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S1224......................................................by STATE AFFAIRS LIQUOR BY THE DRINK LICENSE - Amends existing law to increase the fee to the state for the sale of a liquor by the drink license; and to provide an amortization schedule for licenses purchased from another licensee. 02/15 Senate intro - 1st rdg - to printing 02/16 Rpt prt - to St Aff
S1224|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature First Regular Session - 1999IN THE SENATE SENATE BILL NO. 1224 BY STATE AFFAIRS COMMITTEE 1 AN ACT 2 RELATING TO LICENSE TO SELL LIQUOR BY THE DRINK; AMENDING SECTION 23-908, 3 IDAHO CODE, TO INCREASE THE FEE DUE TO THE STATE FOR THE SALE OF A LICENSE 4 TO SELL LIQUOR BY THE DRINK AT RETAIL AND TO MAKE TECHNICAL CORRECTIONS. 5 Be It Enacted by the Legislature of the State of Idaho: 6 SECTION 1. That Section 23-908, Idaho Code, be, and the same is hereby 7 amended to read as follows: 8 23-908. FORM OF LICENSE -- AUTHORITY -- EXPIRATION -- LIMITATIONS. (1) 9 Every license issued under the provisions of this chapter shall set forth the 10 name of the person to whom issued, the location by street and number, or other 11 definite designation, of the premises, and such other information as the 12 director shall deem necessary. If issued to a partnership, the names of the 13 persons constituting such partnership shall be set forth in the application. 14 If issued to a corporation or association, the names of the principal officers 15 and the governing board shall be set forth in the application. Such license 16 shall be signed by the licensee and prominently displayed in the place of 17 business at all times. Every license issued under the provisions of this chap- 18 ter is separate and distinct and no person except the licensee therein named 19 except as herein otherwise provided, shall exercise any of the privileges 20 granted thereunder. All licenses shall expire at 1:00 o'clock A.M. on January 21 1st of the following year and shall be subject to renewal upon proper applica- 22 tion. Renewal applications for liquor by the drink licenses accompanied by the 23 required fee must be filed with the director on or before January 1st of the 24 following year, provided, however, any licensee holding a valid license who 25 fails to file an application for renewal of his current license on or before 26 January 1st of the following year shall have a grace period of an additional 27 thirty-one (31) days in which to file an application for renewal of his 28 license and during which time he shall not be permitted to sell and dispense 29 liquor by the drink at retail. In any city of less than sixteen thousand 30 (16,000) population, as established in the last preceding census or any subse- 31 quent special census conducted by the United States bureau of the census, no 32 person shall be granted more than one (1) license in any city for any one (1) 33 year; and no partnership, association or corporation in such city of less than 34 sixteen thousand (16,000) population holding a license under the provisions of 35 this chapter shall have as a member, officer or stockholder any person who has 36 any financial interest of any kind in, or is a member of, another partnership 37 or association or an officer of another corporation holding a license in the 38 same city for the same year; provided that this section shall not prevent any 39 person, firm or corporation, owning two (2) or more buildings on connected 40 property in a city from making application for and receiving licenses permit- 41 ting the sale of liquor by the drink in such building. 42 (2) An application to transfer any license issued pursuant to chapter 9, 43 title 23, Idaho Code, shall be made to the director. Upon receipt of such an 2 1 application, the director shall make the same investigation and determinations 2 with respect to the transferee as are required by section 23-907, Idaho Code, 3 and if the director shall determine that all of the conditions required of a 4 licensee under chapter 9, title 23, Idaho Code, have been met by the proposed 5 transferee, then the license shall be indorsed over to the proposed transferee 6 by said licensee for the remainder of the period for which such license has 7 been issued and the director shall issue a license to the transferee. 8 (3) The director, in his discretion, may deny the transfer of a license 9 during the pendancy of any proceedings for suspension or revocation which were 10 instituted pursuant to the terms of this chapter. 11 (4) Each new license issued on or after July 1, 1980, shall be placed 12 into actual use by the original licensee at the time of issuance and remain in 13 use for at least six (6) consecutive months or be forfeited to the state and 14 be eligible for issue to another person by the director after compliance with 15 the provisions of section 23-907, Idaho Code. Such license shall not be trans- 16 ferable for a period of two (2) years from the date of original issuance, 17 except as provided by subsection (5)(a), (b), (c), (d) or (e) of this section. 18 (5) The fee for transferring a liquor license that was an original 19 license and was not purchased from a previous liquor licensee shall be 20ten per centninety percent (19 21 0%) of the purchase price of the liquor license or the cost of good 22 will, whichever is greater .; exceptFor licen- 23 sees who purchase their license from another licensee, they shall, for the 24 purpose of calculating the fee amount to be transferred by the director, amor- 25 tize the purchase price on a straight-line basis over fifteen (15) years from 26 the date of purchase. The percentage of the fifteen (15) year period that has 27 expired, times the purchase price, shall be paid by the seller licensee to the 28 director. Nno fee shall be collected in the following 29 events: 30 (a) The transfer of a license between husband and wife in the event of a 31 property division; or 32 (b) The transfer of a license to a receiver, trustee in bankruptcy or 33 similar person or officer; or 34 (c) The transfer of a license to the heirs or personal representative of 35 the estate in the event of the death of the licensee; or 36 (d) The transfer of a license arising out of the dissolution of a part- 37 nership where the license is transferred to one (1) or more 38 of the partners; or 39 (e) The transfer of a license within a family whether an individual, 40 partnership or corporation. 41 (6) The fee for transferring a liquor license for other than a sale shall 42 be fiftyper centpercent (50%) of the per annum 43 license fee set forth in section 23-904, Idaho Code; except no fee shall be 44 collected for transfers as outlined in subsection (5)(a), (b), (c), (d) or (e) 45 of this section.
STATEMENT OF PURPOSE
RS 08510C1
BACKGROUND:
Idaho Code specifies that owning a liquor license is a
privilege not a property right. In essence, a franchise granted
by the public (the state) to a licensee to sell liquor-by-the-
drink in a specified area. The number of licenses that can be
issued is established in Code. There are presently 754 city
licenses and 199 specialty licenses, 19 of which we specifically
granted in the legislature.
Even though liquor licenses are a privilege, they have been
treated as though they had been purchased from the state with
"ownership" allowed to be transferred at will for primarily the
licensee's financial benefit. These licenses have been used as
collateral for loans and included in "owner's" wills and estates.
The highest price paid for a license is $435,000, but the average
is less than $100,000, depending on location. When licenses are
transferred, 10% of the fair market value of the license is
remitted to the state with the licensee keeping 90%.
The State Alcohol and Beverage Control Bureau has a long
list of citizens applying to receive liquor licenses - issued
first-come, first-served. Some of these people have no interest
in getting a license except to sell it.
PURPOSE OF LEGISLATION:
The purpose of this legislation is to take a major step
toward eliminating state sanctioned private trafficking of liquor
licenses and return the value of the license to the public who
owns it.
This legislation reverses the 90-10 split in sales proceeds
(10% is allowed for a licensee to cover transaction costs). For
licensees who purchase and resell their license, a 15 year
license purchase price amortization period authorized by the IRS
will apply. In those cases, 90% of the purchase price would be
split between the state and selling licensee. The portion of the
15 years amortized times 90% of the sales price will go to the
state with the reciprocal amount going to the selling licensee.
FISCAL NOTE
In 1998, 135 liquor licenses changed hands at a total value of
$1.5 million. In theory, had this law been in effect, general
fund revenues would have increased by 80% of that amount (10%
already received), net of the effect of the 15 year amortization
split discussed above (the net 1998 effect and the number and
value of future transfers cannot be determined).
CONTACT PERSON: Senator Harold Bunderson 332-1000
STATEMENT OF PURPOSE/ FISCAL NOTE S1224