PUBLIC PROTECTION CABINET

Department of Alcoholic Beverage Control

(Amendment)

 

††††† 804 KAR 9:050. Quota retail drink licenses.

 

††††† RELATES TO: KRS 241.060, 241.065, 241.075, 242.125 [242.152], 242.127, 242.129, 243.030, 243.230

††††† STATUTORY AUTHORITY: KRS 241.060

††††† NECESSITY, FUNCTION, AND CONFORMITY: KRS 241.060(2) authorizes the board to limit the number of licenses of each kind or class to issue in this state or any political subdivision, and restrict the locations of licensed premises. This administrative regulation establishes quota retail drink licenses in cities that have become wet pursuant to KRS 242.125 separately from their respective counties that remain dry.

 

††††† Section 1. Establishment of General City Quotas. (1) Except as provided in subsection (2) of this section and Section 4 of this administrative regulation, the number of quota retail drink licenses issued by the department in any city of the Commonwealth which becomes wet separately by virtue of a KRS 242.125 local option election held after January 1, 2013, shall be one (1) for every 2,500 persons resident in the city.

††††† (2) The minimum number of quota retail drink licenses issued by the department in any city shall be two (2) licenses.

††††† (3) A wet fourth class city shall not receive any quotas under this section unless a majority of the votes cast in an election held under KRS 242.127 and KRS 242.129 are in favor of the sale of distilled spirits and wine by the drink for consumption on the premises.

††††† (4) The estimates of population for Kentucky cities prepared by the Kentucky State Data Center, Urban Studies Center of the University of Louisville, Louisville, Kentucky, shall be used, if available, in every year except a census year to determine the number of licenses prescribed by this administrative regulation. The United States Government census figures of population shall be used in a census year.

 

††††† Section 2. Requests for Specific City Quota. (1) Three (3) years after the certification of a wet election pursuant to KRS 242.125 by a first, second, or third class city, or pursuant to KRS 242.127 and 242.129 for a fourth class city, the city may file a request to the board seeking a specific city quota to increase the number of quota retail drink licenses for the city from that established in Section 1 of this administrative regulation.

††††† (2) Before seeking this request, the city shall publish a notice in the newspaper used by the city for legal notices advising the general public of the cityís intent to request additional city quota licenses from the board. A city may petition the board for a specific quota increasing the number of quota retail drink licenses only once every three (3) years from the date of the denial or establishment of a specific city quota.

††††† (3) A cityís request to the board for a specific increased quota shall include:

††††† (a) A certified copy of a cityís governing body government resolution approving the request;

††††† (b) A certified copy of the notice referenced in subsection (2) of this section; and

††††† (c) An explanation why the city meets the criteria for a quota increase in conformity with Section 3 of this administrative regulation.

††††† (4) Upon receiving a city request satisfying subsection (3) of this section, the board may promulgate, in conformity with KRS Chapter 13A, an amendment to Section 4 of this administrative regulation which sets a higher specific quota for the city.

††††† (5) If the board rejects a request made under this section, the board shall notify the city of its decision by registered mail at the address given in the request. Within thirty (30) days after the date of the mailing of the notice, the city may indicate, in writing, its desire for an administrative hearing before the board regarding its request. The hearing shall be conducted in accordance with the provisions of KRS Chapter 13B.

††††† (6) In conformity with Section 4 of this administrative regulation, the department may publish notice of quota vacancies and issue quota retail drink licenses for the general quota number established by Section 1 of this administrative regulation. A licensee that holds a quota retail drink license assumes the business risk that the number of quota licenses might be increased.

††††† (7) Any specific city quota for quota retail drink licenses set by the board in subsection (4) of this section shall not exceed a ratio of one (1) for every 1,500 persons resident in the city.

††††† (8) This section shall not guarantee that a city will receive the requested specific city quota even if the board promulgates an initial amendment pursuant to subsection (4) of this section. The city shall bear the burden of showing the increase is necessary due to a change in circumstances from the previous request and that current needs are not being met by the current license holders.

 

††††† Section 3. Criteria for Consideration. The board may consider the following information in its determination of a cityís request for an increased quota made under Section 2(3) of this administrative regulation:

††††† (1) Population served by the city;

††††† (2) Total retail sales of the city for the most recent past fiscal year;

††††† (3) Retail sales per capita for the most recent past fiscal year;

††††† (4) Total alcohol sales in the city for the most recent fiscal year;

††††† (5) Tourist destinations in the area; and

††††† (6) Other economic and commercial data offered to show the cityís capacity to support additional licenses.

 

††††† Section 4. Establishment of Specific City Quotas. (1) Danville, which repealed prohibition on March 2, 2010, shall have six (6) quota retail drink licenses.

††††† (2)[Section 2.] Radcliff, which repealed prohibition on October 4, 2011, shall have eight (8) quota retail drink licenses.

††††† (3)[Section 3.] Somerset, which repealed prohibition on June 26, 2012, shall have five (5) quota retail drink licenses.

††††† (4)[Section 4.] Murray, which repealed prohibition on July 17, 2012, shall have seven (7) quota retail drink licenses.

 

FREDERICK HIGDON, Chairman

ROBERT D. VANCE, Secretary

††††† APPROVED BY AGENCY: March 13, 2014

††††† FILED WITH LRC: March 13, 2014 at 4 p.m.

††††† PUBLIC HEARING AND PUBLIC COMMENT PERIOD: A public hearing on this administrative regulation shall be held on April 25, 2014 at 9 a.m., EST, at the Kentucky Department of Alcoholic Beverage Control, 1003 Twilight Trail, Frankfort, Kentucky 40601. Individuals interested in being heard at this hearing shall notify this Department in writing by April 18, 2014, five working days prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing is received by this date, the hearing may be cancelled. This hearing is open to the public. Any person who wishes to be heard will be given an opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit comments on the proposed administrative regulation. Written comments shall be accepted until April 30, 2014. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact person.

††††† CONTACT PERSON: Trey Hieneman, Special Assistant, 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 Person: Trey Hieneman

††††† (1) Provide a brief summary of:

††††† (a) What this administrative regulation does: This administrative regulation establishes automatic quotas for cities that vote to go wet at a ratio of 1:2,500 people. The amendment also creates a mechanism for cities to petition the board to increase their quota. The amendment to this administrative regulation also establishes the retail liquor drink license quota for each of the following cities: Danville, Radcliff, Somerset, and Murray. The amendment to this administrative regulation establishes the method for filling quota vacancies and reducing quotas. Finally, the amendment clarifies that no city quota can exist in a wet county.

††††† (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. This regulation is necessary to establish quotas for wet cities located within dry counties.

††††† (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: This administrative regulation establishes automatic quotas for cities that vote to go wet at a ratio of 1:2,500 people. The amendment also creates a mechanism for cities to petition the board to increase their quota. The amendment to this administrative regulation also establishes the retail liquor drink license quota for each of the following cities: Danville, Radcliff, Somerset, and Murray. The amendment to this administrative regulation establishes the method for filling quota vacancies and reducing quotas. Finally, the amendment clarifies that no city quota can exist in a wet county.

††††† (b) The necessity of the amendment to 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. This amendment is necessary to establish quotas for wet cities located within dry counties.

††††† (c) How the amendment 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.

††††† (d) How the amendment will assist in the effective administration of the statutes: 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.

††††† (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 drink licenses that may be issued to newly wet cities. It will affect the cities of Danville, Radcliff, Somerset, and Murray. Current quota retail package license holders in the aforementioned cities may be affected if the cities petition for additional licenses and the board approves the petition.

††††† (4) Provide an analysis of how entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment:

(a) List the actions that each of the regulated entities in question (3) will have to take to comply with this administrative regulation or 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.

††††† (b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3): The cities identified in question (3) will have little to no cost. The cost impact on the licensees mentioned in question (3) is indeterminable, since the board must decide whether to increase the cityís quota.

††††† (c) As a result of compliance, what benefits will accrue to the entities identified in question (3): The cities in question (3) will have a set number of quota retail package licenses, with the potential to increase their number of licenses. The licensees mentioned in question (3) will receive no additional benefits.

††††† (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. What unit, part, or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation. The Commonwealth of Kentucky, Department of Alcoholic Beverage Controlís licensing division will be required to process all applications and licenses issued by this administrative regulation. The cities of Danville, Radcliff, Somerset, and Murray are already required to process all applications and issue alcoholic beverage licenses in their respective cities. All cities who vote to repeal prohibition after January 1, 2013 will be affected by this regulation.

††††† 2. Identify each state or federal statute or federal regulation that authorizes the action taken by the administrative regulation. 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.

††††† 3. Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) This amendment should generate revenue for the state and the cities regulated by this administrative regulation.

††††† (a) How much revenue will this administrative regulation general for the state or local government (including cities, counties, fire departments, or school districts) for the first year? Under KRS 243.070(3)(b), the city of Danville could receive up to $6,000.00 annually ($1,000.00 per license) if six (6) quota retail package licenses were issued. Under KRS 243.030(7), the state would receive $3,720.00 annually ($620.00 per license) if six (6) quota retail package licenses were issued in the city of Danville. Under KRS 243.070(3)(b), the city of Radcliff could receive up to $8,000.00 annually ($1,000.00 per license) if eight (8) quota retail package licenses were issued. Under KRS 243.030(7), the state would receive $4,960.00 annually ($620.00 per license) if nine (9) quota retail package licenses were issued in Radcliff. Under KRS 243.070(3)(b), the city of Somerset could receive up to $5,000.00 annually ($1,000.00 per license) if five (5) quota retail package licenses were issued. Under KRS 243.030(7), the state would receive $3,100.00 annually ($620.00 per license) if five (5) retail liquor package licenses were issued in the city of Somerset. Under KRS 243.070(3)(b), the city of Murray could receive up to $7,000.00 annually ($1,000.00 per license) if seven (7) quota retail package licenses were issued. Under KRS 243.030(7), the state would receive $4,340.00 annually ($620.00 per license) if seven (7) quota retail package licenses were issued in the city of Murray.

††††† (b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years? Under KRS 243.070(3)(b), the city of Danville could receive up to $6,000.00 annually ($1,000.00 per license) if six (6) quota retail package licenses were issued. Under KRS 243.030(7), the state would receive $3,720.00 annually ($620.00 per license) if six (6) quota retail package licenses were issued in the city of Danville. Under KRS 243.070(3)(b), the city of Radcliff could receive up to $8,000.00 annually ($1,000.00 per license) if eight (8) quota retail package licenses were issued. Under KRS 243.030(7), the state would receive $4,960.00 annually ($620.00 per license) if nine (9) quota retail package licenses were issued in Radcliff. Under KRS 243.070(3)(b), the city of Somerset could receive up to $5,000.00 annually ($1,000.00 per license) if five (5) quota retail package licenses were issued. Under KRS 243.030(7), the state would receive $3,100.00 annually ($620.00 per license) if five (5) retail liquor package licenses were issued in the city of Somerset. Under KRS 243.070(3)(b), the city of Murray could receive up to $7,000.00 annually ($1,000.00 per license) if seven (7) quota retail package licenses were issued. Under KRS 243.030(7), the state would receive $4,340.00 annually ($620.00 per license) if seven (7) quota retail package licenses were issued in the city of Murray.

††††† (c) How much will it cost to administer this program for the first year? The cost to administer this amendment should be minimal, if any.

††††† (d) How much will it cost to administer this program for subsequent years? The cost to administer this amendment should be minimal, if any.

††††† 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.