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SB-0257, As Passed Senate, June 30, 2005

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 257

A bill to amend 1998 PA 58, entitled

"Michigan liquor control code of 1998,"

by amending sections 525, 531, and 543 (MCL 436.1525, 436.1531, and

436.1543), section 525 as amended by 2004 PA 266 and sections 531

and 543 as amended by 2004 PA 191.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 525. (1) Except as otherwise provided for in this

section, the following license fees shall be paid at the time of

filing applications or as otherwise provided in this act:

(a) Manufacturers of spirits, but not including makers,

blenders, and rectifiers of wines containing 21% or less alcohol by

volume, $1,000.00.

(b) Manufacturers of beer, $50.00 per 1,000 barrels, or

fraction of a barrel, production annually with a maximum fee of

$1,000.00, and in addition $50.00 for each motor vehicle used in

delivery to retail licensees. A fee increase does not apply to a

manufacturer of less than 15,000 barrels production per year.

this state, $1,000.00.

(d) Wine makers, blenders, and rectifiers of wine, including

makers, blenders, and rectifiers of wines containing 21% or less

alcohol by volume, $100.00. The small wine maker license fee is

$25.00.

(e) Outstate seller of wine, delivering or selling wine in

this state, $300.00.

(f) Outstate seller of mixed spirit drink, delivering or

selling mixed spirit drink in this state, $300.00.

(g) Dining cars or other railroad or Pullman cars selling

alcoholic liquor, $100.00 per train.

(h) Wholesale vendors other than manufacturers of beer,

$300.00 for the first motor vehicle used in delivery to retail

licensees and $50.00 for each additional motor vehicle used in

delivery to retail licensees.

(i) Watercraft, licensed to carry passengers, selling

alcoholic liquor, a minimum fee of $100.00 and a maximum fee of

$500.00 per year computed on the basis of $1.00 per person per

passenger capacity.

(j) Specially designated merchants, for selling beer or wine

for consumption off the premises only but not at wholesale, $100.00

for each location regardless of the fact that the location may be a

part of a system or chain of merchandising.

(k) Specially designated distributors licensed by the

commission to distribute spirits and mixed spirit drink in the

original package for the commission for consumption off the

premises, $150.00 per year, and an additional fee of $3.00 for each

$1,000.00 or major fraction of that amount in excess of $25,000.00

of the total retail value of merchandise purchased under each

license from the commission during the previous calendar year.

(l) Hotels of class A selling beer and wine, a minimum fee of

$250.00 and, for all bedrooms in excess of 20, $1.00 for each

additional bedroom, but not more than $500.00.

(m) Hotels of class B selling beer, wine, mixed spirit drink,

and spirits, a minimum fee of $600.00 and, for all bedrooms in

excess of 20, $3.00 for each additional bedroom. If a hotel of

class B sells beer, wine, mixed spirit drink, and spirits in more

than 1 public bar, the fee entitles the hotel to sell in only 1

public bar, other than a bedroom, and a license shall be secured

for each additional public bar, other than a bedroom, the fee for

which is $350.00.

(n) Taverns, selling beer and wine, $250.00.

(o) Class C license selling beer, wine, mixed spirit drink,

and spirits, $600.00. If a class C licensee sells beer, wine, mixed

spirit drink, and spirits in more than 1 bar, a fee of $350.00

shall be paid for each additional bar. In municipally owned or

supported facilities in which nonprofit organizations operate

concession stands, a fee of $100.00 shall be paid for each

additional bar.

(p) Clubs selling beer, wine, mixed spirit drink, and spirits,

$300.00 for clubs having 150 or fewer duly accredited members and

$1.00 for each additional member. The membership list for the

purpose only of determining the license fees to be paid under this

~~section~~ subdivision shall be the accredited list of members as

determined by a sworn affidavit 30 days before the closing of the

license year. This ~~section~~ subdivision does not prevent the

commission from checking a membership list and making its own

determination from the list or otherwise. The list of members and

additional members is not required of a club paying the maximum

fee. The maximum fee shall not exceed $750.00 for any 1 club.

(q) Warehousers, to be fixed by the commission with a minimum

fee for each warehouse of $50.00.

(r) Special licenses, a fee of $50.00 per day, except that the

fee for that license or permit issued to any bona fide nonprofit

association, duly organized and in continuous existence for 1 year

before the filing of its application, is $25.00. Not more than 5

special licenses may be granted to any organization, including an

auxiliary of the organization, in a calendar year.

(s) Airlines licensed to carry passengers in this state that

sell, offer for sale, provide, or transport alcoholic liquor,

$600.00.

(t) Brandy manufacturer, $100.00.

(u) Mixed spirit drink manufacturer, $100.00.

(v) Brewpub, $100.00.

(w) Class G-1, $1,000.00.

(x) Class G-2, $500.00.

(2) The fees provided in this act for the various types of

licenses shall not be prorated for a portion of the effective

period of the license. Notwithstanding subsection (1), the initial

license fee for any licenses issued under section 531(3) and (4) is

$20,000.00. The renewal license fee shall be the amount described

in subsection (1). However, the commission shall not impose the

$20,000.00 initial license fee for applicants whose license

eligibility was already approved on the effective date of the

amendatory act that added this sentence.

(3) Beginning ~~the effective date of the amendatory act that~~

~~added this subsection~~ July 23, 2004, and except in the case of any

resort or resort economic development license issued under section

531(2), (3), (4), and (5) and a license issued under section 521,

the commission shall issue an initial or renewal license not later

than 90 days after the applicant files a completed application.

Receipt of the application is considered the date the application

is received by any agency or department of the state of Michigan.

If the application is considered incomplete by the commission, the

commission shall notify the applicant in writing, or make the

information electronically available, within 30 days after receipt

of the incomplete application, describing the deficiency and

requesting the additional information. The determination of the

completeness of an application does not operate as an approval of

the application for the license and does not confer eligibility

upon an applicant determined otherwise ineligible for issuance of a

license. The 90-day period is tolled under any of the following

circumstances:

(a) Notice sent by the commission of a deficiency in the

application until the date all of the requested information is

received by the commission.

(b) The time period during which actions required by a party

other than the applicant or the commission are completed that

include, but are not limited to, completion of construction or

renovation of the licensed premises; mandated inspections by the

commission or by any state, local, or federal agency; approval by

the legislative body of a local unit of government; criminal

history or criminal record checks; financial or court record

checks; or other actions mandated by this act or rule or as

otherwise mandated by law or local ordinance.

(4) If the commission fails to issue or deny a license within

the time required by this section, the commission shall return the

license fee and shall reduce the license fee for the applicant's

next renewal application, if any, by 15%. The failure to issue a

license within the time required under this section does not allow

the ~~department~~ commission to otherwise delay the processing of

the application, and that application, upon completion, shall be

placed in sequence with other completed applications received at

that same time. The commission shall not discriminate against an

applicant in the processing of the application based upon the fact

that the license fee was refunded or discounted under this

subsection.

(5) Beginning October 1, 2005, the chair of the commission

shall submit a report by December 1 of each year to the standing

committees and appropriations subcommittees of the senate and house

of representatives concerned with liquor license issues. The chair

of the commission shall include all of the following information in

the report concerning the preceding fiscal year:

(a) The number of initial and renewal applications the

commission received and completed within the 90-day time period

described in subsection (3).

(b) The number of applications denied.

90-day time period and the amount of money returned to licensees

under subsection (4).

(6) As used in this section, "completed application" means an

application complete on its face and submitted with any applicable

licensing fees as well as any other information, records, approval,

security, or similar item required by law or rule from a local unit

of government, a federal agency, or a private entity but not from

another department or agency of the state of Michigan.

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. On-premises escrowed licenses 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. However, beginning ~~the effective~~

~~date of the amendatory act that added this sentence~~ July 8, 2004,

and until July 1, 2009, if the on-premises escrowed license was

issued to a location within a city with a population of over

190,000 but under 300,000, the on-premises escrowed license shall

not be transferred to an applicant whose proposed operation is

located within any other local governmental unit in the county in

which that city is located and, in addition, an escrowed license

located within any local governmental unit in that county is not

transferable into the city with a population of over 190,000 but

under 300,000. If the local governmental unit within which the

former licensee's premises were located spans more than 1 county,

an escrowed license is available 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-premise 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 shall be approved by the local

governmental unit having jurisdiction.

(2) In a resort area, the commission may issue 1 or more

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

limitation because of population, but not in excess of 550, 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 10 5

additional licenses per year ~~for the years 2003 and 2004~~ 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 ~~for the years 2003 and 2004~~

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 pursuant to 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 the number of applications received under this

subsection; the number of licenses granted and to whom; the number

of applications rejected and the reasons; and 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 20 15 resort economic development licenses

per year. ~~for the years 2003 and 2004.~~ 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.

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

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

or as determined pursuant to 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 10 additional specially designated distributor licenses

per year ~~for the years 2003 and 2004~~ 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

pursuant to 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

pursuant to this subsection shall not bar another specially

designated distributor licensee from transferring location to

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

distributor license issued pursuant to section 533 may be located

within 2,640 feet of a specially designated distributor license

issued pursuant to this subsection.

(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 pursuant to this

subsection shall be issued only for events which are to be held

from May 1 to September 30, are artistic in nature, and which are

to be held on the campus of a public university with an enrollment

of 30,000 or more students. A special purpose license shall be

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

shall be $50.00. A special purpose license may be issued only to a

corporation which is all of the following:

(a) Is a nonprofit corporation organized pursuant to 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.

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. A license issued

under this subsection may not be issued at an outdoor stadium

customarily used for intercollegiate athletic events.

(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 the issuance of

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 the issuance of 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 shall not be

applicable to the issuance of a new license or the renewal of 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. Public notice of

the meeting to consider the granting of the license by the local

governmental unit shall be made 2 weeks before the meeting.

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

resort or resort economic development license shall state and

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

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

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

readily available within the county in which the applicant for the

on-premise resort or resort economic development license proposes

to operate, except that until July 1, 2009, and in the case

involving a city with a population of over 190,000 but under

300,000 that verification is not required.

(14) The commission shall not issue an on-premise 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-premise licenses available under

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

readily available within the local governmental unit in which the

applicant for the on-premise resort or resort economic development

license proposes to operate, except until July 1, 2009, in the case

involving a city with a population of over 190,000 but under

300,000. 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 pursuant to 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) 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.

Sec. 543. (1) Quarterly, upon recommendation of the

commission, the state shall pay pursuant to appropriation in the

manner prescribed by law to the city, village, or township in which

a full-time police department or full-time ordinance enforcement

department is maintained or, if a police department or full-time

ordinance enforcement department is not maintained, to the county,

to be credited to the sheriff's department of the county in which

the licensed premises are located, 55% of the amount of the

proceeds of the retailers' license fees and license renewal fees

collected in that jurisdiction, for the specific purpose of

enforcing this act and the rules promulgated under this act. Forty-

one and one-half percent of the amount of the proceeds of

retailers' license and license renewal fees collected shall be

deposited in a special fund to be annually appropriated to the

commission for carrying out the licensing and enforcement

provisions of this act. Any unencumbered or uncommitted money in

the special fund shall revert to the general fund of the state 12

months after the end of each fiscal year in which the funds were

collected. The legislature shall appropriate 3-1/2% of the amount

of the proceeds of retailers' license and license renewal fees

collected to be credited to a special fund in the state treasury

for the purposes of promoting and sustaining programs for the

prevention, rehabilitation, care, and treatment of alcoholics. This

subsection does not apply to retail license fees collected for

railroad or Pullman cars, watercraft, or aircraft, or to the

transfer fees provided in section 529.

(2) All license and license renewal fees, other than retail

license and license renewal fees, shall be credited to the grape

and wine industry council created in section 303, to be used as

provided in section 303. Money credited to the grape and wine

industry council shall not revert to the state general fund at the

close of the fiscal year, but shall remain in the account to which

it was credited to be used as provided in section 303.

(3) All retail license fees collected for railroad or Pullman

cars, watercraft, or aircraft, and the transfer fees provided in

section 529 shall be deposited in the special fund created in

subsection (1) for carrying out the licensing and enforcement

provisions of this act.

(4) The license fee enhancement imposed for licenses issued

under section 531(3) and (4) shall be deposited into a special fund

to be annually appropriated to the commission for enforcement and

other related projects determined appropriate by the commission.

The money representing that amount of the license fees for

identical licenses not issued under section 531(3) and (4) shall be

allocated and appropriated under subsection (1).

(5) As used in this section, "license fee enhancement" means

the money representing the difference between the license fee

imposed for a license under section 525(1) and the additional

amount imposed for resort and resort economic development licenses

under section 525(2).