SB 16-ALCOHOL LIC:FAIRS,THEATRES,CONCERTS;BONDS  4:04:36 PM CHAIR WOOL announced that the first order of business would be SENATE BILL NO. 16, "An Act relating to certain alcoholic beverage licenses and permits; and relating to the bond requirement for certain alcoholic beverage license holders." 4:04:56 PM ASHLEY STRAUCH, Staff, Representative Wool, Alaska State Legislature, introduced the committee substitute (CS) for SB 16, Version 31-LS0283\O, and explained the changes. She said the scope of a fair license was narrowed, allowing only a nonprofit that has been in existence for five years, as of the effective date of the act, to apply for the license. The scope of the definition of "fair" was narrowed by removing the language "or outdoor entertainment." She stated that the conditions under which a minor may be on the licensed premises of a performing arts theater was clarified to allow minors 16 years or older to be in the presence of alcohol at a theater event and allows minors under the age of 16 to be on the licensed premises of the theater with an adult 21 years of age or older. She said that mirrors the current statute regarding golf courses and works the same as a restaurant designation. Bowling was added to the list of activities allowable under a recreational site license. The hours that a restaurant can provide music were increased to 11 a.m. to 11 p.m. Sporting events were delineated from sporting activities under the recreational site license. A pub license was added as carryover from SB 52. The number of events a nonprofit can hold was changed from 12 to 5. Finally, "concert permit" and "music festival permit" were removed from the original bill. 4:07:01 PM REPRESENTATIVE HANNAN asked what a "pub license" is. CHAIR WOOL explained that a pub license is used for the [Alaska] university system. He said it was adopted from a section in the Title 4 omnibus bill that allowed the University of Alaska Fairbanks (UAF) to use their pub license for the museum in the summer months. REPRESENTATIVE HANNAN asked if there was only one pub license. 4:08:40 PM MS. STRAUCH offered her understanding that there is currently only one pub license at the UAF campus. 4:08:53 PM ERIKA MCCONNEL, Director, Alcohol and Marijuana Control Office, confirmed that. 4:09:06 PM REPRESENTATIVE STUTES inquired as to the four events that a nonprofit can hold. MS. STRAUCH clarified that it's five events, which is the number of events that a nonprofit can hold per year where alcohol is served. She noted that the original version of this bill would have increased that to 12 events per year; however, this change brings that number back down to current statute, which is five. REPRESENTATIVE STUTES questioned whether any nonprofit can submit an application the ABC board without having an associated beverage dispensary license (BDL). MS. STRAUCH said that is her understanding. 4:09:57 PM REPRESENTATIVE FIELDS sought clarification on the "Chickenstock situation" and what it will take for that festival to continue operating. CHAIR WOOL said the music festival would be addressed after the CS is adopted. REPRESENTATIVE TALERICO questioned whether the CS removes the concert permit and music festival permit. CHAIR WOOL confirmed that the CS removes that language. 4:11:12 PM REPRESENTATIVE STUTES moved to adopt the proposed committee substitute (CS) for SB 16, labeled 31-LS0283\O, Bruce, 5/4/19, as the working draft. REPRESENTATIVE TALERICO objected. A roll call vote was taken. Representatives Story, Fields, Hannan, Stutes, and Wool voted in favor of adopting the proposed CS. Representatives Revak and Talerico voted against it. Therefore, Version O was before the committee by a vote of 5-2. CHAIR WOOL turned attention to public testimony. 4:12:43 PM CODIE COSTELLO, VP Strategic Development & Communications, Alaska Center for the Performing Arts, expressed her support for SB 16 and thanked members for their hard work on this piece of legislation. 4:13:23 PM MAHLA STROHMAIER, Executive Director, Tanana Valley State Fair Association, voiced her support for SB 16 because it provides greater clarity and consistency in state law and enables Alaska fair organizations to continue building their long-term financial sustainability. She provided a brief historical background of the Tanana Valley State Fair, noting that the fair is self-sustaining and operates on a combination of earned income from ticket sales, vendor fees, building and ground rentals, grants, and sponsorships. She stated that consistent and standardized alcoholic beverage licensing and permitting under Alaska statutes offers Alaska fairs the ability to generate important earned revenue that allows those organizations to build, maintain and enhance their abilities to be more sustainable and financially self-supporting. The Tanana Valley State Fair's current business model as it relates to the sale of alcohol, she said, involves contracting with a local business that utilizes its own liquor license and taking a small portion of their sales as earned income. She addressed the fair's 5-year strategic plan based, in part, on making the fairground a year-round community destination. She offered her belief that clarifying Alaska's statute for fairs through SB 16 will provide the Tanana Valley State Fair Association with essential options as they continue to grow its long-term financial viability and overall sustainability. 4:16:12 PM ROBERT BREWSTER, CEO, The Alaska Club, informed the committee that The Alaska Club has been a recreational site license holder at their 21 and over summit location for eight years, during which they had never been cited for any violations and had complied with all applicable regulations and fees. He said they worked with an Alcohol Beverage Control Board staff member to obtain their recreational site license and relied on that qualification to construct their premises, define their product, and make representations that beer and wine would be available to members. Two years ago, that license was terminated by the ABC Board only to be won back in an appeal process. This year their renewal was once again denied. He asked for help in correcting the unfortunate outcome of these non-renewals, which serve no valid public purpose and are harming responsible businesses. He encouraged the passage of SB 16. 4:19:13 PM SARAH OATES, President/CEO, Alaska Cabaret, Hotel, Restaurant and Retailers Association, disclosed her prior experience working for the Alcohol and Beverage Control Office for seven years. She voiced support for the proposed CS for numerous reasons. She said the prior version of the bill worked against the work that the Title 4 stakeholders' group has been working on, while the CS sticks to their objective. She also praised the deletion of the music festival permit and concert permit. She opined that it is irresponsible and inappropriate to adopt legislation that affects only one entity when that same legislation could negatively impact many other entities across the state. She expressed support for grandfathering in the existing licensees and those who lost their licenses due to the recreational site language. 4:23:10 PM REPRESENTATIVE FIELDS asked for more clarification on Chickenstock. He explained that there is an existing BDL from a local business in Chicken, Alaska, and asked how that business could work with people putting on the festival to ensure that beverages could be dispensed. MS. OATES offered her belief that the existing beverage dispensary licensee in Chicken has worked to put on Chickenstock. She reiterated that the way the language is written would affect many more businesses than just one individual festival in Chicken, Alaska. She added that the restaurateur who is requesting this change already has the current capability to put on the festival by providing food in a banquet or dinner during the festival. REPRESENTATIVE FIELDS asked if they could partner with a local bar for a caterer's [permit] if they wanted to serve alcohol. MS. OATES answered yes. 4:24:50 PM CHAIR WOOL asked how [Salmonfest Alaska] currently operates. MS. OATES offered her belief that they have a nonprofit entity that qualifies for a special events permit. 4:25:31 PM REPRESENTATIVE HANNAN inquired as to the process of catering a music festival with either a restaurant license or a full BDL. MS. MCCONNELL replied that there is a caterer's permit in statute that authorizes a beverage dispensary licensee (BDL) to sell or dispense alcoholic beverages at conventions, picknicks, social gatherings, sporting events or similar affairs held off the holders licensed premises. She said a festival could partner with a BDL to get a caterer's permit to sell at that particular event. 4:27:31 PM REPRESENTATIVE HANNAN sought clarification on whether a BDL would allow a caterer to operate at a music festival. She asked if there are any geographic restrictions on how close to their BDL premises they can operate. MS. MCCONNELL explained that a music festival would fall into the same category as the convention, picknick, social gathering, or sporting event, as listed in AS 411.230 (a). She further noted that there is no geographic proximity requirement. REPRESENTATIVE HANNAN asked if a bar owner from Kodiak could sell beer at a festival in Chicken, Alaska. MS. MCCONNELL answered yes. 4:28:40 PM REPRESENTATIVE FIELDS addressed the effect of the CS on Arctic Valley Ski Area and Eagle Crest Ski Area and asked if both locations will be places where it's appropriate to dispense alcoholic beverages. MS. MCCONNELL said yes. CHAIR WOOL sought clarification on restrictions placed on restaurant or eating place licenses regarding percentage of sales. MS. MCCONNELL stated that a restaurant or eating place license is in statute at AS 04.11.100 and authorizes the following: a restaurant or eating place may only to sell beer or wine for consumption on the licensed premises; must be a bonified restaurant, as determined by the board; and must provide evidence upon renewal that gross receipts from the sale of food upon the licensed premises constitutes no less than 50 percent of the gross receipts for the entire licensed premises. CHAIR WOOL established a scenario in which a music festival sells $100,000 in beer and wine over one weekend. He asked if they would have to sell $100,000 in food over the rest of the year to satisfy that regulation. MS. MCCONNELL referred to AS 04.11.100 (e), and said depending on what a music festival caterer permit said, she would interpret it to mean that any receipts from a festival off of the licensed premises wouldn't count towards the receipts that are required in 04.11.100 (e). CHAIR WOOL disclosed that he is longer in the alcohol business, adding that last year, when he was in the alcohol business, he did not pay himself. 4:32:34 PM JEROME HERTEL, Manager, Alaska State Fair, thanked the committee for the opportunity to testify in support of SB 16, calling it legislation that creates a fair license category and will correct some of the shortfalls of Alaska's current statutes that apply to alcoholic beverages. He added that it will also correct the problematic situation that the Alaska State Fair has experienced. This piece of legislation, he said, will provides much needed clarity and understanding to the fair, as well as to the Alaska Beverage Control agency that is in charge of the application of the law. Without this legislation, the Alaska State Fair is at risk of losing a revenue source that would jeopardize the sustainability of the fair. Beer and wine sales are an important part of the experience and are part of a diversified revenue stream that sustains the operation in bad years and allows growth in prosperous years. This revenue stream has allowed the fair to be self-sustaining, one of few in the nation that isn't subsidized by state government. SB 16 preserves the fair's sustainability and allows them to continue serving the people of Alaska. 4:35:18 PM MARNA SANFORD expressed her disappointment with the proposed CS, which removes the music festival language. She offered her belief that the "fair bill" was written to impact one entity. Chickenstock, she said, is a family friendly event that has been operating for over a decade; however, with different Alcohol and Marijuana Control Office (AMCO) directors and with different interpretations of the current statute, they went from being able to use one type of a permit to not being able to use it. She noted that it's more complicated than asking the current BDL holder in chicken to use that license. She concluded by saying that she does support the version of the bill that came out of the Senate Finance Committee; however, she does not support the proposed CS. 4:37:40 PM REPRESENTATIVE FIELDS asked why it's necessary to have a separate music festival category rather than contracting a BDL from a local business. MS. SANFORD replied that Chickenstock is the "brainchild" of Chicken Gold Camp & Outpost (CGC). She said they already have a restaurant license, which they cannot use for a music festival. She opined that making them pay a BDL holder for the use of his or her license in order to put on Chickenstock is capitalistic, especially if there is the ability to create a license that allows them to own their idea and benefit from it. 4:38:50 PM REPRESENTATIVE STUTES asked what Chickenstock is. MS. SANFORD said it is a family friendly music festival at CGC, an RV park in Chicken, Alaska. She explained that people from all over the state travel there and camp on site for the festival, which has been in existence for 12 years. CHAIR WOOL expressed confusion as to why they can't continue to use the same BDL, from Bernie Karl at Chena Hot Springs, that they have using for the last 12 years. MS. SANFORD said they have been borrowing a BDL from Bernie Karl since the change in leadership at AAMCO, which interpreted the law differently. She noted that they do not have a relationship with the local BDL holder in Chicken, Alaska. She further stated that borrowing a BDL is not the ideal situation when a permit could be created that allows them to operate within their own umbrella. CHAIR WOOL asked Ms. McConnel for her input on Chickenstock. 4:42:03 PM MS. MCCONNELL offered her understanding that [Chickenstock] was being catered under a restaurant caterer's dinner permit, and that the previous AAMCO director determined it was not the appropriate permit for that festival, which is why the change happened in 2016. She further stated that she agrees with that decision. 4:42:53 PM REPRESENTATIVE FIELDS said he sees both sides of the problem and asked how it could be solved without a "sweeping legislative fix" that is poorly thought out on either end of the spectrum. MS. MCCONNELL pointed out that they have worked successfully with a BDL out of Chena Hot Springs for the last three years. She noted that she is not privileged to the details of that relationship. She further noted that the board hasn't taken a position on this issue, and because she works for the board, she is hesitant to insert an opinion. REPRESENTATIVE FIELDS deduced that the takeaway is that festival operators need to shop around for a BDL from someone. MS. MCCONNELL said that would be consistent with the current statutes and regulations. CO-CHAIR WOOL asked how many restaurant or eating place licenses (REPLs) exist. MS. MCCONNELL answered 386. 4:44:52 PM REPRESENTATIVE STORY inquired as to the process for an establishment to work with a BDL license holder. MS. MCCONNELL said AAMCO will receive an application for a caterer's permit from a BDL, which is then evaluated to ensure that the sale and service of alcohol is compliant with statutes and regulations. MS. MCCONNELL, responding to a follow-up question from Representative Story, said there are approximately six different permit types in statute that allow the sale of alcohol: caterer's permit, special events permit, restaurant caterer's dinner permit, club license caterer's permit, theatre license, art exhibit permit, and wine auction permit. REPRESENTATIVE STORY asked which two options are available for Chickenstock. CHAIR WOOL offered his understanding that the BDL or food banquet option would apply. 4:48:37 PM REPRESENTATIVE FIELDS asked if there is a third option for the RV owners to establish a nonprofit to allow a festival on their premises. MS. MCCONNELL said special events permits are available for eligible nonprofits that have been active for a period of at least 2 years before the time of application. 4:49:21 PM REPRESENTATIVE STUTES asked if there was anything under statute for an art exhibit. MS. MCCONNELL replied that in that section of regulations, "art exhibit event" means a public event involving an art display or similar activity approved by the Board that is held on a single date at one or more art galleries, art studios, art stores, art dealer stores, or museum. She offered her understanding that this permit was created for First Friday type of events. 4:50:17 PM REPRESENTATIVE HANNAN asked if a caterer's permit can be issued with a BDL for any location with no food restrictions; while catering with a REPL requires the provision of a full meal. MS. MCCONNELL said yes, they must be providing a banquet or dinner event. 4:51:05 PM PAUL THOMAS, Owner, Alaska Cache Liquor, pointed out that Title 4 is trying to par down all the special, one-off licenses. He opined that the best part of SB 16 is the grandfathering. He discussed the change to the recreational site license and the need to be language specific with the addition of skiing. CHAIR WOOL acknowledged that they put in language to narrow the focus of what a ski area is. 4:54:37 PM JACK MANNING, Owner, Duck Creek Market, reminded legislators that there is another bill that has been in the works for years now, which makes a big change to Title 4. He voiced his strong support for the grandfathering, which will take care of a lot of problems for the licenses that are not getting renewed. 4:55:34 PM LEEANN THOMAS, Owner, Triangle Bar, said exit plans for business owners are important because they work hard for their businesses and want something to be able to sell at the end. She said SB 16 has solved some of those problems and she supports the grandfathering. She addressed the need for more specific language when defining a ski area and bowling alley to maintain a regulated industry. She pointed out that in the proposed CS the word "activity" is substituting the original word, "recreation," which she said she does not like. CHAIR WOOL clarified that some are delineated events and others are delineated activities, like skiing and bowling. MS. THOMAS expressed further concern with the earlier start time for entertainment at REPLs. 5:00:49 PM JERAD CURE, Owner, The Narrows, expressed his concern with changes to the recreational site license. He said that "loose" language allowing anyone with recreational activities to apply for a liquor license will create more issues than it solves. He addressed the grandfathering and said he agrees with saving the license of businesses that have been in operation for many years. Nonetheless, he opined that not all bowling alleys should be allowed to have a liquor license. He expressed further concern with "loose" language regarding the fair license and which activities constitute a fair. He pointed out that he relies on catering during the slower months to provide additional revenue for his business and to keep his staff employed. He offered his belief that allowing anyone throwing a concert to apply for these permits would be a nightmare for an already overwhelmed AAMCO permit staff and would be a detriment to the health and safety of the consumer. 5:02:53 PM REPRESENTATIVE HANNAN noted that Mr. Cure expressed some expertise in using his BDL to be a caterer offsite. She asked how far from his licensed premises he would be willing to cater. MR. CURE replied that he uses his catering permit anywhere in Juneau. MR. CURE, responding to a follow-up question from Representative Hannan, said that there are probably plenty of BDLs closer to [Chicken, Alaska] that would be willing to take on that job. He offered that the issue isn't getting the permit, it's that they want the money from the alcohol. To that end, he said that he paid $250,000 to make money off alcohol and that other businesses can do the same or find a business to contract with. 5:04:31 PM GEORGE TIPTON, Ketchikan Cabaret, Hotel, and Restaurant Retailers Association, stated that he agrees with some of the changes in the proposed CS. He noted that adding on additional license types continues to do the same thing as what Title 4 is trying to restrict. He said that by adding on, this bill creates short term, impulsive solutions for license and permit types. Overall, he said the CS is a step in the right direction. 5:07:21 PM MACEY SHAPIRO, Hatcher Alpine Xperience, announced that they are building a ski area in Hatcher Pass, Alaska. While they build their business plan, he said it's important to find as many revenue streams as possible. One of which, is a beer and wine license. He pointed out that in the working draft, ski and snowboard areas would specifically be included under recreational site licenses and Hatcher would like to solicit an endorsement of this category of beer and wine licenses for ski and snowboard areas in the state. In return, he said, Hatcher pledges responsible management of the serving of any alcoholic beverage to the highest standards, and reciprocally, the state would be providing an avenue to assist families and youth into a sport that promotes a healthy lifestyle. CHAIR WOOL closed public testimony. 5:09:31 PM SENATOR PETER MICCICHE, Alaska State Legislature, as prime sponsor of SB 16, addressed the CS and said he supports nearly all the changes. He said this bill was designed to protect business owners that have been operating for years. He opined that "fair" is well defined and thanked the committee for leaving in the grandfathering. Renewal and transfer of the licenses are two important parts of the grandfathering, he said. He noted the change to a period of five years on the fair license, which keeps brand new fairs from popping up. He turned attention to Chickenstock and said it has not been as easy as it seems. The license that they have been borrowing is hundreds of miles away and has been a challenge. He said there are creative options that could be considered, such as extending the circumference for an REPL to serve one event per year up to x days that has been in existence for 10 years or more. He emphasized that this bill must pass to save a score of businesses that are at risk right now. CHAIR WOOL pointed out that with nearly 400 REPLs in existence, allowing them to put on music festivals could upset the balance. SENATOR MICCICHE clarified that he suggested a stipulation of at least 10 years of existence so that 400 music festivals could not pop up around the state. REPRESENTATIVE STUTES voiced her appreciation for the idea of REPLs making an accommodation for the event in Chicken. 5:14:43 PM REPRESENTATIVE FIELDS agreed that there should be something done to accommodate that festival. 5:14:56 PM REPRESENTATIVE STORY referenced page 2 of bill and asked for the rationale behind the change from 3 p.m. to 11 a.m. CHAIR WOOL said it was for a local business that wanted to have music at lunch. Nonetheless, he said he agrees that changing laws for one specific business could get complicated and lead to 150 different types of licenses, for example. 5:15:54 PM REPRESENTATIVE HANNAN asked how many of the REPLs are seasonal locations only. MS. MCCONNELL answered 52 of the 386 REPLs are seasonal. 5:17:22 PM CHAIR WOOL announced that SB 16 was held over.