making it, and liquor licenses are available for sale. Yet, the exemptions allow free licenses. Number 2214 REPRESENTATIVE PORTER asked if it was fair to say that the tavern industry in Washington state is really the cocktail lounge industry in Alaska. He then described the license system in that state. MR. SKEWIS responded in the affirmative. REPRESENTATIVE PORTER noted that the number of licenses allowed in Washington state is limited. He described the license system in Washington and Oregon. MR. SKEWIS commented that he had only learned about the new type of license two days ago. Number 2284 REPRESENTATIVE ELTON asked for how long an alcohol dispensing license is issued. MR. SKEWIS replied that the licenses are issued for an indefinite term, but must be renewed each year. He stressed that keeping the license is a privilege, which must be earned. REPRESENTATIVE ELTON asked if the renewal requirements are the same for the new, exempt establishments. MR. SKEWIS said that the renewal requirements are the same. However, the "tavern" licenses have a $500 annual fee, while alcohol dispensing licenses cost $1,300 annually. REPRESENTATIVE ELTON noted that the statute says a license will not be renewed if more than 50 percent of a restaurant's sales are liquor. MR. SKEWIS replied that the new, exempt establishments do not have to meet that standard. Number 2381 REPRESENTATIVE KUBINA commented that the root of the problem seems to be entertainment. An establishment pays extra for its license because it provides entertainment. MR. SKEWIS pointed out that 93 percent of his business is beer and wine, which means that he is definitely paying extra for the privilege of selling alcohol. REPRESENTATIVE KUBINA noted that Section B of HB 372 creates an exemption "if the board has determined it is a bona fide restaurant." Does this mean that at least 50 percent of the profits have to come from food? MR. SKEWIS responded in the affirmative. REPRESENTATIVE KUBINA then asked if there would be some way to keep the 50 percent requirement, and allow entertainment all night. Number 2408 MR. SKEWIS replied that food has to be available as long as alcohol is being served. If live entertainment were to be added, the 50 percent standard could not be met, because very little food gets sold after the dinner hour. REPRESENTATIVE ROKEBERG noted that the proposed CS leaves the 50 percent exemption for the grandfathered establishments, but reinserts a portion of the entertainment regulations. TAPE 96-25, SIDE B Number 2481 REPRESENTATIVE ROKEBERG further noted that the 200-foot regulation for restaurants is in the existing law. MR. SKEWIS concurred, but added that the requirement for a beverage dispensary license is 1,000 feet. In other words, a beverage dispensary outlet cannot be located within 1,000 feet of a church or school. However, the exempt establishments fall under the 200 feet category. This could result in a beer hall being located within 200 feet of a church or school. CHAIRMAN KOTT announced that the committee would now take testimony by teleconference. Number 2390 DOUG GRIFFIN, Director of the state Alcoholic Beverage Control (ABC) Board, testified via teleconference from Anchorage. He stated there was no question, in hindsight, that the passage of SB 87 had created some headaches. However, he noted that Section 2 of the proposed CSHB 372 appears to be unnecessary. The minimum food content required will be set by the board, and will actually be a higher standard than set forth in the proposed legislation. To date, establishments applying for the exempt status have been focused more on entertainment than food. He noted that the grandfathering, under the requirements of Section 2, would actually make the establishments worse off. He commented perhaps that was Representative Rokeberg's intent. Mr. Griffin concluded by stating that the ABC board supports HB 372, with some concerns, as noted. Number 2278 REPRESENTATIVE ROKEBERG stated that at his meeting with the ABC board several weeks ago, the menu requirement appeared to be minimal. MR. GRIFFIN replied that the board would hold establishments to a high standard, and would in fact be looking for the 50 percent of gross sales requirement. He commented that he thought the ABC board would make good decisions, and that they should be given some discretion. He reiterated that a beer and wine license should be issued only in conjunction with a bona fide restaurant. Number 2183 MAURICE MCDONALD, owner of Burgers and Brew and Vice President of the Cabaret Hotel and Restaurant Retailers Association (CHARR), testified that when SB 87 was passed, no one in the industry understood its full implications. What they understand now in Anchorage is, exempt equals tavern. As Representative Rokeberg has pointed out, this has created an unfair advantage. Basically, the exempt permit applicants are looking for the right to provide entertainment. Currently, under Alaska statutes, if you want to have entertainment in the bar business, you must have an alcoholic beverage dispensary license. MR. MCDONALD further testified that Anchorage is currently experiencing a growth of "brew pubs." In order to be a brew pub, you must have a beverage dispensary license. Now, some individuals have built a brewery and attached a restaurant. They are not required to have a beverage dispensary license; yet by law, they can give out free samples. On top of that, they can take the beer that they have brewed and sell it to a wholesaler, or a retail outlet. Now, by law, they can also sell their beer at retail across the counter. With an exempt license, establishments can be both wholesalers and retailers. This has totally skewed what was previously a level playing field. Mr. McDonald also noted that this type of establishment could be opened in any Alaskan city having a population of 5,000 or more. Number 2021 CHAIRMAN KOTT asked Mr. McDonald if he was testifying on behalf of CHARR, or as a restaurant and bar owner. MR. MCDONALD responded that he was testifying on behalf of CHARR. He stated that he had met with the CHARR board members, and that CHARR has drafted a letter stating it is opposed to exempt licenses. Their only concern earlier was with the title of the bill. CHAIRMAN KOTT asked if it was CHARR's position that they do not support grandfathering in the three existing establishments. MR. MCDONALD stated it was his understanding that the three exempt establishments must be approved by both the assembly and the ABC board. He also noted, as Mr. Griffin pointed out, that the grandfather clause in HB 372 actually makes those establishments worth less. The only thing they are really exempt from is the 50/50 split. Number 1944 REPRESENTATIVE KUBINA asked if CHARR was a statewide organization. MR. MCDONALD replied that it is. He noted that Jack Lewis, the president of the Anchorage Restaurant and Beverage Association (ARBA), was also available to testify. Number 1924 JACK LEWIS, President of ARBA, stated that his organization is in 100 percent support of HB 372. He further noted that he could not understand how SB 87 had slipped by, but that it appeared to be aimed at accommodating establishments that weren't meeting the food/beverage ratio. Mr. Lewis said he did not believe the legislature had actually intended to create a whole new class of exempt licenses. As the owner of the Sourdough Mining Company restaurant and the Peanut Farm, he believes that SB 87 puts him at an incredible disadvantage. Part of the value of his license is the ability to provide entertainment, yet exempt establishments can also do this, and do not have to purchase their licenses. In conclusion, Mr. Lewis noted that his phone is ringing off the hook in Anchorage, with calls from people in the industry who can't believe what has happened, or from people who want to find out how they can get one of the new, free licenses. He reiterated that ARBA fully supports HB 372. Number 1792 REPRESENTATIVE SANDERS emphasized that if he had understood the implications of SB 87, he would not have voted for it. PAT FULLERTON, President of the Spenard Community Council, stated that SB 87 had been brought to the council's attention last year. From what they understand, it was an attempt by the ABC board to allow Cyrano's Bookstore to let its customers sip wine while they browsed through the books. However, Cyrano's was able to correct its problem without the need for an exempt license. Last year, a "dubious operator" applied to open a sports pub in Spenard, using an exempt license. He would not provide live entertainment, but would instead have televised sporting events. Spenard has approximately 6 percent of Anchorage's population, and approximately 25 percent of its liquor licenses. The council is trying to reduce the availability of alcohol in the community. Mr. Fullerton noted that, last September, a man in Spenard shot and killed his estranged wife. His excuse was that he was drunk on beer. Exempt licenses make alcohol more readily available, without more stringent requirements. The council believes that exempt licenses would create more problems in Spenard. Number 1599 REPRESENTATIVE KOTT asked if any additional members of the public wished to testify on HB 372. There being no further witnesses, he announced that public testimony on HB 372 was closed. REPRESENTATIVE ROKEBERG stated that his proposed Amendment 1 to CSHB 372(G) would add the provision regarding entertainment, " ..., unless approved by the Director after a written request by the Licensee for a specific occasion." This would overcome the problem raised by Representative Elton, and puts the exempt license on the same basis as other restaurant licenses. Therefore, the value of a grandfathered exempt license would not be as great, although they still would not have to meet the requirements of the 50 percent rule. Representative Rokeberg also noted that on page 2, line 27, he would insert a new subsection (3) under Section (3), stating that the premises may not have a physical dance floor. This is to avoid disco type entertainment, as opposed to live entertainment. If there is no dance floor, then disco cannot be offered, which would further restrict the scope of entertainment allowed under the grandfathered exemption. REPRESENTATIVE ROKEBERG moved that the House Labor and Commerce Committee adopt Amendment 1 to CSHB 372(G). Number 1452 CHAIRMAN KOTT stated that he would object, for purposes of discussion. He asked Representative Rokeberg to define the phrase "physical dance floor." REPRESENTATIVE ROKEBERG responded that it was an area physically delineated as an area for dancing. He noted that if someone wanted to get up and do the polka between tables, nobody would complain. But a delineated dance floor would be prohibited. CHAIRMAN KOTT asked if an establishment had a karaoke machine and some pool tables, a person could then get up and dance on the pool table. REPRESENTATIVE ROKEBERG responded that natural spontaneity could never be legislated out of existence. The proposed amendment would simply prohibit disco type entertainment being offered at exempt establishments. Number 1349 CHAIRMAN KOTT reiterated that he still didn't understand the meaning of "physical dance floor." REPRESENTATIVE ROKEBERG responded that perhaps "designated" would be a better word. CHAIRMAN KOTT concurred. REPRESENTATIVE ROKEBERG noted that he would be happy to entertain any amendments to the amendment. CHAIRMAN KOTT offered a friendly amendment to the proposed amendment, removing the word "physical," and inserting "designated." Number 1315 REPRESENTATIVE ELTON raised two points. First, he guaranteed the sponsor that if he and his wife got up and did the polka between the tables, someone would certainly object. Second, he offered a friendly amendment, to insert a semicolon rather than a period, after the phrase "specific occasion". REPRESENTATIVE ROKEBERG concurred. CHAIRMAN KOTT then noted that the phrase "the premises" should be deleted from paragraph 3, under Section 2. REPRESENTATIVE ROKEBERG agreed. The change was offered as a friendly amendment. Number 1228 CHAIRMAN KOTT stated that he withdrew his objection to REPRESENTATIVE ROKEBERG's proposed amendment. REPRESENTATIVE KUBINA asked if Section 2 was being discussed. He noted that the ABC board felt the section was unnecessary. CHAIRMAN KOTT asked Mr. Griffin to address the question. MR. GRIFFIN responded that he would support the amendment, but was concerned that live entertainment and dancing would be permitted between the hours of 6 p.m. and 9 p.m. REPRESENTATIVE ROKEBERG responded that the amendment would read "may only provide live performances or music on the licensed premises between 6 and 9 p.m., unless approved by the Director at the written request . . ." MR. GRIFFIN stated that live entertainment, including dancing, would still be allowed for those three hours. Therefore, the dance floor provision is somewhat contradictory. Number 1052 REPRESENTATIVE KUBINA again asked if the board would prefer to see the entire section deleted. MR. GRIFFIN responded that the entire issue could be resolved by referring to the regulation, 15 AAC 104.305, which regulates entertainment on licensed premises. REPRESENTATIVE KUBINA noted that the amendment would only affect the three establishments already approved, and any that might be approved before the effective date of the bill. REPRESENTATIVE ROKEBERG responded that a large number of applications are pending. REPRESENTATIVE KUBINA noted that the number of exempt licenses allowed is limited by population size. In his community, for instance, there could only be one. In Juneau, there couldn't be more than two. He again suggested deleting Section 2 in its entirety. Number 0925 REPRESENTATIVE ROKEBERG responded that he would be happy to adopt the regulations by reference, and insert them in the bill. He reiterated that he wanted to keep entertainment restrictions on the exempt licenses. He also noted that he had another proposed amendment, which would delete the reference to menu requirements, and leave those standards up to the discretion of the board. He stated that he was willing to give the exemption from the 50 percent rule. Number 0868 REPRESENTATIVE ELTON noted that the committee appeared to be spiraling downward, in its attempts to amend the bill. He suggested that perhaps the sponsor could continue working on the bill, and bring a comprehensive amendment to the next meeting. REPRESENTATIVE ROKEBERG stated that he knew exactly what he wanted to do, and that he would like to get on with the decision. Number 0795 REPRESENTATIVE PORTER asked Mr. Griffin, if the proposed exemptions were included, would the board approve exemptions for single event activities only? MR. GRIFFIN responded that his interpretation of the intent of the regulations was that exemptions be limited to single event occasions. Number 0655 REPRESENTATIVE KUBINA noted that Chairman Kott had stated earlier he would not move the bill today. That being the case, he agreed with Representative Elton that the sponsor should continue to work on the bill. REPRESENTATIVE ROKEBERG stated that these were policy calls. He agreed with Representative Porter, that the regulations should be inserted in the bill by reference. REPRESENTATIVE ELTON reiterated that he felt the committee was spiraling downward. The testimony from the director was that the dance floor provision created "cognitive dissonance." He emphasized that questions of this type should be resolved before the bill is brought before the committee. Representative Elton further stated that he understood the sponsor's request for speed, but that he did not want to see the committee pass out a bad bill, like SB 87, which would then have to be dealt with next year. Number 0532 REPRESENTATIVE ROKEBERG responded that HB 372 had already received a major hearing in another committee, in addition to the testimony today. He offered to remove the provision referring to a dance floor. He stated that he would move an amendment to the amendment to the amendment, to delete subsection 3, relating to the designated dance floor. REPRESENTATIVE ELTON offered a friendly amendment to reinsert the period, in place of the semicolon. REPRESENTATIVE ROKEBERG accepted the amendment. Number 0486 CHAIRMAN KOTT noted that the amendment to the amendment to the amendment to the amendment, which was a friendly amendment, inserted a period in place of a semicolon. REPRESENTATIVE PORTER announced that he was experiencing cognitive dissonance. REPRESENTATIVE ELTON responded that that was his phrase. REPRESENTATIVE KUBINA commented that the substantive hearing in the last committee had obviously not dealt with all the bill's problems. CHAIRMAN KOTT asked if there was any objection to the aforementioned amendment. Hearing none, the amendment was passed. Several of the members appeared confused about which amendment had passed. Number 0375 REPRESENTATIVE ROKEBERG then withdrew his amendments, due to confusion, and asked if the committee could start from scratch. There being no objection, he made a motion that the committee pass his original Amendment 1. CHAIRMAN KOTT noted that the amendment added language after "9 p.m." on line 27. Hearing no objection, Amendment 1 was adopted. Number 0325 REPRESENTATIVE ROKEBERG made a motion that the committee pass Amendment 2, deleting everything from "that includes at least two hot dinner entrees . . ." through the word "salad." This would allow the board to use its own discretion. Number 0254 CHAIRMAN KOTT noted that the amendment would change the requirement to " . . . a full service menu approved by the board." Hearing no objection, Amendment 2 was passed. Number 0236 REPRESENTATIVE ELTON asked if the committee needed to discuss the 1,000 versus 200 foot provision. REPRESENTATIVE ROKEBERG responded that the 200 foot provision was actually contained in the existing statute. REPRESENTATIVE ELTON responded that he was not comfortable with allowing a grandfathered tavern within 200 feet of a school. REPRESENTATIVE ROKEBERG concurred, but noted that the 200 foot rule already applied to restaurants. Number 1069 REPRESENTATIVE PORTER noted that the exemption only related to the three grandfathered establishments, one of which was already located with 200 feet of a church. To change the provision would then negate that grandfathered establishment. REPRESENTATIVE ROKEBERG stated he believed that was true. Number 0042 CHAIRMAN KOTT asked if there were any further amendments. REPRESENTATIVE SANDERS made a motion that the committee pass CSHB 372(L&C), as amended, with attached zero fiscal notes and individual recommendations. REPRESENTATIVE KUBINA objected. He noted that the chairman had previously stated he would hold the bill. REPRESENTATIVE ELTON also objected. He stated that the committee was acting too quickly, and that they needed further input from the director of the ABC board. REPRESENTATIVE ROKEBERG emphasized that the director had already stated he was okay with the bill. TAPE 96-26, SIDE A Number 0042 MR. GRIFFIN stated that he was satisfied with the bill. REPRESENTATIVE ROKEBERG then asked if, that being the case, the members would withdraw their objections. All objections were withdrawn. CHAIRMAN KOTT announced that CSHB 372(L&C), as amended, was passed out of the House Labor and Commerce Committee, with attached zero fiscal notes and individual recommendations. HB 482 - STATE PROCUREMENT PRACTICES & PROCEDURES Number 0119 CHAIRMAN KOTT announced that the next order of business to come before the House Labor and Commerce Committee was HOUSE BILL NO. 482 "An Act relating to state procurement practices and procedures; and providing for an effective date." He asked if anyone from the Department of Administration was present to testify. The Chairman then announced that Dugan Petty would testify with regard to the proposed amendment to HB 482. DUGAN PETTY, Director, Division of General Services, Department of Administration, stated that the proposed amendment to HB 482 attempts to address the committee's previous questions regarding bidders who wished to bring a protest. He noted that the underlined section in the committee members' packets would replace the underlined section in the previous version of the bill. It allows the procurement officer to establish a shorter period of time in the bid, so that a protestor could bring a bid protest forward in less than 10 days. It also, in the second sentence, allows a protestor of a solicitation to bring a protest forward just prior to bid opening, if the bid solicitation period has been shortened from the full notice period. Finally, the proposed amendment states that if a pre-bid conference is held within 12 days of bid opening, then a protest of a solicitation could be brought right up to the time of bid opening or proposal submission. Mr. Petty noted that the intent was to allow sufficient time for a bidder to respond to any issues found at the bid opening. Number 0253 REPRESENTATIVE ELTON asked for clarification that the proposed amendment would replace only the underlined language. MR. PETTY responded in the affirmative. REPRESENTATIVE ELTON moved that the committee adopt the proposed Amendment 1. There being no objections, Amendment 1 to HB 482 was adopted. Number 0404 REPRESENTATIVE ROKEBERG offered an amendment to delete Sections 4, 5, 6 and 7 in their entirety. These are related to leasing procedures, which exempt lease purchase agreements up to $2 million five hundred thousand or 5,000 square feet of office space, and allow lease extensions of up to ten years or 10 percent. He stated that these items need further review. REPRESENTATIVE KOTT objected. MR. PETTY stated the department believes that Sections 4 and 5 allow it to be more effective, and to save the state money through a more streamlined process. He asserted that the department would exercise judgment, and make good business decisions. Number 0311 REPRESENTATIVE ROKEBERG asserted that Section 5 would grant the state an automatic renewal option on any expiring lease, which creates an unfair situation in the real estate market. He stated that such leases should be put out for competitive bid. He requested that the Chairman hold the bill, so that the committee could look at it more closely. He also objected to Section 36, which is related to adjustments to leases being made within 30 days. MR. PETTY suggested that perhaps extending the period to 90 days would alleviate the problem. REPRESENTATIVE ROKEBERG responded that on certain contracts, 90 days might be too long. MR. PETTY noted that there is currently no statute of limitations on when claims can be brought against the state on expired contracts. This language attempts to address that problem. REPRESENTATIVE ROKEBERG stated that he agrees a time frame is necessary, but that a provision relating to utility charges for leasehold property should also be included. He noted that in some cases, an adjustment clause allows a landlord to back-bill a tenant for increased utility rates. This could take several months, sometimes as long as six to eight months. CHAIRMAN KOTT asked Mr. Petty to confer with Representative Rokeberg, and stated that HB 482 would be held over until the next meeting. He further noted that, since the committee no longer had a quorum, all other bills scheduled would also be held over until the next meeting. ADJOURNMENT Number 0695 There being no further business to come before the House Labor and Commerce Committee, Chairman Kott adjourned the meeting at 5:15 p.m.