804 KAR 9:040. Retail liquor package [liquor] license quota.

PUBLIC PROTECTION CABINET

Department of Alcoholic Beverage Control

(Amended After Comments)

804 KAR 9:040. Retail liquor package[~~liquor~~] license quota.

RELATES TO: KRS 241.060[~~(2)~~], 241.065, 241.075, 241.125, 243.030[~~(7)~~]

STATUTORY AUTHORITY: KRS 241.060[~~(2), EO 2008-507~~]

NECESSITY, FUNCTION, AND CONFORMITY: KRS 241.060(2) authorizes the board to limit in its sound discretion the number of licenses of each kind or class to be issued[~~issue~~] in this state or any political subdivision, and restrict the locations of licensed premises.[EO 2008-507, effective June 16, 2008, abolished the Environmental and Public Protection Cabinet and established the new Public Protection Cabinet, and reorganized the Office of Alcohol Beverage Control as the Department of Alcohol Beverage Control.] This administrative regulation establishes retail liquor package license quotas in cities which have become wet pursuant to KRS 242.125 separately from their respective counties which remain dry.

Section 1. Pikeville, which repealed prohibition on April 12, 1983, shall have a quota of thirteen (13) retail liquor package licenses.

Section 2. Madisonville, which repealed prohibition on March 10, 1992, shall have a quota of seven (7) retail liquor package licenses.

Section 3. Central City, which repealed prohibition on July 10, 2002, shall have a quota of four (4) retail liquor package licenses.

Section 4. Dawson Springs, which repealed prohibition on February 5, 2008, shall have a quota of two (2) retail liquor package licenses.

Section 5. Lancaster, which repealed prohibition on August 19, 2008, shall have a quota of three (3) retail liquor package licenses.

Section 6. Paintsville, which repealed prohibition on June 9, 2009, shall have a quota of three (3) retail liquor package licenses.

Section 7. Danville, which repealed prohibition on March 2, 2010, shall have a quota of six (6) retail liquor package licenses.

Section 8. Earlington, which repealed prohibition on March 29, 2011, shall have a quota of two (2) retail liquor package licenses.

Section 9. Manchester, which repealed prohibition on June 21, 2011, shall have a quota of two (2) retail liquor package licenses.

Section 10. Elizabethtown, which repealed prohibition on October 4, 2011, shall have a quota of twelve (12) retail liquor package licenses.

Section 11. Radcliff, which repealed prohibition on October 4, 2011, shall have a quota of nine (9) retail liquor package licenses.

Section 12. Vine Grove, which repealed prohibition on October 4, 2011, shall have a quota of two (2) retail liquor package licenses.

Section 13. Guthrie, which repealed prohibition on October 4, 2011, shall have a quota of two (2) retail liquor package licenses.

Section 14. Junction City, which repealed prohibition on October 4, 2011, shall have a quota of two (2) retail liquor package licenses.

Section 15. Corbin, which repealed prohibition on February 14, 2012, shall have a quota of three (3) retail liquor package licenses.

Section 16. Somerset, which repealed prohibition on June 26, 2012, shall have a quota of ten (10)[~~five (5)~~] retail liquor package licenses.

Section 17. Whitesburg, which repealed prohibition on June 26. 2012, shall have a quota of two (2) retail liquor package licenses.

Section 18. Murray, which repealed prohibition on July 17, 2012, shall have a quota of seven (7) retail liquor package licenses.

Section 19. Franklin, which repealed prohibition on July 17, 2012, shall have a quota of three (3) retail liquor package licenses.

Section 20. LaGrange, which repealed prohibition on July 24, 2012, shall have a quota of three (3) retail liquor package licenses.

Section 21. Georgetown, which repealed prohibition on July 31, 2012, shall have a quota of twelve (12) retail liquor package licenses.

Section 22. Princeton, which repealed prohibition on August 7, 2012, shall have a quota of two (2) retail liquor package licenses.[~~individual quotas for~~ smaller political subdivisions within a county if the general retail package liquor license quota established in 804 KAR 9:010, if applied, would result in the issuance of more licenses than the population of the political subdivision could reasonably support.

~~Section 1. For Pikeville, following its repeal of prohibition on April 12, 1983, the retail package liquor license quota shall be thirteen (13).~~

~~Section 2. For Madisonville, following its repeal of prohibition on March 10, 1992, the retail package liquor license quota shall be seven (7).~~

~~Section 3. For Central City, following its repeal of prohibition on July 10, 2002, the retail package liquor license quota shall be four (4).~~

~~Section 4. For Dawson Springs, following its repeal of prohibition on February 5, 2008, the retail package liquor license quota shall be one (1).~~

~~Section 5. For Lancaster, following its repeal of prohibition on August 19, 2008, the retail package liquor license quota shall be three (3).~~]

FREDERICK HIGDON, Commissioner

ROBERT D. VANCE, Secretary

APPROVED BY AGENCY: April 12, 2013

FILED WITH LRC: April 12, 2013 at noon

CONTACT PERSONS: Stephen B. Humphress, General Counsel, Sam Crain, Paralegal Consultant, Department of Alcoholic Beverage Control, 1003 Twilight Trail, Frankfort, Kentucky 40601, phone (502) 564-4850, fax (502) 564-7479.

REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT

Contact Persons: Stephen B. Humphress, Sam Crain

(1) Provide a brief summary of:

(a) What this administrative regulation does:

The amendment to this administrative regulation establishes the retail liquor package license quota for each of the following cities: Paintsville, Danville, Earlington, Manchester, Elizabethtown, Radcliff, Vine Grove, Guthrie, Junction City, Corbin, Somerset, Whitesburg, Murray, Franklin, LaGrange, Georgetown, and Princeton. The amendment also increases the liquor package license quota to two (2) in Dawson Springs, so as to avoid a monopoly.

(b) The necessity of this administrative regulation: The existing administrative regulation establishes the number of quota licenses for cities based on population and monopoly avoidance while a different regulation, 804 KAR 9:010, establishes county quotas. The amendment to this administrative regulation provides the necessary retail liquor package license quotas for the following cities which have recently voted wet: Paintsville, Danville, Earlington, Manchester, Elizabethtown, Radcliff, Vine Grove, Guthrie, Junction City, Corbin, Somerset, Whitesburg, Murray, Franklin, LaGrange, Georgetown, and Princeton. It also increases the quota for Dawson Springs so as to avoid a monopoly.

(c) How this administrative regulation conforms to the content of the authorizing statutes: KRS 241.060(1) authorizes the board to promulgate administrative regulations. KRS 241.060(2) requires the board to limit in its sound discretion the number of licenses of each kind or class to be licensed in this state or any political subdivision, and restrict the locations of licensed premises. To this end, the Board may make reasonable division and subdivision of the state or any political subdivision into districts. Administrative regulations relating to the granting, refusal, and revocation of licenses may be different within the several divisions or subdivisions.

(d) How this administrative regulation currently assists or will assist in the effective administration of the statute. The amendment to this administrative regulation enables the board to execute its KRS 241.060(2) duty by setting quotas for newly wet cities situated in dry counties.

(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:

(a) How the amendment will change this existing administrative regulation: The proposed amendment will establish the quota for retail liquor package licenses in the following cities which recently voted wet: Paintsville, Danville, Earlington, Manchester, Elizabethtown, Radcliff, Vine Grove, Guthrie, Junction City, Corbin, Somerset, Whitesburg, Murray, Franklin, LaGrange, Georgetown, and Princeton. It also increases the quota for Dawson Springs so as to avoid a monopoly.

(b) The necessity of the amendment to this administrative regulation: This administrative regulation is needed to establish the quota for retail liquor package licenses in cities which have recently voted wet although the county remained dry. A different regulation, 804 KAR 9:010, sets the liquor package license quota for a county that votes wet based on the county’s population and a ratio of one license per 2300 residents. That regulation does not address, or set, a license quota for city local option elections when the county remains dry. When a city votes wet but county remains dry, the Board amends the current regulation, 804 KAR 9:040, to set specific quotas for each wet city. The existing regulation satisfies Due Process by codifying the retail liquor package license quotas for wet cities situated in dry counties. The proposed amendment will update the regulation by setting quotas for newly wet cities situated in dry counties. The quotas for wet counties are set by a different regulation, 804 KAR 9:010, which uses a population ration of one (1) license per 2300 residents.

(c) How the amendment conforms to the content of the authorizing statutes: KRS 241.060(2) allows the Board to limit the number of licenses of each kind or class to be issued in any political subdivision. The amendment will establish a quota for retail liquor package licenses in the cities of Paintsville, Danville, Earlington, Manchester, Elizabethtown, Radcliff, Vine Grove, Guthrie, Junction City, Corbin, Somerset, Whitesburg, Murray, Franklin, LaGrange, Georgetown, and Princeton, based primarily on each city’s population and a 1/2300 ratio.

(d) How the amendment will assist in the effective administration of the statutes: The amendment will establish the number of retail liquor package licenses that may be issued in the cities of Paintsville, Danville, Earlington, Manchester, Elizabethtown, Radcliff, Vine Grove, Guthrie, Junction City, Corbin, Somerset, Whitesburg, Murray, Franklin, LaGrange, Georgetown, and Princeton, proportionate to territory population.

(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation: This amendment to the administrative regulation will affect the Kentucky Department of Alcoholic Beverage Control ("Department") by providing a limited number of retail liquor package licenses that may be issued to newly wet cities. It will affect the cities of Paintsville, Danville, Earlington, Manchester, Elizabethtown, Radcliff, Vine Grove, Guthrie, Junction City, Corbin, Somerset, Whitesburg, Murray, Franklin, LaGrange, Georgetown, and Princeton. A retail liquor package license permits a business to operate a liquor package store. No liquor package stores exist until a city votes to become to become wet. As this amendment to the regulation sets quotas for cities that are newly wet, no existing businesses will be affected. The Board initially proposed to set the Somerset’s LP license quotas at five (5) licenses using Somerset’s population (11,300) and the 804 KAR 8:010 ratio of 1/2300 used for wet counties. However, the Board has previously set higher city quotas for economic, competitive and other reasons when requested by cities. For example, Pikeville has a quota of thirteen (13) LP licenses yet its population (6,300) which would only authorize a quota of two (2) LP licenses under the 804 KAR 9:010 county ratio. As Somerset representatives pointed out at the public hearing, Pikeville has about half the population of Somerset yet has a quota of eight (8) more LP licenses than originally proposed for Somerset. Similarly, Central City’s quota of four (4) LP licenses is twice what its population would warrant based on the county ratio. Somerset representatives demonstrated at the public hearing that its total retail sales and retail sales per capita were comparable, and even higher, than cities with much greater populations such as Richmond (31,300), Hopkinsville (31,000), Georgetown (29,000), Nicholasville (28,000), Henderson (28,700), and Radcliffe (21,600). This regulation sets Radcliffe’s quota at nine (9) LP licenses and Georgetown’s quota at twelve (12) LP licenses. However, Somerset’s retail sales are almost 200 percent greater than Radcliffe’s sales and 150 percent greater than Georgetown’s sales. Somerset’s monthly alcohol sales were 150 percent greater than comparable monthly alcohol sales in Danville. Somerset would need to have nine LP licenses to equal the same average sales per license in Danville. Somerset anticipates even higher alcohol sales this summer since dam work is completed at Lake Cumberland and it will return to normal lake level and attract even more tourists. The Board, upon considering Somerset’s strong evidence, documentation, and convincing arguments at the comments decided to increase Somerset’s LP license quota to ten (10) licenses.

(4) Provide an assessment of how the above group or groups will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment: The impact of this amendment to the regulation will be minimal because the Department already issues state licenses and enforces alcohol laws and cities already issue city licenses.

(5) Provide an estimate of how much it will cost to implement this administrative regulation:

(a) Initially: No extra costs are anticipated to implement this administrative regulation amendment.

(b) On a continuing basis: None.

(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation: Agency funding is used for the implementation and enforcement of the administrative regulation.

(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change, if it is an amendment: There is no anticipated increase in fees or funding necessary to implement this administrative regulation amendment.

(8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees: This administrative regulation amendment does not directly or indirectly increase any fees.

(9) TIERING: Is tiering applied? No tiering is applied. There are no costs associated with administering this administrative regulation.

FISCAL NOTE ON STATE OR LOCAL GOVERNMENT

1. State what unit, part, or division of local government this administrative regulation will affect. The Commonwealth of Kentucky, Department of Alcoholic Beverage Control’s licensing division will be required to process all applications and licenses issued by this administrative regulation. The cities of Paintsville, Danville, Earlington, Manchester, Elizabethtown, Radcliff, Vine Grove, Guthrie, Junction City, Corbin, Somerset, Whitesburg, Murray, Franklin, LaGrange, Georgetown, and Princeton, are already required to process all applications and issue alcoholic beverage licenses in their respective cities.

2. State, in detail, the aspect or service of local government to which this administrative regulation relates, including identification of the applicable state or federal statute or regulation that mandates the aspect or service or authorizes the action taken by the administrative regulation. There should be no effects of this administrative regulation amendment on the service of local government. This amendment to the administrative regulation should not affect any aspect or service of local government.

3. Estimate the effect of this administrative regulation on the expenditures and revenues of a local government for the first full year the administrative regulation is to be in effect. If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation. Under KRS 243.070(1)(e)(4), the city of Paintsville could receive up to $1,500.00 annually ($500.00 per license) if three (3) retail liquor package licenses were issued. Under KRS 243.030(7)(d), the state would receive $1,500.00 annually ($500.00 per license) if three (3) liquor package licenses were issued in the city of Paintsville. Under KRS 243.070(1)(e)(4), the city of Danville could receive up to $3,600.00 annually ($600.00 per license) if six (6) retail liquor package licenses were issued. Under KRS 243.030(7)(c), the state would receive $3,600.00 annually ($600.00 per license) if six (6) liquor package licenses were issued in the city of Danville. Under KRS 243.070(1)(e)(4), the city of Earlington could receive up to $1,000.00 annually ($500.00 per license) if two (2) retail liquor package licenses were issued. Under KRS 243.030(7)(d), the state would receive $1,000.00 annually ($500.00 per license) if two (2) liquor package licenses were issued in the city of Earlington. Under KRS 243.070(1)(e)(4), the city of Manchester could receive up to 1,000.00 annually ($500.00 per license) if two (2) retail liquor package licenses were issued. Under KRS 243.030(7)(d), the state would receive $1,000.00 annually ($500.00 per license) if two (2) retail liquor package licenses were issued in the city of Manchester. Under KRS 243.070(1)(e)(4), the city of Elizabethtown could receive up to $8,400.00 annually ($700.00 per license) if twelve (12) retail liquor package licenses were issued. Under KRS 243.030(7)(b), the state would receive $8,400.00 annually ($700.00 per license) if twelve (12) retail liquor package licenses were issued in Elizabethtown. Under KRS 243.070(1)(e)(4), the city of Radcliff could receive up to $6,300.00 annually ($700.00 per license) if nine (9) retail liquor package licenses were issued. Under KRS 243.030(7)(b), the state would receive $6,300.00 annually ($700.00 per license) if nine (9) retail liquor package licenses were issued in Radcliff. Under KRS 243.070(1)(e)(4), the city of Vine Grove could receive up to $1,400.00 annually ($700.00 per license) if two (2) retail liquor package licenses were issued. Under KRS 243.030(7)(b), the state would receive $1,400.00 annually ($700.00 per license) if two (2) retail liquor package licenses were issued in Vine Grove. Under KRS 243.070(1)(e)(4), the city of Guthrie could receive up to $1,000.00 annually ($500.00 per license) if two (2) retail liquor package licenses were issued. Under KRS 243.030(7)(d), the state would receive $1,000.00 annually ($500.00 per license) if two (2) retail liquor package licenses were issued in Guthrie. Under KRS 243.070(1)(e)(4), the city of Junction City could receive up to $1,200.00 annually ($600.00 per license) if two (2) retail liquor package licenses were issued. Under KRS 243.030(7)(c), the state would receive $1,200.00 annually ($600.00 per license) if two (2) retail liquor package licenses were issued in the city of Junction City. Under KRS 243.070(1)(e)(4), the city of Corbin could receive up to $1,500.00 annually ($500.00 per license) if three (3) retail liquor package licenses were issued. Under KRS 243.030(7)(d), the state would receive $1,500.00 annually ($500.00 per license) if three (3) retail liquor package licenses were issued to the city of Corbin Under KRS 243.070(1)(e)(4), the city of Somerset could receive up to $6,000.00 annually ($600.00 per license) if ten (10) retail liquor package licenses were issued. Under KRS 243.030(7)(c), the state would receive $3,000.00 annually ($600.00 per license) if five (5) retail liquor package licenses were issued in the city of Somerset. Under KRS 243.070(1)(e)(4), the city of Whitesburg could receive up to $1,000.00 annually ($500.00 per license) if two (2) retail liquor package licenses were issued. Under KRS 243.030(7)(d), the state would receive $1,000.00 annually ($500.00 per license) if two (2) retail liquor package licenses were issued to the city of Whitesburg. Under KRS 243.070(1)(e)(4), the city of Murray could receive up to $4,200.00 annually ($600.00 per license) if seven (7) retail liquor package licenses were issued. Under KRS 243.030(7)(c), the state would receive $4,200.00 annually ($600.00 per license) if seven (7) retail liquor package licenses were issued in the city of Murray. Under KRS 243.070(1)(e)(4), the city of Franklin could receive up to $1,500.00 annually ($500.00 per license) if three (3) retail liquor package licenses were issued. Under KRS 243.030(7)(d), the state would receive $1,500.00 annually ($500.00 per license) if three (3) retail liquor package licenses were issued in the city of Franklin. Under KRS 243.070(1)(e)(4), the city of LaGrange could receive up to $1,500.00 annually ($500.00 per license) if three (3) retail liquor package licenses were issued. Under KRS 243.030(7)(d), the state would receive $1,500.00 annually ($500.00 per license) if three (3) retail liquor package licenses were issued in the city of LaGrange. Under KRS 243.070(1)(e)(4), the city of Georgetown could receive up to $6,000.00 annually ($500.00 per license) if twelve (12) retail liquor package licenses were issued. Under KRS 243.030(7)(d), the state would receive $6,000.00 annually ($500.00 per license) if twelve (12) retail liquor package licenses were issued to the city of Georgetown. Under KRS 243.070(1)(e)(4), the city of Princeton could receive up to $1,000.00 annually ($500.00 per license) if two (2) retail liquor package licenses were issued. Under KRS 243.030(7)(d), the state would receive $1,000.00 annually ($500.00 annually) if two (2) retail liquor package licenses were issued to the city of Princeton. Under KRS 243.070(1)(e)(4), the city of Dawson Springs could receive up to $1,000.00 annually ($500.00 per license) if two (2) retail liquor package licenses were issued. Under KRS 243.030(7)(d), the state would receive $1,000.00 annually ($500.00 annually) if two (2) retail liquor package licenses were issued to the city of Dawson Springs.

Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.

Revenues (+/-):

Expenditures (+/-):

Other Explanation: Additional costs to administer these regulatory changes at the local government level for this year or subsequent years should be minimal or none.