FREE CONFERENCE COMMITTEE AMENDMENTS TO H.B. 2621
(Reference to Senate engrossed House bill)
Page 1, between lines 1 and 2, insert:
"Section 1. Section 4-101, Arizona Revised Statutes, is amended to read:
4-101. Definitions
In this title, unless the context otherwise requires:
1. "Act of violence" means an incident consisting of a riot, a brawl or a disturbance, in which bodily injuries are sustained by any person and such injuries would be obvious to a reasonable person, or tumultuous conduct of sufficient intensity as to require the intervention of a peace officer to restore normal order, or an incident in which a weapon is brandished, displayed or used. Act of violence does not include the use of nonlethal devices by a peace officer.
2. "Aggrieved party" means a person who resides at, owns or leases property within a one mile radius of a premises proposed to be licensed and who filed a written request with the department to speak in favor of or opposition to the issuance of the license no later than sixty days after the filing of the application or fifteen days after action by the local governing body, whichever is later.
3. "Beer" means any beverage obtained by the alcoholic fermentation, infusion or decoction of barley malt, hops, or other ingredients not drinkable, or any combination of them.
4. "Board" means the state liquor board.
5. "Bona fide guest" means:
(a) A person who is actually a houseguest or a person whose presence as a guest is in response to a specific and personal invitation.
(b) In the case of a club that meets the criteria prescribed in paragraph 7, subdivision (a) of this section, a current member of the armed services of the United States who presents proper military identification and any member of a recognized veterans' organization of the United States and of any country allied with the United States during current or past wars or through treaty arrangements.
6. "Broken package" means any container of spirituous liquor on which the United States tax seal has been broken or removed, or from which the cap, cork or seal placed thereupon by the manufacturer has been removed.
7. "Club" includes any of the following organizations where the sale of spirituous liquor for consumption on the premises is made to members only:
(a) A post, chapter, camp or other local unit composed solely of veterans and its duly recognized auxiliary which has been chartered by the Congress of the United States for patriotic, fraternal or benevolent purposes and which has, as the owner, lessee or occupant, operated an establishment for that purpose in this state.
(b) A chapter, aerie, parlor, lodge or other local unit of an American national fraternal organization which has as the owner, lessee or occupant operated an establishment for fraternal purposes in this state. An American national fraternal organization as used in this subdivision shall actively operate in not less than thirty‑six states or have been in active continuous existence for not less than twenty years.
(c) A hall or building association of a local unit mentioned in subdivisions (a) and (b) of this paragraph, all of the capital stock of which is owned by the local unit or the members, and which operates the clubroom facilities of the local unit.
(d) A golf club which has more than fifty bona fide members and which owns, maintains or operates a bona fide golf links together with a clubhouse.
(e) A social club with more than one hundred bona fide members who are actual residents of the county in which it is located, that owns, maintains or operates club quarters, is authorized and incorporated to operate as a nonprofit club under the laws of this state, and has been continuously incorporated and operating for a period of not less than one year. The club shall have had, during this one year period, a bona fide membership with regular meetings conducted at least once each month, and the membership shall be and shall have been actively engaged in carrying out the objects of the club. The club's membership shall consist of bona fide dues paying members paying at least six dollars per year, payable monthly, quarterly or annually, which have been recorded by the secretary of the club, and the members at the time of application for a club license shall be in good standing having for at least one full year paid dues. At least fifty‑one per cent of the members shall have signified their intention to secure a social club license by personally signing a petition, on a form prescribed by the board, which shall also include the correct mailing address of each signer. The petition shall not have been signed by a member at a date earlier than thirty days prior to the filing of the petition. The club shall qualify for exemption from the payment of state income taxes under title 43. It is the intent of this paragraph that a license shall not be granted to a club which is, or has been, primarily formed or activated to obtain a license to sell liquor, but solely to a bona fide club, where the sale of liquor is incidental to the main purposes of the club.
(f) An airline club operated by or for airlines which are certificated by the United States government and which maintain or operate club quarters located at airports with international status.
8. "Company" or "association", when used in reference to a corporation, includes successors or assigns.
9. "Control" means the power to direct or cause the direction of the management and policies of an applicant, licensee or controlling person, whether through the ownership of voting securities or a partnership interest, by agreement or otherwise. Control is presumed to exist if a person has the direct or indirect ownership of or power to vote ten per cent or more of the outstanding voting securities of the applicant, licensee or controlling person or to control in any manner the election of one or more of the directors of the applicant, licensee or controlling person. In the case of a partnership, control is presumed to mean the general partner or a limited partner who holds ten per cent or more of the voting rights of the partnership. For the purposes of determining the percentage of voting securities owned, controlled or held by a person, there shall be aggregated with the voting securities attributed to the person the voting securities of any other person directly or indirectly controlling, controlled by or under common control with the other person, or by an officer, partner, employee or agent of the person or by a spouse, parent or child of the person. Control is also presumed to exist if a creditor of the applicant, licensee or controlling person holds a beneficial interest in ten per cent or more of the liabilities of the licensee or controlling person.
10. "Controlling person" means a person directly or indirectly possessing control of an applicant or licensee.
11. "Department" means the department of liquor licenses and control.
12. "Director" means the director of the department of liquor licenses and control.
13. "Distilled spirits" includes alcohol, brandy, whiskey, rum, tequila, mescal, gin, absinthe, a compound or mixture of any of them or of any of them with any vegetable or other substance, alcohol bitters, bitters containing alcohol, fruits preserved in ardent spirits, and any alcoholic mixture or preparation, whether patented or otherwise, which may in sufficient quantities produce intoxication.
14. "Employee" means any person who performs any service on licensed premises on a full‑time, part‑time or contract basis with consent of the licensee, whether or not the person is denominated an employee, independent contractor or otherwise. Employee does not include a person exclusively on the premises for musical or vocal performances, for repair or maintenance of the premises or for the delivery of goods to the licensee.
15. "Government license" means a license to serve and sell spirituous liquor on specified premises available only to a county, city, town or state university or the Arizona coliseum and exposition center upon application by the governing body of a county, city, town or state university or the Arizona exposition and state fair board.
16. "Legal drinking age" means the age of twenty‑one years or older.
17. "License" means a license or an interim retail permit issued pursuant to the provisions of this title.
18. "License fees" means fees collected for license issuance, license application, license renewal, interim permit issuance and license transfer between persons or locations.
19. "Licensee" means a person who has been issued a license or an interim retail permit pursuant to the provisions of this title or a special event licensee.
20. "Manager" means a natural person who meets the standards required of licensees and has authority to organize, direct, carry on, control or otherwise operate a licensed business on a temporary or full‑time basis.
21. "Off‑sale retailer" means any person operating a bona fide regularly established retail liquor store selling spirituous liquors, wines and beer, and any established retail store selling commodities other than spirituous liquors and engaged in the sale of spirituous liquors only in the original unbroken package, to be taken away from the premises of the retailer and to be consumed off the premises.
22. "On‑sale retailer" means any person operating an establishment where spirituous liquors are sold in the original container for consumption on or off the premises or in individual portions for consumption on the premises.
23. "Person" includes a partnership, limited liability company, association, company or corporation, as well as a natural person.
24. "Premises" or "licensed premises" means the area from which the licensee is authorized to sell, dispense or serve spirituous liquors under the provision of the license.
25. "Registered mail" includes certified mail.
26. "Registered retail agent" means any person who is authorized pursuant to section 4‑222 to purchase spirituous liquors for and on behalf of himself and other retail licensees.
27. "Repeated acts of violence" means two or more acts of violence occurring within seven days, three or more acts of violence occurring within thirty days or acts of violence occurring with any other similar frequency which the director determines to be unusual or deserving of review.
28. "Sell" includes soliciting or receiving an order for, keeping or exposing for sale, directly or indirectly delivering for value, peddling, keeping with intent to sell and trafficking in.
29. "Spirituous liquor" includes alcohol, brandy, whiskey, rum, tequila, mescal, gin, wine, porter, ale, beer, any malt liquor or malt beverage, absinthe, a compound or mixture of any of them or of any of them with any vegetable or other substance, alcohol bitters, bitters containing alcohol, any liquid mixture or preparation, whether patented or otherwise, which produces intoxication, fruits preserved in ardent spirits, and beverages containing more than one‑half of one per cent of alcohol by volume.
30. "Vehicle" means any means of transportation by land, water or air, and includes everything made use of in any way for such transportation.
31. "Vending machine" means a machine that dispenses merchandise through the means of coin, token, credit card or other nonpersonal means of accepting payment for merchandise received.
32. "Veteran" means a person who has served in the United States air force, army, navy, marine corps or coast guard, as an active nurse in the services of the American red cross, in the army and navy nurse corps in time of war, or in any expedition of the armed forces of the United States, and who has received a discharge other than dishonorable.
33. "Voting security" means any security presently entitling the owner or holder of the security to vote for the election of directors of an applicant, licensee or controlling person.
34. "Wine" means the product obtained by the fermentation of grapes or other agricultural products containing natural or added sugar or any such alcoholic beverage fortified with grape brandy and containing not more than twenty‑four per cent of alcohol by volume.
Sec. 2. Section 4-209, Arizona Revised Statutes, is amended to read:
4-209. Fees for license, application, issuance, renewal and transfer; late renewal penalty; seasonal operation; surcharges
A. A fee shall accompany an application for an original license or transfer of a license, or in case of renewal, shall be paid in advance. Every license expires annually. A licensee who fails to renew the license on or before the due date shall pay a penalty of one hundred fifty dollars which the licensee shall pay with the renewal fee. A license renewal that is deposited, properly addressed and postage prepaid in an official depository of the United States mail on or before the due date shall be deemed filed and received by the department on the date shown by the postmark or other official mark of the United States postal service stamped on the envelope. If the due date falls on a Saturday, Sunday or other legal holiday, the renewal shall be considered timely if it is received by the department on the next business day. The director may waive a late renewal penalty if good cause is shown by the licensee. A licensee who fails to renew the license on or before the due date may not sell, purchase or otherwise deal in spirituous liquor until the license is renewed. A license which is not renewed within sixty days after the due date is deemed terminated. The director may renew the terminated license if good cause is shown by the licensee. An application fee for an original license or the transfer of a license shall be one hundred dollars, which shall be retained by this state.
B. Issuance fees for original licenses shall be:
1. For an in‑state producer's license, to manufacture or produce spirituous liquor in this state, one thousand five hundred dollars.
2. Except as provided in paragraph 15 of this subsection, for an out‑of‑state producer's, exporter's, importer's or rectifier's license, two hundred dollars.
3. For a domestic microbrewery license, three hundred dollars.
4. For a wholesaler's license, to sell spirituous liquors, one thousand five hundred dollars.
5. For a government license issued in the name of a county, city or town, one hundred dollars.
6. For a bar license, which is an on‑sale retailer's license to sell all spirituous liquors primarily by individual portions and in the original containers, one thousand five hundred dollars.
7. For a beer and wine bar license, which is an on‑sale retailer's license to sell beer and wine primarily by individual portions and in the original containers, one thousand five hundred dollars.
8. For a conveyance license issued to an operating railroad company, to sell all spirituous liquors in individual portions or in the original containers on all passenger trains operated by the railroad company, or to an operating airline company, to sell or serve spirituous liquors solely in individual portions on all passenger planes operated by the airline company, or to a boat operating in the waters of this state, to sell all spirituous liquors in individual portions or in the original containers for consumption on the boat, one thousand five hundred dollars.
9. For a liquor store license, which is an off‑sale retailer's license to sell all spirituous liquors, one thousand five hundred dollars.
10. For a beer and wine store license, which is an off‑sale retailer's license to sell beer and wine, one thousand five hundred dollars.
11. For a hotel‑motel license issued as such, to sell and serve spirituous liquors solely for consumption on the licensed premises of the hotel or motel, one thousand five hundred dollars.
12. For a restaurant license issued as such, to sell and serve spirituous liquors solely for consumption on the licensed premises of the restaurant, one thousand five hundred dollars.
13. For a domestic farm winery license, one hundred dollars.
14. For a club license issued in the name of a bona fide club qualified under this title to sell all spirituous liquors on‑sale, one thousand dollars.
15. For an out‑of‑state winery that sells not more than fifty cases of wine in this state in a calendar year, twenty‑five dollars.
C. The department may issue licenses with staggered renewal dates to distribute the renewal work load workload as uniformly as practicable throughout the twelve months of the calendar year. If a license is issued less than six months before the scheduled renewal date of the license, as provided by the department's staggered license renewal system, one‑half of the annual license fee shall be charged.
D. The annual fees for licenses shall be:
1. For an in‑state producer's license, to manufacture or produce spirituous liquors in this state, three hundred fifty dollars.
2. Except as provided in paragraph 15 of this subsection, for an out‑of‑state producer's, exporter's, importer's or rectifier's license, fifty dollars.
3. For a domestic microbrewery license, three hundred dollars.
4. For a wholesaler's license, to sell spirituous liquors, two hundred fifty dollars.
5. For a government license issued to a county, city or town, one hundred dollars.
6. For a bar license, which is an on‑sale retailer's license to sell all spirituous liquors primarily by individual portions and in the original containers, one hundred fifty dollars.
7. For a beer and wine bar license, which is an on‑sale retailer's license to sell beer and wine primarily by individual portions and in the original containers, seventy‑five dollars.
8. For a conveyance license issued to an operating railroad company, to sell all spirituous liquors in individual portions or in the original containers on all passenger trains operated by the railroad company, or to an operating airline company, to sell or serve spirituous liquors solely in individual portions on all passenger planes operated by the airline company, or to a boat operating in the waters of this state, to sell all spirituous liquor in individual portions or in the original containers for consumption on the boat, two hundred twenty‑five dollars.
9. For a liquor store license, which is an off‑sale retailer's license to sell all spirituous liquors, fifty dollars.
10. For a beer and wine store license, which is an off‑sale retailer's license to sell beer and wine, fifty dollars.
11. For a hotel‑motel license issued as such, to sell and serve spirituous liquors solely for consumption on the licensed premises of the hotel or motel, five hundred dollars.
12. For a restaurant license issued as such, to sell and serve spirituous liquors solely for consumption on the licensed premises of the restaurant, five hundred dollars, and for a restaurant license that is permitted to continue operating as a restaurant pursuant to section 4-213, subsection E, an additional amount established by the director. the department shall transfer this amount to the state treasurer for deposit in the state general fund.
13. For a domestic farm winery license, one hundred dollars.
14. For a club license issued in the name of a bona fide club qualified under this title to sell all spirituous liquors on‑sale, one hundred fifty dollars.
15. For an out‑of‑state winery that sells not more than twenty‑five cases of wine in this state in a calendar year, twenty‑five dollars.
E. Where the business of an on‑sale retail licensee is seasonal, not extending over periods of more than six months in any calendar year, the licensee may designate the periods of operation, and a license may be granted for those periods only, upon payment of one‑half of the fee prescribed in subsection D of this section.
F. Transfer fees from person to person for licenses transferred pursuant to section 4‑203, subsection C shall be three hundred dollars.
G. Transfer fees from location to location, as provided for in section 4‑203, shall be one hundred dollars.
H. Assignment fees for a change of agent, as provided for in section 4‑202, subsection C, shall be one hundred dollars, except that where a licensee holds multiple licenses the assignment fee for the first license shall be one hundred dollars and the assignment fee for all remaining licenses transferred to the same agent shall be fifty dollars each, except that the aggregate assignment fees shall in no event exceed one thousand dollars.
I. No fee shall be charged by the department for an assignment of a liquor license in probate or an assignment pursuant to the provisions of a will or pursuant to a judicial decree in a domestic relations proceeding which assigns ownership of a business which includes a spirituous liquor license to one of the parties in the proceeding. In the case of nontransferable licenses no fee shall be charged by the department for the issuance of a license for a licensed business pursuant to a transfer of the business in probate or pursuant to the provisions of a will or pursuant to a judicial decree in a domestic relations proceeding which assigns ownership of the business to one of the parties in the proceeding.
J. The director shall assess a surcharge of thirty dollars on all licenses prescribed in subsection D, paragraphs 6, 7 and 12 of this section. Monies from the surcharge shall be used by the department exclusively for the costs of an auditor and support staff to review compliance by applicants and licensees with the requirements of section 4‑205.02, subsection E. The department shall assess the surcharge as part of the annual license renewal fee.
K. The director shall assess a surcharge of thirty‑five dollars on all licenses prescribed in this section. Monies from the surcharge shall be used by the department exclusively for the costs of an enforcement program to investigate licensees who have been the subject of multiple complaints to the department. The enforcement program shall respond to complaints against licensees by neighborhood associations, by neighborhood civic groups and from municipal and county governments. The department shall assess the surcharge as part of the annual license renewal fee.
L. The director shall assess a surcharge of twenty dollars on all licenses prescribed in subsection D, paragraphs 11 and 12 of this section and thirty‑five dollars on all other licenses prescribed in this section. Monies from the surcharge and from surcharges imposed pursuant to subsection K of this section shall be used by the department exclusively for the costs of a neighborhood association interaction and liquor enforcement management unit. The unit shall respond to complaints from neighborhood associations, neighborhood civic groups and local governing authorities regarding liquor violations. The director shall report the unit's activities to the board at each board meeting or as the board may direct.END_STATUTE
Sec. 3. Section 4-213, Arizona Revised Statutes, is amended to read:
4-213. Restaurant audit
A. The director may require a restaurant to submit an audit of its records to demonstrate compliance with section 4‑205.02. The director shall not require an establishment to submit to such an audit more than once a year after the initial twelve months of operation even if the establishment is allowed to continue operating as a restaurant pursuant to subsection E of this section.
B. Except as provided in subsection D of this section, the department shall audit accounts, records and operations of a licensee that cover a twelve month period. An establishment that averages at least forty per cent of its gross revenue from the sale of food during the twelve month audit period shall be deemed to comply with the gross revenue requirements of section 4-205.02. The twelve month audit period shall fall within the sixteen months immediately preceding the beginning of the audit.
C. If the audit or a consent agreement that may be offered at the discretion of the director and that is signed by the licensee and the director reveals that the licensee did not meet the definition of a restaurant as prescribed in section 4‑205.02 and the percentage of food sales determined by the audit or consent agreement was:
1. Less than thirty per cent, the department shall revoke the license.
2. At least thirty per cent but less than thirty-seven per cent, the department shall allow the licensee a six month period to either:
(a) Replace the license with a bar or beer and wine bar license, except that, at the end of that six month period, the department shall revoke the restaurant license or the licensee shall surrender the restaurant license.
(b) Obtain permission from the department to continue operating with a restaurant license pursuant to subsection e of this section.
3. At least thirty-seven per cent but less than forty per cent, the licensee shall be granted a period of one year to increase the food percentage to at least forty per cent. If the licensee does not increase the percentage of food sales to at least forty per cent, the department shall allow the licensee a six month period to either:
(a) Replace the license with a bar or beer and wine bar license, except that, at the end of the six month period, the department shall revoke the restaurant license or the licensee shall surrender the restaurant license.
(b) Obtain permission from the department to continue operating with a restaurant license pursuant to subsection E of this section.
D. The department may conduct an audit of a licensee described in section 4‑209, subsection B, paragraph 12 after twelve months following the beginning of operations as a restaurant by the licensee to determine compliance by the licensee with section 4‑205.02, except that the department may conduct an audit of a licensee within the first twelve months of operation if the licensee has made a substantial modification in the restaurant equipment, service or entertainment items or seating capacity during that twelve month period, in which event the department may conduct the audit for a period of less than twelve months.
E. A restaurant licensee may continue to operate with its restaurant license if its food sales are at least thirty per cent and less than forty per cent and the department approves the continuation of the restaurant license pursuant to this subsection and subsections C, F, G, H and I of this section. The department shall not approve more than fifteen restaurant licenses pursuant to this subsection and subsections C, F, G, H and I of this section in each of the fiscal years 2006-2007 and 2007-2008. The department shall not approve any additional licenses pursuant to this subsection and subsections C, F, G, H and I of this section from consent agreements entered into or audits conducted in any fiscal year after 2007‑2008. The department may approve a request submitted by the licensee to continue to operate with its restaurant license only if all of the following apply at the time the licensee files its request with the department:
1. The restaurant has a sufficient number of cooks, food preparation personnel and wait staff to prepare and provide the restaurant services that are necessary for the menu offered by the licensee.
2. The restaurant’s equipment is of a sufficient grade and the size of the restaurant's kitchen is appropriate to the menu offered and the kitchen occupies not less than twenty per cent of the total floor space of the licensed premises.
3. The menu is of a type consistent with a restaurant operation. In making a determination pursuant to this paragraph, the department may consider the proportion of food sales to alcohol sales, the price of spirituous liquor beverages and food served by the licensee and whether the licensee provides reduced price or complimentary food and beverages.
4. Not more than thirty per cent of the public interior area floor space consists of pool tables, dart or arcade games, barstools, cocktail tables and similar types of seating and dance floors, and the aggregate area of all dance floors on the premises is not greater than ten per cent of the total floor space of the public area of the premises.
5. The name of the restaurant does not include terms associated with alcohol consumption, such as "bar", "tavern", "pub", "spirits", "club", "lounge", "cabaret", "cantina" or "saloon".
6. Disposable dinnerware and smallware, including dining utensils, are not used except in outdoor areas.
F. If the department intends to approve a restaurant's continuation of operation pursuant to subsection E of this section:
1. the department shall advise the governing body of the city or town if the premises are within the incorporated limits of a city or town or the county of the department's intent.
2. The city or town or the county shall post a notice for at least twenty days on the licensed premises that the licensee has made a request for continuation to operate with a restaurant license and invite bona fide residents who own, lease or reside on property within a one mile radius of the licensed premises to file written comments with the department regarding the request within thirty days of the first posting of the notice.
G. If the local jurisdiction through its governing body or its authorized agent does not object within ninety days, the licensee may continue its operation as a restaurant.
H. If the department intends to disapprove a restaurant's continuation of operation pursuant to subsection e of this section, or if the local jurisdiction or its agent timely objects to its continuation, the department shall set a hearing before the board and the local jurisdiction shall post a notice of the hearing for a period of at least twenty days on the licensed premises. The city or town or the county may testify at the hearing and bona fide residents who own, lease or reside on property within a one mile radius of the licensed premises may testify before the board regarding the licensee’s request. The board shall determine whether the restaurant may continue its operation based on consideration of the criteria listed in subsection e of this section.
I. A restaurant licensee may continue to operate with its restaurant license pursuant to subsection E of this section, if the restaurant and the restaurant licensee continue to meet the requirements of this subsection, subsection E of this section and any other statute. As a condition of continuing operation as a restaurant under subsection E of this section, the department may require the licensee to specifically acknowledge the representations made by the licensee regarding its operations in support of the licensee's continuing operation as a restaurant. Notwithstanding subsection a of this section, if the licensee changes its operation in any way that materially and detrimentally affects the representations made by the licensee, the department may audit the licensee or terminate the license without an audit."
Renumber to conform
Page 1, after line 34, insert:
"Sec. 5. Laws 2005, chapter 284, section 15 is amended to read:
Sec. 15. Temporary transfers of licenses
Between July 1, 2006 and December 31, 2007 2008, bar, beer and wine bar and liquor store licenses may be transferred from counties with a population of five hundred thousand or more persons to counties with a population of less than five hundred thousand persons.
Sec. 6. Applicability of audit provisions
Section 4-213, Arizona Revised Statutes, as amended by this act, does not apply to any audit or disciplinary action completed or any consent agreement signed before January 1, 2006.
Sec. 7. Reporting requirement
The department of liquor licenses and control shall submit a report to the governor, the president of the senate and the speaker of the house of representatives on or before November 1, 2007 and shall provide a copy of this report to the director of the Arizona state library, archives and public records regarding the impact of sections 4-209 and 4-213, Arizona Revised Statutes, as amended by this act. The department of liquor licenses and control shall solicit input from neighborhood groups and local jurisdictions before issuing the report.
Sec. 8. Appropriation; department of liquor licenses and control
The sum of $450,000 is appropriated from the state general fund in fiscal year 2006-2007 to the department of liquor licenses and control for the purpose of hiring three additional investigators and two additional auditors."
Amend title to conform