Legislature(1995 - 1996)

03/20/1996 03:17 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                                                               
 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                     
 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                                                             
 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                    
 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             
 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                
 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                   
 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            
 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            
 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             
 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                
 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                  
 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               
 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            
 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              
 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                        
 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                  
 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                    
 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            
 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                    
 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            
 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                 
 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.              
 "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            
 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                
 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.                                                             
 Number 0695                                                                   
 There being no further business to come before the House Labor and            
 Commerce Committee, Chairman Kott adjourned the meeting at 5:15               

Document Name Date/Time Subjects