* Last Call *

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ABC staff appeared before the State and Local Subcommittee of Government Operations Committee Thursday, August 19, 2010 to review termination of the ABC as a separate agency.  The ABC is currently scheduled to “sunset” next summer.

During the recent legislative session, there was discussion of merging the ABC into another agency, like the Department of Revenue.  Consideration of the potential merger was deferred near the very end of the legislative session, with a bill that extended the duration of the ABC for another year.

According to ABC Director Danielle Elks, “I think it was a very good meeting.”  Based on comments made at the meeting, it appears that the subcommittee will recommend extension of the ABC for two years.  The two year extension should take some pressure off ABC staff members that could easily be worried about trying to find a new job during a recession.

I attended a public meeting last night (August 10, 2010) where several council members and public citizens appeared to support a revised ordinance that would allow businesses with an ABC restaurant license to obtain a beer permit – even if the premises was within 100 feet of a residence, church, school or other disqualifying use.

With current law, the only way a business can avoid the 100 foot rule is to apply for beer PUD, a long and expensive process.

Under the new proposal, a business with an ABC restaurant license can ask the local council representative to introduce a resolution that will require one public hearing with notice to area residents. If the resolution passes the one hearing, the business can be granted a beer permit, despite being less than 100 feet from a house, church or school.

The new law will not apply to limited service licenses.  Bars and other watering holes that do not make 50% of their revenue from the sale of food cannot follow this process to locate within 100 feet of a house, church or school.

The current bill will need to be amended and is currently set for second reading. It appears that the sponsors may have enough support to pass the amended bill, but check back for more updates.

The ABC has started issuing 20 day demand letters with new citations.  If an establishment fails to respond within 20 days, the citation may be set for hearing.  The ABC has set several for hearing and may begin withdrawing settlement offers.

According to Assistant Director Carolyn Smith, the new procedure results in more fines being paid promptly to the ABC.

In the past, the ABC issued 14 day demand letters, but rarely followed up at the end of the 14 day period.  The practice was to require that citations be paid in connection with renewals.

Establishments are advised to look for citations and respond within the 20 day period, even if the response is to dispute the allegations in the citation.

Bars and clubs across the State of Tennessee can breathe a sigh of relief with the passage of a new liquor license on June 9, 2010.  The Tennessee Legislature created a new liquor license that lowers the food service requirement and the minimum the number of seats.  Bars with fifteen percent or more in food sales can now legally hold a liquor license.

The new law also clarifies that a restaurant is a business that earns fifty percent of its income from the sale of food.  This will force many establishments to convert to the new bar license.

License fees are staggered based on the percentage of food sales:

15%     $4,000

20%     $3,000

30%     $2,000

The law allows for license fees to be prorated, meaning that establishments applying during the mid year of their license will get a credit for their restaurant license fee and a credit for the bar license fee.

The definition of food for a limited service license specifically excludes popcorn, chips and other snack foods.  At this time, the ABC has not decided whether items like “chips and salsa” and “nachos and cheese” will be excluded or included in the calculation of food sales.  It appears that the cover charge for a food buffet will continue to be included, although the ABC will look at the price and food offer to ensure that it is a reasonable fit.

If a bar was the victim of a low food service audit during the preceding year, it may not qualify for the new license.  As part of the licensing process, applicants must file an affidavit that states that food sales for the preceding one-year period were fifteen percent or more.  This may prove problematic for bars that have recently been audited by the ABC.

Legislators have kicked around a number of different liquor bills that would legitimize bars in Tennessee.  Currently, bars are licensed as restaurants and, according to the ABC, must derive a majority of sales from food.  Hundreds of watering holes across the state fail to meet this requirement, including high-profile locations like the Bluebird Café and Wildhorse Saloon.  In the past few months, the ABC has suspended the liquor licenses of two restaurants for ninety days because of insufficient food sales.

Late in the Legislative Session, Representative Curry Todd and Senator Bill Ketron moved forward with an attempt to pass a bar bill.  If approved, the bill would legitimize bars that make fifteen percent of their income from the sale of food.  Popcorn, pretzels and other snacks are not included in the calculation.

Fifteen percent food is pretty high for many bars, but it is much need relief for bar and club owners facing the possibility of a 90 day suspension.  90 days without liquor will put most owners out of business.

The bar bill met with strong opposition on the Senate floor last Thursday.  Senator Roy Herron, who is generally conservative on liquor issues and is running for U.S. Congress in a conservative district, voiced strong opposition.  Senator Thelma Harper, who owns a restaurant here in Nashville that does not serve liquor, also spoke in opposition to the legislation.  Not having enough votes to pass the bill, sponsors allowed an amendment that eliminated the bar license.

Ironically, Senator Ketron has passed sponsorship of the bill to Senator Harper, who spoke in opposition to the bill two days earlier.  Insiders believe that sponsorship was changed to Senator Harper, a Democrat, in order to pick up some Democratic support for the bill.

With per diem allowances running out this week, most expect the legislative session to wrap up quickly.  Will a bar bill emerge from the last minute raucous at Capitol Hill?  Check back for more details.

From my Guns & Gin Blog

In the hours leading up to passage of the new guns with liquor law, the Tennessee Senate approved amendments that allow a restaurant or bar to opt out by posting the international circle and slash no gun sign. 

The sign conveys a simple message to gun permit holders – leave your gun in the car.  It is not a scary sign.  It should not startle tourists at the door.  It makes complete sense.

Previously, the law required posting a sign large enough to be “plainly visible to the average person entering the building” that said:

AS AUTHORIZED BY TCA § 39-17-1359, POSSESSION OF A WEAPON ON POSTED PROPERTY OR IN A POSTED BUILDING IS PROHIBITED AND IS A CRIMINAL OFFENSE.

Many insiders believe the big ALL CAPS sign was intentionally required to deter restaurants and bars from opting out.  Who would want to post a huge sign on the door with that message?

Although we would have preferred to prohibit guns with liquor entirely, we will settle for a reasonable opt out sign.

At this point, the law is on the governor’s desk.  Check back for more updates.

Thursday April 22, 2010, the ABC suspended the liquor license for Buck Wild Saloon, a watering hole on Second Avenue in Downtown Nashville.  Based on two consecutive food service audits falling below 5% food sales, the Commission imposed a 90 day suspension.

Two months ago, the Commission also imposed a 90 day suspension to another bar that failed two food service audits.

Buck Wild presented proof that in the last six months, it increased food sales from 5% to 22%.  If the Commission was impressed with the focus on food sales, it certainly did not impact the suspension.

It appears that the ABC will consistently dole out 90 day suspensions to bars that fail two food service audits.  Regardless of the circumstances.

The ABC is acting in direct response to pressure from the Tennessee General Assembly.  Some Legislators are taking a strong anti-business position that will ultimately drive many of Tennessee’s strongest tourist destinations out of business.  Buck Wild is only one of about a dozen bars and honky tonks on Second Avenue and Lower Broad that serve more booze than food.  The same is true of Beale Street in Memphis and internationally known music destinations like the Bluebird Cafe.

Posted by Will Cheek

A bill quietly advancing through the state legislature makes the ABC “sunset” on June 30, 2011. This is no reason for celebration. Liquor laws are not going away. It is a matter of who is going to enforce them.

If the bill passes, the ABC ceases to exist June 30, 2011. Liquor sales are a big revenue source for the state. Either the life of the ABC will be extended, or some other agency will take over ABC functions.There is talk that the ABC might be merged into the Department of Revenue or some other agency, presumably for cost savings. This pundit says merger is a bad idea.

For better, or for worse, our state ABC ranks pretty well compared to other states. Licenses are issued in a matter of weeks – not several months. ABC agents and staff freely advise businesses how to comply with the complex web of liquor laws – many states only issue written opinions to written questions, making even simple questions difficult and time consuming to answer.

The Department of Revenue is good at chasing delinquent taxpayers. Revenue knows how to collect money. Revenue is not known for enforcing rules of conduct.

To be effective, basic liquor laws must be enforced.

For example, if no one is enforcing the drinking age, some businesses will start ignoring the law and serve anyone – regardless of age. This creates pressure for honest businesses to also ignore the law. Ultimately, enforcement of the liquor laws levels the playing field – making unscrupulous owners play by the same rules as honest business owners.

Industry members need to pay close attention. Although our liquor laws are antiquated, extinction of the ABC is not the answer.