SENATE BILL No. 862

 

 

March 11, 2014, Introduced by Senators SCHUITMAKER, WARREN and RICHARDVILLE and referred to the Committee on Regulatory Reform.

 

 

 

     A bill to amend 1998 PA 58, entitled

 

"Michigan liquor control code of 1998,"

 

by amending section 531 (MCL 436.1531), as amended by 2013 PA 237.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 531. (1) A public license shall not be granted for the

 

sale of alcoholic liquor for consumption on the premises in excess

 

of 1 license for each 1,500 of population or major fraction

 

thereof. An on-premises escrowed license issued under this

 

subsection may be transferred, subject to local legislative

 

approval under section 501(2), to an applicant whose proposed

 

operation is located within any local governmental unit in a county

 

in which the escrowed license was located. If the local

 

governmental unit within which the former licensee's premises were

 


located spans more than 1 county, an escrowed license may be

 

transferred, subject to local legislative approval under section

 

501(2), to an applicant whose proposed operation is located within

 

any local governmental unit in either county. If an escrowed

 

license is activated within a local governmental unit other than

 

that local governmental unit within which the escrowed license was

 

originally issued, the commission shall count that activated

 

license against the local governmental unit originally issuing the

 

license. This quota does not bar the right of an existing licensee

 

to renew a license or transfer the license and does not bar the

 

right of an on-premises licensee of any class to reclassify to

 

another class of on-premises license in a manner not in violation

 

of law or this act, subject to the consent of the commission. The

 

upgrading of a license resulting from a request under this

 

subsection is subject to approval by the local governmental unit

 

having jurisdiction.

 

     (2) In a resort area, the commission may issue no more than

 

550 licenses for a period not to exceed 12 months without regard to

 

a limitation because of population and with respect to the resort

 

license the commission, by rule, shall define and classify resort

 

seasons by months and may issue 1 or more licenses for resort

 

seasons without regard to the calendar year or licensing year.

 

     (3) In addition to the resort licenses authorized in

 

subsection (2), the commission may issue not more than 5 additional

 

licenses per year to establishments whose business and operation,

 

as determined by the commission, is designed to attract and

 

accommodate tourists and visitors to the resort area, whose primary

 


purpose is not for the sale of alcoholic liquor, and whose capital

 

investment in real property, leasehold improvement, and fixtures

 

for the premises to be licensed is $75,000.00 or more. Further, the

 

commission shall issue 1 license under this subsection per year to

 

an applicant located in a rural area that has a poverty rate, as

 

defined by the latest decennial census, greater than the statewide

 

average, or that is located in a rural area that has an

 

unemployment rate higher than the statewide average for 3 of the 5

 

preceding years. In counties having a population of less than

 

50,000, as determined by the last federal decennial census or as

 

determined under subsection (11) and subject to subsection (16) in

 

the case of a class A hotel or a class B hotel, the commission

 

shall not require the establishments to have dining facilities to

 

seat more than 50 persons. The commission may cancel the license if

 

the resort is no longer active or no longer qualifies for the

 

license. Before January 16 of each year the commission shall

 

transmit to the legislature a report giving details as to all of

 

the following:

 

     (a) The number of applications received under this subsection.

 

     (b) The number of licenses granted and to whom.

 

     (c) The number of applications rejected and the reasons they

 

were rejected.

 

     (d) The number of the licenses revoked, suspended, or other

 

disciplinary action taken and against whom and the grounds for

 

revocation, suspension, or disciplinary action.

 

     (4) In addition to any licenses for the sale of alcoholic

 

liquor for consumption on the premises that may be available in the

 


local governmental unit under subsection (1) and the resort

 

licenses authorized in subsections (2) and (3), the commission may

 

issue not more than 15 resort economic development licenses per

 

year. A person is eligible to apply for a resort economic

 

development license under this subsection upon submitting an

 

application to the commission and demonstrating all of the

 

following:

 

     (a) The establishment's business and operation, as determined

 

by the commission, is designed to attract and accommodate tourists

 

and visitors to the resort area.

 

     (b) The establishment's primary business is not the sale of

 

alcoholic liquor.

 

     (c) The capital investment in real property, leasehold

 

improvement, fixtures, and inventory for the premises to be

 

licensed is in excess of $1,500,000.00.

 

     (d) The establishment does not allow or permit casino gambling

 

on the premises.

 

     (5) In governmental units having a population of 50,000 or

 

less, as determined by the last federal decennial census or as

 

determined under subsection (11), in which the quota of specially

 

designated distributor licenses, as provided by section 533, has

 

been exhausted, the commission may issue not more than a total of

 

15 additional specially designated distributor licenses per year to

 

established merchants whose business and operation, as determined

 

by the commission, is designed to attract and accommodate tourists

 

and visitors to the resort area. A specially designated distributor

 

license issued under this subsection may be issued at a location

 


within 2,640 feet of existing specially designated distributor

 

license locations. A specially designated distributor license

 

issued under this subsection shall not bar another specially

 

designated distributor licensee from transferring location to

 

within 2,640 feet of that licensed location. A specially designated

 

distributor license issued under section 533 may be located within

 

2,640 feet of a specially designated distributor license issued

 

under this subsection. The person signing the application for a

 

specially designated distributor license under this subsection

 

shall state that he or she attempted to secure an escrowed

 

specially designated distributor license or quota license and that,

 

to the best of his or her knowledge, an escrowed specially

 

designated distributor license or quota license is not readily

 

available within the county in which the applicant for the

 

specially designated distributor license under this subsection

 

proposes to operate.

 

     (6) In addition to any licenses for the sale of alcoholic

 

liquor for consumption on the premises that may be available in the

 

local governmental unit under subsection (1), and the resort or

 

resort economic development licenses authorized in subsections (2),

 

(3), and (4), and notwithstanding section 519, the commission may

 

issue not more than 5 additional special purpose licenses in any

 

calendar year for the sale of beer and wine for consumption on the

 

premises. A special purpose license issued under this subsection

 

shall be issued only for events that are to be held from May 1 to

 

September 30, are artistic in nature, and that are to be held on

 

the campus of a public university with an enrollment of 30,000 or

 


more students. A special purpose license is valid for 30 days or

 

for the duration of the event for which it is issued, whichever is

 

less. The fee for a special purpose license is $50.00. A special

 

purpose license may be issued only to a corporation that meets all

 

of the following requirements:

 

     (a) Is a nonprofit corporation organized under the nonprofit

 

corporation act, 1982 PA 162, MCL 450.2101 to 450.3192.

 

     (b) Has a board of directors constituted of members of whom

 

half are elected by the public university at which the event is

 

scheduled and half are elected by the local governmental unit.

 

     (c) Has been in continuous existence for not less than 6

 

years.

 

     (7) Notwithstanding the local legislative body approval

 

provision of section 501(2) and notwithstanding the provisions of

 

section 519, the commission may issue, without regard to the quota

 

provisions of subsection (1) and with the approval of the governing

 

board of the university, either a tavern or class C license which

 

may be used only for regularly scheduled events at a public

 

university's established outdoor program or festival at a facility

 

on the campus of a public university having a head count enrollment

 

of 10,000 students or more. A license issued under this subsection

 

may only be issued to the governing board of a public university, a

 

person that is the lessee or concessionaire of the governing board

 

of the university, or both. A license issued under this subsection

 

is not transferable as to ownership or location. Except as

 

otherwise provided in this subsection, a license issued under this

 

subsection may not be issued at an outdoor stadium customarily used

 


for intercollegiate athletic events. A license may be issued at an

 

outdoor stadium customarily used for intercollegiate athletic

 

events for not more than 30 consecutive days to a concessionaire of

 

an entity granted exclusive use of a public university's property

 

in conjunction with a hockey game sanctioned by an unincorporated

 

not-for-profit association that operates a major professional ice

 

hockey league consisting of teams located in Canada and in the

 

United States or in conjunction with a professional international

 

soccer match between 2 international soccer clubs as part of a

 

tournament sanctioned by a not-for-profit association that is the

 

governing body for soccer in the United States and organized and

 

promoted by a match agent that is licensed by the international

 

governing body for soccer if the concessionaire has entered into an

 

agreement granting it control of the licensed premises for the

 

purposes of complying with this act and rules promulgated under

 

this act regarding the sale of alcoholic liquor. A nationally

 

televised game between 2 professional hockey teams or 2

 

professional international soccer clubs played outdoors is

 

considered an established outdoor program for the purposes of this

 

subsection. Notwithstanding any provision of this act or any rule

 

promulgated under this act, a concessionaire obtaining a license

 

under this subsection may share the profits generated from that

 

license with an unincorporated not-for-profit association that

 

operates a major professional ice hockey league consisting of teams

 

located in Canada and in the United States or an affiliated entity

 

under a written contract reviewed by the commission or with a

 

licensed match agent and a promoter that organizes and promotes

 


international soccer matches under a written contract reviewed by

 

the commission. If the established outdoor program is a nationally

 

televised game between 2 professional hockey teams or 2

 

professional international soccer clubs, the commission may allow

 

the promotion and advertising of alcoholic liquor brands on the

 

campus of a public university where a concessionaire has been

 

issued a license under this subsection for the duration of the

 

license.

 

     (8) In issuing a resort or resort economic development license

 

under subsection (3), (4), or (5), the commission shall consider

 

economic development factors of the area in issuing licenses to

 

establishments designed to stimulate and promote the resort and

 

tourist industry. The commission shall not transfer a resort or

 

resort economic development license issued under subsection (3),

 

(4), or (5) to another location. If the licensee goes out of

 

business the license shall be surrendered to the commission.

 

     (9) The limitations and quotas of this section are not

 

applicable to issuing a new license to a veteran of the armed

 

forces of the United States who was honorably discharged or

 

released under honorable conditions from the armed forces of the

 

United States and who had by forced sale disposed of a similar

 

license within 90 days before or after entering or while serving in

 

the armed forces of the United States, as a part of the person's

 

preparation for that service if the application for a new license

 

is submitted for the same governmental unit in which the previous

 

license was issued and within 60 days after the discharge of the

 

applicant from the armed forces of the United States.

 


     (10) The limitations and quotas of this section are not

 

applicable to issuing a new license or renewing an existing license

 

where the property or establishment to be licensed is situated in

 

or on land on which an airport owned by a county or in which a

 

county has an interest is situated.

 

     (11) For purposes of implementing this section a special state

 

census of a local governmental unit may be taken at the expense of

 

the local governmental unit by the federal bureau of census or the

 

secretary of state under section 6 of the home rule city act, 1909

 

PA 279, MCL 117.6. The special census shall be initiated by

 

resolution of the governing body of the local governmental unit

 

involved. The secretary of state may promulgate additional rules

 

necessary for implementing this section pursuant to the

 

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

 

24.328.

 

     (12) Before granting an approval as required in section 501(2)

 

for a license to be issued under subsection (2), (3), or (4), a

 

local legislative body shall disclose the availability of

 

transferable licenses held in escrow for more than 1 licensing year

 

within that respective local governmental unit. The local

 

governmental unit shall provide public notice of the meeting to

 

consider the granting of the license by the local governmental unit

 

2 weeks before the meeting.

 

     (13) The person signing the application for an on-premises

 

resort or resort economic development license shall state and

 

verify that he or she attempted to secure an on-premises escrowed

 

license or quota license and that, to the best of his or her

 


knowledge, an on-premises escrowed license or quota license is not

 

readily available within the county in which the applicant for the

 

on-premises resort or resort economic development license proposes

 

to operate.

 

     (14) The commission shall not issue an on-premises resort or

 

resort economic development license if the county within which the

 

resort or resort economic development license applicant proposes to

 

operate has not issued all on-premises licenses available under

 

subsection (1) or if an on-premises escrowed license exists and is

 

readily available within the local governmental unit in which the

 

applicant for the on-premises resort or resort economic development

 

license proposes to operate. The commission may waive the

 

provisions of this subsection upon a showing of good cause.

 

     (15) The commission shall annually report to the legislature

 

the names of the businesses issued licenses under this section and

 

their locations.

 

     (16) The commission shall not require a class A hotel or a

 

class B hotel licensed under subsection (2), (3), or (4) to provide

 

food service to registered guests or to the public.

 

     (17) Subject to the limitation and quotas of subsection (1)

 

and to local legislative approval under section 501(2), the

 

commission may approve the transfer of ownership and location of an

 

on-premises escrowed license within the same county to a class G-1

 

or class G-2 license or may approve the reclassification of an

 

existing on-premises license at the location to be licensed to a

 

class G-1 license or to a class G-2 license, subject to subsection

 

(1). Resort or economic development on-premises licenses created

 


under subsection (3) or (4) may not be issued as, or reclassified

 

to, a class G-1 or class G-2 license.

 

     (18) An escrowed specially designated distributor license may

 

be transferred, with the consent of the commission, to an applicant

 

whose proposed operation is located within any local governmental

 

unit in a county in which the specially designated distributor

 

license is located. If the local governmental unit within which the

 

escrowed specially designated distributor license is located spans

 

more than 1 county, the license may be transferred to an applicant

 

whose proposed operation is located within any local governmental

 

unit in either county. If the specially designated distributor

 

license is activated within a local governmental unit other than

 

that local governmental unit within which the specially designated

 

distributor license was originally issued, the commission shall

 

count that activated license against the local governmental unit

 

originally issuing the specially designated distributor license.

 

     (19) Subsection (8) of R 436.1135 of the Michigan

 

administrative code does not apply to a transfer under subsection

 

(18).

 

     (20) As used in this section:

 

     (a) "Escrowed license" means a license in which the rights of

 

the licensee in the license or to the renewal of the license are

 

still in existence and are subject to renewal and activation in the

 

manner provided for in R 436.1107 of the Michigan administrative

 

code.

 

     (b) "Readily available" means available under a standard of

 

economic feasibility, as applied to the specific circumstances of

 


the applicant, that includes, but is not limited to, the following:

 

     (i) The fair market value of the license, if determinable.

 

     (ii) The size and scope of the proposed operation.

 

     (iii) The existence of mandatory contractual restrictions or

 

inclusions attached to the sale of the license.