DAR File No. 32578

Alcoholic Beverage Control, Administration

R81-5-1

Licensing

NOTICE OF PROPOSED RULE

DAR File No.: 32578
Filed: 04/29/2009, 12:35
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule amendment is being proposed to implement S.B. 187 which was passed by the 2009 State Legislature. (DAR NOTE: S.B. 187 (2009) is found at Chapter 383, Laws of Utah 2009, and was effective 05/12/2009.)

Summary of the rule or change:

S.B. 187 eliminated the membership requirement for dining and social clubs. This rule amendment replaces the words "private club" with the word "club" and replaces the terms "class C private club" or "class D private club" with the terms "dining" or "social" club. The amendment also permits present class C and class D private club owners to convert to a different type of classification during the 2009 renewal period.

State statutory or constitutional authorization for this rule:

Section 32A-1-107

Anticipated cost or savings to:

the state budget:

None--This amendment is proposed primarily for the purpose of changing language in the rule to match language in S.B. 187. It also permits licensees to change classification. Neither of these things will create a cost or savings to the state budget.

local governments:

None--Provisions in the Liquor Act that regulate private clubs are managed by the Department of Alcoholic Beverage Control and do not require regulation by local governments.

small businesses and persons other than businesses:

None--The renewal cost will be the same for the owner of a small private club that decides to change classification as it would have been if the club owner had decided not to change classification.

Compliance costs for affected persons:

None--This rule is being amended primarily for the purpose of matching rule terminology with the terminology in S.B. 187, and there will be no compliance costs assessed to those who choose to change club classification.

Comments by the department head on the fiscal impact the rule may have on businesses:

Most of what this rule amendment does is to match rule language with the language in S.B. 187, and to permit club owners to change classification. These changes will have no fiscal impact on these businesses. Dennis R. Kellen, Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Alcoholic Beverage Control
Administration
1625 S 900 W
SALT LAKE CITY UT 84104-1630

Direct questions regarding this rule to:

Sharon Mackay at the above address, by phone at 801-977-6800, by FAX at 801-977-6889, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

06/15/2009

This rule may become effective on:

06/22/2009

Authorized by:

Dennis R. Kellen, Director

R81. Alcoholic Beverage Control, Administration.

R81-5. [Private ]Clubs.

R81-5-1. Licensing.

(1) [Private club]Club liquor licenses are issued to persons as defined in Section 32A-1-105[(41)](44). Any contemplated action or transaction that may alter the organizational structure or ownership interest of the person to whom the license is issued must be submitted to the department for approval prior to consummation of any such action to ensure there is no violation of Sections 32A-5-102(4), 32A-5-103 and 32A-5-107[(40)](26).

(2)(a) At the time the commission grants a [private ]club license the commission must designate whether the [private ]club qualifies to operate as [a class A, B, C, or D private]an equity, fraternal, dining, or social club based on criteria in 32A-5-101.

(b) During the June 2009 renewal period, a class C private club licensee or class D private club licensee may request to convert to a different type of club license effective July 1, 2009. [After the]Also, after any club license is granted, a [private ]club may request that the commission approve a change in the club's classification in writing supported by evidence to establish that the club qualifies to operate under the new class designation based on the criteria in 32A-5-101.

(c) The department shall conduct an investigation for the purpose of gathering information and making a recommendation to the commission as to whether or not the request should be granted. The information shall be forwarded to the commission to aid in its determination.

(d) If the commission determines that the [private ]club has provided credible evidence to establish that it meets the statutory criteria to operate under the new class designation, the commission shall approve the request.

(3)(a) A [class C private]dining club must operate as [a dining club as defined]described in 32A-5-101(3)[(c)](a)(ii)(C), and must maintain at least 50% of its total private club business from the sale of food, not including mix for alcoholic beverages, service charges, and membership fees.

(b) A [class C private]dining club shall maintain records separately showing quarterly expenditures and sales for beer, heavy beer, liquor, wine, set-ups and food. These shall be available for inspection and audit by representatives of the department, and maintained for a period of three years.

(c) If any inspection or audit discloses that the sales of food are less than 50% for any quarterly period, an order to show cause shall be issued by the department to determine why the license should not be immediately reclassified by the commission as a [class D private]social club. If the commission grants the order to show cause, the reclassification shall remain in effect until the licensee files a request for and receives approval from the commission to be classified as a [class C private]dining club. The request shall provide credible evidence to prove to the satisfaction of the commission that in the future, the sales of food will meet or exceed 50%.

 

KEY: alcoholic beverages

Date of Enactment or Last Substantive Amendment: [June 27, 2008]2009

Notice of Continuation: September 7, 2006

Authorizing, and Implemented or Interpreted Law: 32A-1-107; 32A-5-107(18); 32A-5-107(23)