1999 Legislation
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SENATE BILL NO. 1224 – Liquor by drink license, sale, fee


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Daily Data Tracking History

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

Bill Text


 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fifth Legislature                 First Regular Session - 1999

                                      IN THE SENATE

                                   SENATE BILL NO. 1224

                                BY STATE AFFAIRS COMMITTEE

 1                                        AN ACT

 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:

 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


 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
20      ten  per cent   ninety percent  ( 1  9
21    0%) of the purchase price of the liquor license  or  the  cost  of  good
22    will, whichever is greater .  ; except   For 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. N  n o 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  fifty    per  cent   percent  (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 / Fiscal Impact

                        STATEMENT OF PURPOSE

                             RS 08510C1

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.

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