Legislature(1995 - 1996)

04/16/1996 03:45 PM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
               SENATE STATE AFFAIRS COMMITTEE                                
                         April 16, 1996                                        
                           3:45 p.m.                                           
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
 Senator Bert Sharp, Chairman                                                  
 Senator Randy Phillips, Vice-Chairman                                         
 Senator Loren Leman                                                           
 Senator Dave Donley                                                           
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
 Senator Jim Duncan                                                            
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
 SENATE BILL NO. 314                                                           
 "An Act relating to issuance of a restaurant or eating place liquor           
 license."                                                                     
                                                                               
                                                                               
 HB 210 (PRIVATE MOTOR VEHICLE LICENSING/TESTING) was scheduled, but           
 not taken up on this date.                                                    
                                                                               
                                                                               
 HB 364 (ELECTION CRIMES; INTERFERENCE W/VOTING) was scheduled, but            
 not taken up on this date.                                                    
                                                                               
                                                                               
 HB 384 (PIONEERS' HOME - INABILITY TO PAY) was scheduled, but not             
 taken up on this date.                                                        
                                                                               
                                                                               
 HB 437 (JUDICIAL OFFICERS COMPENSATION COMMISSION) was scheduled,             
 but not taken up on this date.                                                
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
 SB 314 - See State Affairs minutes dated 3/28/96.                             
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Chris Anderson                                                                
 Glacier Brew House                                                            
 8241 Sunniest Dr., Anchorage, AK ¶(907)786-3789                               
   POSITION STATEMENT: opposes SB 314                                          
                                                                               
 Richard Sassara                                                               
 Railway Brewing                                                               
 1964 Loussac Dr., Anchorage, AK ¶(907)243-7775                                
   POSITION STATEMENT: opposes SB 314                                          
                                                                               
 Guy Kasnick                                                                   
 Pike's Landing                                                                
 4438 Airport Way, Fairbanks, AK 99709¶(907)479-7113                           
   POSITION STATEMENT: supports SB 314                                         
                                                                               
 Hap Ryder                                                                     
 interest-holder in two alcoholic beverage dispensary licenses                 
 122 N. Turner, Fairbanks, AK 99701¶(907)456-6437                              
   POSITION STATEMENT: supports SB 314                                         
                                                                               
 Joe Kingsolver                                                                
 Elks Lodge 1351                                                               
 717 W. 3rd, Anchorage, AK 99501¶(907)276-1351                                 
   POSITION STATEMENT: opposes SB 314                                          
                                                                               
 Gary Klopfer                                                                  
 Snow Goose Restaurant                                                         
 3401 Denali St., #202, Anchorage, AK 99503¶(907)561-2274                      
   POSITION STATEMENT: opposes SB 314                                          
                                                                               
 Mark Staples                                                                  
 Midnight Sun Brewing                                                          
 7329 Arctic Blvd, Anchorage, AK 99518¶(907)344-1179                           
   POSITION STATEMENT: opposes SB 314                                          
                                                                               
 Mark Wilson                                                                   
 Snow Goose Restaurant & Brewery and Sleeping Lady Brewing Company             
 1400 W. Benson Blvd, #150, Anchorage, AK 99503¶(907)276-4115                  
   POSITION STATEMENT: opposes SB 314                                          
                                                                               
 Mark Moehn                                                                    
 Sleeping Goose Restaurant                                                     
 1400 W. Benson Blvd, #150, Anchorage, AK 99503¶(907)276-4115                  
   POSITION STATEMENT: opposes SB 314                                          
                                                                               
 Mark Nystuen                                                                  
 Sleeping Goose Restaurant & Sleeping Lady Brewing Company                     
 3510 Spenard Rd, #100, Anchorage, AK 99502¶(907)272-4255                      
   POSITION STATEMENT: opposes SB 314                                          
                                                                               
 Bob Gross                                                                     
 737 W. 5th Ave., Anchorage, AK 99501¶(907)786-3762                            
  POSITION STATEMENT: opposes SB 314                                           
 Mary Sassara                                                                  
 Railway Brewing Company                                                       
 1964 Loussac Dr., Anchorage, AK 99517¶(907)243-7775                           
   POSITION STATEMENT: opposes SB 314                                          
                                                                               
 Karen Weaver                                                                  
 Shareholder, Railway Brewing Company                                          
 8501 Greenhill Way, Anchorage, AK 99502¶(907)344-5081                         
   POSITION STATEMENT: opposes SB 314                                          
                                                                               
 Harvey Prickett                                                               
 Snow Goose Restaurant & Brewery                                               
 405 E. Fireweed Lane, Anchorage, AK 99503¶(907)277-7884                       
   POSITION STATEMENT: opposes SB 314                                          
                                                                               
 Doug Griffin, Director                                                        
 Alcoholic Beverage Control Board                                              
 550 W. 7th Ave., Ste. 350, Anchorage, AK 99501-3510¶(907)277-8638             
   POSITION STATEMENT: testified on SB 314                                     
                                                                               
 Bill Roche                                                                    
 Alcoholic Beverage Control Board                                              
 550 W. 7th Ave., Ste. 350, Anchorage, AK 99501-3510¶(907)277-8638             
   POSITION STATEMENT: testified on SB 314                                     
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
                                                                               
          SB 314 RESTAURANT LIQUOR LICENSE OWNERSHIP                         
                                                                               
 TAPE 96-29, SIDE A                                                            
                                                                               
 Number 001                                                                    
                                                                               
 CHAIRMAN SHARP called the Senate State Affairs Committee to order             
 at 3:45 p.m. and brought up SB 314.  The chairman called the first            
 witness.                                                                      
                                                                               
 Number 030                                                                    
                                                                               
 CHRIS ANDERSON, Partner & General Manager, Glacier Brew House,                
 stated he has been in the full-service restaurant industry for 20             
 years.  The Glacier Brew House project was begun over a year ago,             
 and will seat 150 people in the dining room, 85 people in the bar,            
 35 people in banquet rooms, and 60 people on the deck.  The Glacier           
 Brew House will employ 85 people full time, and 100 people full               
 time during peak season.  We will not be offering hard liquor.  The           
 concept has been approved four times by the Anchorage Assembly and            
 through all the community councils.  Mr. Anderson stated that the             
 concept of a combination restaurant and brewery is a new concept              
 for Alaska.  It is a very successful enterprise in the lower forty-           
 eight.  To be successful, one must make a considerable capital                
 investment.  By the time we open next month, our capital investment           
 will be between $2,500,000.00 and $3,000,000.00.                              
                                                                               
 MR. ANDERSON stated that he does not agree with the argument                  
 regarding an un-level playing field.  He thinks the costs are about           
 level for having a restaurant-brewery as they are for just opening            
 a restaurant.  His first objection to SB 314 is that the Glacier              
 Brew House has followed all Alaskan laws for the last year and                
 based a business on those laws.  SB 314 would stop Mr. Anderson               
 from owning any other restaurant in the State of Alaska if he                 
 currently holds a restaurant-brewery license.  He disagrees that he           
 can be legislated from opening a secondary business.  Especially              
 when the statutes currently say he can do so.  His business plans             
 and the type of management he designed was not for a single                   
 restaurant in Anchorage.  They have a lot of potential for growth             
 in many outlying communities, from Fairbanks to Juneau and many               
 other places.  To stop the growth of a business would be                      
 unfortunate.  The brewery-restaurant concept, with just beer and              
 wine being served, are more family oriented than the drinking                 
 establishments of the past.  We should not have legislation that              
 gets in the way of competition.  They are competing with every                
 other restaurant.  The company for which he worked for fourteen               
 years is two blocks from the Glacier Brew House, and they are                 
 wishing him well.                                                             
                                                                               
 MR. ANDERSON stated he has submitted a possible amendment to SB 314           
 which addresses some of his concerns.  He hopes the committee will            
 take it into consideration.  To be four weeks from opening with an            
 investment of $2,500,000.00 that he cannot grow is unacceptable.              
                                                                               
 Number 135                                                                    
                                                                               
 SENATOR LEMAN asked Mr. Anderson if he knows how many people have             
 approved applications for a brewery license.                                  
                                                                               
 MR. ANDERSON responded he is aware of eleven breweries that are               
 currently open or have applications pending.                                  
                                                                               
 Number 150                                                                    
                                                                               
 RICHARD SASSARA, President, Railway Brewing, stated he is concerned           
 with SB 314.  His company has invested about $1,300,000.00, and the           
 Alaska Railroad Corporation has invested as well.  Railway Brewing            
 has gone through hearings with the Municipality of Anchorage, the             
 ABC Board, zoning, building department, and ATF.  SB 314 is unfair            
 in that it seems to be an eleventh hour measure to pull the rug out           
 from under us when we're so close to opening.  Backers of this bill           
 and the constituents who are pushing it have had ample opportunity            
 to voice their opinion, and no one has stepped to the plate on it.            
 It is also unclear to Mr. Sassara whether SB 314 would allow for              
 transfer of license.  Mr. Sassara's interpretation of the statutes            
 for breweries and brew-pubs is that the State of Alaska's brewery             
 licensing laws are fairly conservative in relation to other state's           
 statutes, so he doesn't think they need to be further restricted by           
 SB 314.  Railway Brewing is not interested in operating in the                
 beverage dispensary license business: they aren't interested in               
 serving hard alcohol.  They feel that hard alcohol is a thing of              
 the past.  Mr. Sassara thinks SB 314 is unfair in the areas of                
 growth and transferability, and he thinks it suppresses Alaskan               
 owned businesses.  He thinks the state should support businesses              
 that are creating jobs and rehabilitating old buildings within                
 communities.                                                                  
                                                                               
 Number 220                                                                    
                                                                               
 GUY KASNICK, Owner, Pike's Landing, testifying from Fairbanks,                
 stated he is concerned with the situation that developed last year            
 after the passage of SB 87.  That allowed departure from the 50/50            
 food and liquor ratio on application.  His concern is that a                  
 wholesaler being allowed to retail their own product will set up a            
 monopolistic situation.  A brewery can produce their product at the           
 production price, which is less than the amount any other licensee            
 can pay for it.  Also, the sale of the brewed product off premises            
 is an advantage that mechanism has, which he thinks would be unfair           
 to the traditional licensee.  Mr. Kasnick stated that free alcohol            
 samples is something that's never been allowed to any other                   
 licensee in Alaska.  He also thinks that a licensee that is a non-            
 brewery could be forced to purchase their product, if they have a             
 very good product.  He would be very concerned if the Alaskan                 
 Brewery had a retail outlet next to his business.  Mr. Kasnick                
 stated there is good reason that Anheiuser Busch, under federal               
 law, cannot open chains of taverns across the U.S.  It is his                 
 understanding that up to 75 of these brewery licenses could                   
 potentially be issued in the state.  He thinks that would be very             
 dangerous to the established retail liquor industry.  He thinks               
 that the businesses currently being established in Anchorage should           
 be allowed to open their operations, and he thinks that SB 314                
 provides for that.  He thinks those businesses might have to forego           
 expansion though.  Mr. Kasnick urged passage of SB 314.                       
                                                                               
 Number 290                                                                    
                                                                               
 HAP RYDER, interest-holder in two alcoholic beverage dispensary               
 licenses, testifying from Fairbanks, asked for support of SB 314.             
 Passage of SB 314 will deter unfair competition with legitimate               
 beverage dispensary license holders.  Mr. Ryder stated that passage           
 of SB 314 will preserve the original intent of SB 87, and in                  
 particular, those sections that pertain to prohibited financial               
 interests.  In a time of increasing regulation of a legitimate                
 private business, and a time when legislation, such as HB 523, SB             
 314 will deter the proliferation of new alcoholic beverage outlets            
 for the general public and the growth of a business industry                  
 already in trouble with moralists, fundamentalists, MADD, downtown            
 urban areas, and the like.  That certain individuals have                     
 circumvented the law by using loopholes to justify the rejection of           
 SB 314 is not sufficient justification.  He stated there are                  
 greater problems presented by non-enactment.  He urged support of             
 SB 314.                                                                       
                                                                               
 Number 330                                                                    
                                                                               
 JOE KINGSOLVER, Elks Lodge 1351, testifying from Anchorage, stated            
 that if SB 314 is passed and the progress of the Snow Goose                   
 Restaurant is terminated, this will mean almost the end of the                
 Anchorage Elks Lodge.  The Elks and other investors have put a lot            
 of money into the project in good faith.  He thinks SB 314 is                 
 unfair and should be killed.                                                  
                                                                               
 Number 340                                                                    
                                                                               
 GARY KLOPFER, majority owner, Snow Goose Restaurant, testifying               
 from Anchorage, stated he submitted written testimony to the                  
 committee.  He stated what he has heard so far at this committee              
 meeting reminds him of prohibition days.  The marketplace is                  
 changing; micro-brewed is the concept of fresh coffee, fresh beer,            
 and fresh bread, all of which are becoming popular.  Mr. Klopfer is           
 amazed that Wonder Bread isn't trying to outlaw small, micro-                 
 bakeries, because they're afraid of the competition.  People                  
 nowadays are trying to be more concerned about not only the amount            
 of alcoholic beverages they drink, but also what they drink.                  
 People would like the ability to purchase fresh beer brewed on                
 premises.  Mr. Klopfer stated that from the beginning, Snow Goose             
 Restaurant never had the intention of serving hard alcohol.  Based            
 on the market place and what's going on in the rest of the country,           
 one can see that there is a demand for this type of business.  The            
 passage of SB 314 would do nothing but keep those people who have             
 liquor licenses in business, and there would be no economic benefit           
 for the blossoming of this industry in our state.  He hopes that SB           
 314 does not pass.                                                            
                                                                               
 CHAIRMAN SHARP asked if it is the intention of Snow Goose                     
 Restaurant to only sell their beer on premises, and not retail it.            
                                                                               
 MR. KLOPFER responded that is correct.  The downtown Anchorage area           
 is only zoned for commercial, not industrial, so we got a waiver              
 because we wanted to be strictly on-site.                                     
                                                                               
 Number 393                                                                    
                                                                               
 MARK STAPLES, Midnight Sun Brewing, testifying from Anchorage, is             
 opposed to SB 314.  His project has been several years in the                 
 works, and he is not ready to give up his option to at some point             
 have a restaurant.  He doesn't understand why people with                     
 dispensary licenses think this is unfair.  If they want to do a               
 brew pub, they can either buy a brew-pub license, or if they want             
 to do a brewery, they can give up their dispensary license.  There            
 is nothing that he is doing that they cannot do if they want to.              
 Mr. Staples stated that the so-called "loophole" is something that            
 the ABC Board is the first one to tell you to use.  It's a little             
 late to be changing the whole structure.                                      
                                                                               
 Number 410                                                                    
                                                                               
 MARK WILSON, managing partner, Snow Goose Restaurant and Brewery              
 and Sleeping Lady Brewing Company, testifying from Anchorage, is              
 opposed to SB 314.  He recommends against passage because, one,               
 current statutes support the federal code of regulations as they              
 apply to liquor licensing and joint ownership.  Secondly,                     
 restaurant and brewery combinations bring multi-million dollar                
 investment to Alaska.  Third, restaurant and brewery combinations             
 enhance tourism and growth in Alaska.  SB 314 discourages                     
 investment.  SB 314 is not good legislation and unfairly protects             
 special commercial interests.  SB 314 ruins one or more                       
 developments in Anchorage.  Contrary to representations that have             
 been made, the brewery and restaurant brewery combinations, which             
 are commonly called brew-pubs throughout the U.S., have been openly           
 and aggressively pursued and supported by state legislatures                  
 throughout the United States.  Mr. Wilson read a resolution (Joint            
 Resolution #95-33) passed by the 60th General Assembly of the State           
 of Colorado.  Mr. Wilson stated that SB 314 is bad for business: it           
 does not support growth of tourism, it does not encourage capital             
 investment in Alaska, and it sends the wrong message to promising             
 and entrepreneurial endeavors.  Pleas do not pass SB 314.                     
                                                                               
 Number 465                                                                    
                                                                               
 GEORGE MALEKOS, testifying from Anchorage, stated he is also                  
 speaking for three other businesses:                                          
  1) Earl Mayo, How How Restaurant & Lounge, Muldoon;                          
  2) Rod Muma, Garcia's Restaurant & Cantina, Eagle River;                     
  3) Garry Buffington, J.J.'s Sportsman's Lounge or Bar,                       
     Muldoon.                                                                  
                                                                               
 MR. MALEKOS stated that he and the businesses just listed all                 
 strongly support SB 314.                                                      
                                                                               
 Number 475                                                                    
                                                                               
 MARK MOEHN, Snow Goose Restaurant, testifying from Anchorage,                 
 opposes SB 314 because it would not help this industry flourish.              
 This new industry is a classic example of an opportunity to produce           
 more within the state, rather than shipping products into the                 
 state, which is why he opposes SB 314.                                        
                                                                               
 Number 483                                                                    
                                                                               
 MARK NYSTUEN, General Contractor, Snow Goose Restaurant and                   
 Sleeping Lady Brewery, testifying from Anchorage, is concerned with           
 the financial impacts of SB 314.  As he understands it, SB 314                
 could potentially kill their project, so he is really concerned               
 about the bill.                                                               
                                                                               
 Number 492                                                                    
                                                                               
 BOB GROSS, real estate developer, testifying from Anchorage, stated           
 he specializes in urban renewal projects in downtown Anchorage.  He           
 thinks SB 314 would stifle economic development if left unamended.            
 If properly amended, he thinks SB 314 could support economic                  
 development and growth.  Local Alaskans have invested millions of             
 dollars of personal funds in these projects, and those are funds              
 that stay in our community.  Unless the bill is amended, that would           
 be stifled.  These people are not going to the state or local                 
 government and asking for money; they are taking a huge personal              
 risk.  Concerning benefits to the public, it is Mr. Gross'                    
 assessment that hundreds of new jobs will be created by this                  
 industry.  Improvements have been made to the Elks Club Building,             
 the Alaska Railroad Depot Building, and other buildings.  He thinks           
 the impact on the tax rolls for the city will exceed over                     
 $100,000.00 per year just in increased property taxes.  Each of               
 these businesses will tremendously support the tourist industry.              
 He thinks it's important that committee members realize that they             
 have been involved in this process for 12 months.  That process               
 includes public notification, public posting, community council               
 support and approval, assembly-level approval, conditional use                
 permit approval, and ABC Board approval.  Everyone has supported              
 it.  As SB 314 reads right now, the bill would kill all the work              
 that these people have done and would stifle economic growth.  Mr.            
 Gross stated that if SB 314 was properly amended, it could support            
 economic growth and development.                                              
                                                                               
 Number 522                                                                    
                                                                               
 MARY SASSARA, Marketing Director, Railway Brewing Company,                    
 testifying from Anchorage, stated the Railway Brewing Company is              
 creating 140 seat restaurant at the historic Alaska Railroad Depot            
 Building.  She stated the business is a restaurant first and a                
 micro-brewery second.  Ms. Sassara thinks it is unfair for SB 314             
 to be introduced after Railway Brewing Company has completed all              
 requirements of the State of Alaska, the Municipality of Anchorage,           
 and the ATF, only to have the rug pulled out from underneath them.            
 The bill has all the markings of a self-serving legislation, the              
 sole purpose of which is to legislate out competition.  The                   
 legislature should be encouraging growth.  Railway Brewing Company            
 will add about 35 new jobs to the Anchorage market.  Railway                  
 Brewing Company is renovating a State of Alaska owned building with           
 the cooperation and financial support of the Alaska Railroad                  
 Corporation.  Railway Brewing Company will create jobs, a tourist             
 facility, generate taxes, and will create an Alaskan manufactured             
 product.                                                                      
 MS. SASSARA stated that in the eighteen months since Railway                  
 Brewing Company began working on this project, none of the people             
 pushing SB 314 voiced any disapproval, even thought Railway Brewing           
 has been through four separate municipal hearings and four ABC                
 public hearings.  Why did the backers of SB 314 not protest at                
 those times?  Railway Brewing Company has obtained all of the                 
 required licenses, including building permits and zoning                      
 requirements.  She urged opposition of SB 314, and noted that the             
 bill also does not address the issue of transferability of                    
 licenses.  Without that, the sale or transfer of stock would not be           
 allowed.  Alaska Statutes for breweries and brew-pubs are currently           
 already more conservative than existing laws in other states.  She            
 listed several brew pubs in Washington and Oregon which she enjoys            
 visiting while on vacation.  Ms. Sassara stated Railway Brewing               
 Company is not interested in serving hard alcohol and does not want           
 to attract the type of clientele that drinks hard alcohol.  She               
 urged the committee not to support SB 314.                                    
                                                                               
 Number 550                                                                    
                                                                               
 KAREN WEAVER, shareholder in Railway Brewing Company, testifying              
 from Anchorage, stated she hasn't really been involved in the                 
 permitting process, but she and her husband really love beer and              
 they fly to Seattle regularly in order to patronize the brew pubs             
 down there.  The only thing she has heard from the supporters of SB           
 314 is, "It's going to hurt me."  She doesn't hear anything about             
 the Alaskans who want to have micro-breweries in the state and want           
 to get a premium product.  She thinks a majority of Alaskans have             
 been waiting for brew-pubs to open in Alaska, and it would be a               
 pity to have it stop at this point.  Ms. Weaver opposes SB 314.               
                                                                               
 Number 560                                                                    
                                                                               
 HARVEY PRICKETT, designer of Snow Goose Restaurant & Brewery,                 
 testifying from Anchorage, stated he is financially and design-wise           
 heavily involved in the project.  If the plug was pulled at this              
 point, he thinks it would be a deterrent and set a bad precedent              
 for economic growth in downtown Anchorage.  He urged the committee            
 to oppose SB 314.                                                             
                                                                               
 Number 570                                                                    
                                                                               
 CHAIRMAN SHARP stated the committee has a proposed amendment that             
 would provided protection for those who have an approved                      
 application.  He asked if there was anyone available from the ABC             
 Board.                                                                        
                                                                               
 Number 580                                                                    
                                                                               
 DOUG GRIFFIN, Director, Alcoholic Beverage Control Board, stated he           
 is in Anchorage.                                                              
                                                                               
 CHAIRMAN SHARP asked Mr. Griffin if he's seen the amendment.                  
                                                                               
 MR. GRIFFIN responded he has not.                                             
                                                                               
 TAPE 96-29, SIDE B                                                            
                                                                               
 Number 585                                                                    
                                                                               
                                                                               
 SENATOR DONLEY read the amendment:                                            
                                                                               
 Insert a new section specifying, "The prohibition against issuance            
 of a restaurant or eating place license does not apply to a person            
 who holds or who has an approved application for a brewery license            
 on the effective date of this act."                                           
                                                                               
 CHAIRMAN SHARP asked Mr. Griffin if he would interpret "approved              
 application" as an application that's been submitted and is in                
 proper order, but has not been finalized.                                     
                                                                               
 MR. GRIFFIN replied he would interpret an approved application as             
 one that has been approved by the board.  In some instances, he has           
 the ability to give temporary approval of licenses between board              
 meetings, but he would be more conservative in this instance and              
 would want full approval of the board.                                        
                                                                               
 SENATOR DONLEY asked if there are currently any pending                       
 applications.                                                                 
                                                                               
 MR. GRIFFIN responded there is a brewery in Homer that has a                  
 temporary license at this time.                                               
                                                                               
 SENATOR RANDY PHILLIPS asked how many have been approved and how              
 many are pending total.                                                       
                                                                               
 MR. GRIFFIN replied there are about five or six licenses which have           
 been approved, but not issued.                                                
                                                                               
 SENATOR RANDY PHILLIPS asked if it would be more appropriate to               
 specify "an issued license", rather than "an approved application".           
 Is                                                                            
 SENATOR DONLEY asked what is holding them up.                                 
                                                                               
 SENATOR RANDY PHILLIPS asked if there is a difference between the             
 issuance of a license and an approved application.                            
                                                                               
 Number 558                                                                    
                                                                               
 MARK WILSON, Snow Goose Restaurant & Brewery, testifying from                 
 Anchorage, stated the problem with the amendment is it doesn't                
 address transferability.  The Snow Goose is transferring a license,           
 and every single transfer has to be approved.  So it could be                 
 interpreted that the license is not approved if it is not approved            
 for transfer.  If the Snow Goose Restaurant & Brewery sold shares             
 of it's ownership to someone else, Alaska Statutes specifies that             
 constitutes a transfer of the license, and we would then have to go           
 before the ABC Board to be approved.  SB 314 would essentially                
 cancel the license, because ownership could never be transferred,             
 we could never sell shares, and we could never take on                        
 shareholders.                                                                 
                                                                               
 SENATOR RANDY PHILLIPS asked the ABC Board Representatives what the           
 process is for issuance of licenses.  Is there a difference between           
 an approved application and an issued license?                                
                                                                               
 Number 537                                                                    
                                                                               
 MR. GRIFFIN replied there are two different pieces there, and that            
 is that the brewery license has been approved.  Then you get into             
 the restaurant eating place license side, and some of those are               
 licenses that are being transferred, and some are new licenses.               
 They're all in various states.  He stated he would let Mr. Roche              
 address that question.                                                        
                                                                               
 Number 520                                                                    
                                                                               
 BILL ROCHE, ABC Board, testifying from Anchorage, stated that in              
 one instance, there is a brewery that has had its' license                    
 approved, but is applying to transfer to a separate entity for tax            
 flight purposes.  They are also applying to transfer the ownership            
 of the restaurant or eating place liquor license.  So the language            
 of the amendment is unclear to us as to what is intended with the             
 wording "approved license".                                                   
                                                                               
 CHAIRMAN SHARP stated the problem is only in transferability.  He             
 asked if the board has some approved applications for a brewery               
 license, but have not yet issued those.                                       
                                                                               
 MR. ROCHE responded that is correct.  There are several that have             
 been approved, but not yet issued.                                            
                                                                               
 CHAIRMAN SHARP noted that the amendment would allow those permits             
 to be issued.                                                                 
                                                                               
 SENATOR RANDY PHILLIPS asked how long it would take between                   
 approval and issuance of licenses.                                            
                                                                               
 MR. ROCHE replied that depends on the construction schedules of the           
 applicants and the federal process.  It takes quite some time after           
 the ATF inspectors do their final inspection before the federal               
 government issues the brewers notice, and we cannot issue an Alaska           
 liquor license until the brewers notice is in hand.                           
                                                                               
 SENATOR RANDY PHILLIPS noted that the committee should, in that               
 case, key in on approved applications.                                        
                                                                               
 CHAIRMAN SHARP stated he reads the amendment as stating the                   
 prohibition against issuance of a restaurant eating place license             
 can occur anytime in the future to a person who holds an approved             
 application for a brewery license as of the effective date.  Which            
 means if the application is approved, but not yet issued, it would            
 still trigger the ability to issue the brewery license and they               
 could acquire a restaurant eating place license down the road if              
 they so desired.                                                              
                                                                               
 Number 502                                                                    
                                                                               
 SENATOR DONLEY stated it is late in the year, and this looks to be            
 very technical.  There are two or three major concepts he would               
 like to see incorporated into SB 314 if it moves ahead.  He asked             
 if it is the committee's intent to move SB 314.                               
                                                                               
 CHAIRMAN SHARP replied he would like to move it up to the Finance             
 Committee.  But he does want to ensure that before the bill leaves            
 the State Affairs Committee there is no financial harm done to                
 those who have already jumped through all the hoops.                          
                                                                               
 SENATOR DONLEY is afraid that if SB 314 is not crafted correctly,             
 there will be a stampede for this type of license.  His other                 
 concern is to address transferability.  He does not want to set up            
 some sort of ultra-valuable license.                                          
                                                                               
 CHAIRMAN SHARP stated he is concerned about that also: SB 314 would           
 be creating a select few who would have the right to operate this             
 type of business.  It would create value rapidly.                             
                                                                               
 SENATOR DONLEY suggested putting a cap on the transferability or              
 specify that any excess goes back to the general fund.  There are             
 a lot of complicated questions here, it's eighty degrees in this              
 room, and we're dealing with the budget today.                                
                                                                               
 SENATOR RANDY PHILLIPS asked how much it costs for one of these               
 licenses.                                                                     
                                                                               
 An unidentified speaker from Anchorage responded about                        
 $2,000,000.00.                                                                
                                                                               
 MR. GRIFFIN replied a two-year license for a restaurant eating                
 place (a beer and wine license) is $600.00.  A brewery license is             
 $1,000.00 for a two-year license.                                             
                                                                               
 Number 458                                                                    
                                                                               
 SENATOR DONLEY doesn't think limiting the resale value of those               
 licenses would be as simple as just putting a cap on the value.  He           
 thinks that would just artificially inflate the value of another              
 part of the business.  We have to have some provision for                     
 transferability related to investors in the business.                         
                                                                               
 CHAIRMAN SHARP agreed, but he doesn't know how you would divorce              
 the value of the license from the establishment.  He asked if                 
 committee members have suggestions they could prepare in the next             
 few days.                                                                     
                                                                               
 Number 440                                                                    
                                                                               
 SENATOR RANDY PHILLIPS stated his concerns are that he has some               
 constituents who support SB 314; second, there are half a dozen               
 people in the midst of the licensing process; third, there is the             
 problem of creating a super-valuable license; lastly, he is                   
 concerned with the effective date.                                            
                                                                               
 SENATOR DONLEY is also concerned about being fair to people who               
 have micro-breweries and full-blown liquor licenses, but who are              
 not allowed to sell off-premises.  They should be allowed to sell             
 off-premises too.                                                             
                                                                               
 Number 405                                                                    
                                                                               
 SENATOR LEMAN wanted to make sure he understood the process for               
 approving an application.  Do you apply and get approval before or            
 after investing money?                                                        
                                                                               
 Number 390                                                                    
                                                                               
 MR. GRIFFIN responded approval can be granted at any time during              
 the process.  The actual issuance of the license comes after the              
 brewery facility has been constructed.                                        
                                                                               
 CHAIRMAN SHARP asked what the normal time frame is between when an            
 application is submitted and the board acts on the application.               
                                                                               
 MR. GRIFFIN responded the minimum time period is 60 days.                     
                                                                               
 MR. KLOPFER, Snow Goose Restaurant & Brewery, stated the ATF takes            
 a minimum of two months before they will even act on that                     
 paperwork.                                                                    
                                                                               
 SENATOR DONLEY asked if there is any requirement that applicants              
 will already have made a capital investment before getting an                 
 application approved.                                                         
                                                                               
 MR. GRIFFIN responded yes.  There has to be some design work done             
 before approval.  They don't need to have architectural quality               
 drawings, but we need to have a general idea of the layout and the            
 location.                                                                     
                                                                               
 CHAIRMAN SHARP asked if capacity is tied to it at any time.                   
 MR. GRIFFIN replied there is no maximum capacity for a brewery, but           
 there is a maximum capacity for a brew-pub for those who have a               
 beverage dispensary license.                                                  
                                                                               
 SENATOR RANDY PHILLIPS suggested the legislative drafter of SB 314            
 contact the ABC Board.  We could outline our concerns to the                  
 drafter, who could relay those to the board and try to work out               
 language to address those concerns.                                           
                                                                               
 Number 350                                                                    
                                                                               
 CHAIRMAN SHARP stated that would make him more comfortable with the           
 legislation.  He asked Mr. Griffin if that would be acceptable.               
                                                                               
 MR. GRIFFIN responded that would be acceptable.                               
                                                                               
 SENATOR RANDY PHILLIPS made a motion to table SB 314 until                    
 Thursday's committee meeting.  It would then be his intent to move            
 SB 314 at that meeting.                                                       
                                                                               
 CHAIRMAN SHARP, hearing no objection, stated the motion was                   
 adopted.                                                                      
                                                                               
 Number 315                                                                    
                                                                               
 CHAIRMAN SHARP adjourned the Senate State Affairs Committee meeting           
 at 4:57 p.m.                                                                  
                                                                               

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