No. 33157 (New Rule): Rule R81-4E. Resort Licenses

(New Rule)

DAR File No.: 33157
Filed: 11/18/2009 08:26:02 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is proposed to implement the new resort license created in S.B. 187 passed by the 2009 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:

The 2009 legislature created a new liquor license type in the Resort License Act. This rule is proposed to ensure that resort licensees are regulated in the same way as the holders of other liquor licenses. Section R81-4E-1 requires that any transaction that may alter the organizational structure or owner interest of the license holder must first be approved by the Department of Alcoholic Beverage Control (DABC). Section R81-4E-2 outlines requirements of the application for a resort license and clarifies that sublicensees of the resort license need not file separate applications nor carry separate insurance and bond if those are adequately covered under the resort license. Section R81-4E-3 elaborates on regulations regarding the bond required by statute to be carried by resort licensees, including penalties for noncompliance. Section R81-4E-4 elaborates on regulations regarding requirements for resort licensee insurance coverage and penalties for noncompliance. Section R81-4E-5 regulates how resort licensees may place liquor orders at state liquor stores and how they should go about returning items if they over-buy. Title 32A, Chapter 4a, mandates that a resort licensee or sublicensee may have their liquor storage area open and unlocked only during hours they may legally sell the liquor. Section R81-4E-6 permits the licensee to open the storage area at other times for the limited purposes of inventory, restocking, repair, and cleaning. Resort licensees are the only licensee in the Liquor Act that operate their restaurants as sublicensees of the resort license. Section R81-4E-7 provides guidelines for where alcoholic beverages may be dispensed and consumed and how they may be sold in restaurants with sublicenses. The section also establishes how liquor sales records should be maintained. Section R81-4E-8 permits sublicensees in resorts to store all types of liquor in the same storage area on the licensed premises. Alcoholic product flavorings may be used in alcohol drinks or as a food preparation. Section R81-4E-9 regulates the use of alcoholic product flavorings used by resort licensees. Section R81-4E-10 allows wine service at a patron's table which is a practice accepted worldwide. Section R81-4E-11 establishes where on the premises of a restaurant sublicense alcoholic beverages may be consumed by a patron. Section R81-4E-12 establishes guidelines and regulations for posting liquor prices and liquor service prices and practices in sublicensed establishments licensed under a resort license. Section R81-4E-13 establishes regulations for employees of sublicenses established under the resort license for wearing a unique identification badge when selling and serving alcoholic beverages. Section R81-4E-14 addresses when it is legal and appropriate to permit brown-bagging on the premises of a sublicensee. The Resort License Act created a new license type called a Resort Spa Sublicense. Section R81-4E-15 defines the term resort spa, establishes application requirements, and addresses minors in spas with lounges. Section R81-4E-16 states that the rules for sublicenses issued under the larger resort license must comply with the same type of licenses issued by the DABC. For example, a restaurant sublicensee must comply with the same regulations as a regular restaurant licensee.

State statutory or constitutional authorization for this rule:

• Section 32A-1-107

Anticipated cost or savings to:

the state budget:

This rule elaborates on the statutory requirement in Title 32A, Chapter 4a, and provides application requirements, guidelines, and procedures for a resort license and restaurant sublicenses. The passage of this rule will not fiscally affect the state's budget.

local governments:

Liquor stores in Utah are operated by the State of Utah. Local governments have no part in retail liquor sales. This rule only affects persons applying for a state-issued resort license. Therefore, this rule will have no fiscal impact on local governments.

small businesses:

Resorts as defined by Title 32A, Chapter 4a, are huge enterprises employing hundreds of staff members. Resort licenses are issued only to facilities that are 400,000 square feet in size. These facilities will no doubt employ hundreds of staff members. Consequently, this rule will not affect small businesses.

persons other than small businesses, businesses, or local governmental entities:

The requirements for resort licensees will only affect the licensee and no other persons. The regulation of alcoholic beverage dispensing and consumption in restaurants within resorts only affects the resort itself. This rule states that the rules for sublicenses issued under the larger resort license must comply with the same type of licenses issued by the DABC. For example, a restaurant sublicensee must comply with the same regulations as a regular restaurant licensee. This rule regulates these resorts and will have no fiscal effect on other persons.

Compliance costs for affected persons:

This rule outlines requirements for an applicant for a state resort license to carry insurance and a bond. Application requirements are mandated by Title 32A, Chapter 4a, but this rule clarifies the fact that sublicensees of the resort license are not required to file a separate application or carry separate insurance and bond. Consequently, this rule saves compliance costs for the resort licensee. Also, this rule defines the term resort spa, establishes application requirements, and addresses minors in spas with lounges. Resorts are not required to have spas on the premises. If they choose to have a spa, following the regulations established in the rule will have no added compliance costs. The only compliance costs involved with this rule are costs to set up a record-keeping system that complies with the requirements of the rule. This cost will vary from one resort to another, but should be minimal.

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

This rule is written to ensure the holders of resort licenses comply with rules required of other liquor license holders. This rule sets guidelines for where alcoholic beverages may be consumed in an establishment licensed under the resort license law. The guidelines are reasonable and will have no fiscal impact on businesses. The resort license is a very limited license that will be utilized by a very select population. For this reason, this rule regulating the resort license should have no real fiscal impact on other 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 [e-mail]

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:

01/14/2010

This rule may become effective on:

01/21/2010

Authorized by:

Dennis Kellen, Director

RULE TEXT

R81. Alcoholic Beverage Control, Administration.

R81-4E. Resort Licenses.

R81-4E-1. Licensing.

Resort licenses are issued to persons as defined in Section 32A-1-105(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-4a-202(4), 32A-4a-203, 32A-4a-305(30), and 32A-4a-401(14).

 

R81-4E-2. Application.

(1) A license application shall be included in the agenda of the monthly commission meeting for consideration for issuance of a resort license when the requirements of Sections 32A-4a-202, -203, and -205 have been met, a completed application has been received by the department, and the resort premises have been inspected by the department.

(2) Pursuant to 32A-4a-204(3) and 32a-4A-302(1), each sublicense of a resort license is not required to:

(a) submit an application or renewal application that is separate from the resort license application;

(b) carry public liability or dramshop insurance coverage that is separate from that carried by the resort licensee; or

(c) post a bond that is separate from the bond posted by the resort licensee if the aggregate of any bonds posted by the resort licensee covers each sublicense under the resort license.

(3) Pursuant to 32A-4a-302(1) and (2), a resort spa sublicense is not required to file a separate application from the application for the resort license unless the resort spa sublicense is being sought after the resort license has already been granted. If a resort licensee seeks to add a resort spa sublicense after its resort license is granted, the application shall comply with 32A-4a-302(2), and this rule.

 

R81-4E-3. Bonds.

No part of any corporate surety or cash bond required by Section 32A-4a-205, may be withdrawn during the time the license is in effect. If the licensee fails to maintain a valid corporate surety or cash bond, the license shall be immediately suspended until a valid bond is obtained. Failure to obtain a bond within 30 days of notification by the department of the delinquency shall result in the automatic revocation of the license.

 

R81-4E-4. Insurance.

Public liability and dram shop insurance coverage required in Section 32A-4e-202(1)(i) and (j) must remain in force during the time the license is in effect. Failure of the licensee to maintain the required insurance coverage may result in a suspension or revocation of the license by the commission.

 

R81-4E-5. Resort License Liquor Order and Return Procedures.

The following procedures shall be followed when a resort licensee orders liquor from or returns liquor to any state liquor store, package agency, or department satellite warehouse:

(1) The licensee must place the order in advance to allow department personnel sufficient time to assemble the order. The licensee or employees of the licensee may not pick merchandise directly off the shelves of a state store or package agency to fill the licensee's order. The order shall include the business name of the licensee, department licensee number, and list the products ordered specifying each product by code number and quantity.

(2) The licensee shall allow at least four hours for department personnel to assemble the order for pick-up. When the order is complete, the licensee will be notified by phone and given the total cost of the order. The licensee may pay for the product in cash, company check or cashier's check.

(3) The licensee or the licensee's designee shall examine and sign for the order before it leaves the store, agency or satellite warehouse to verify that the product has been received.

(4) Merchandise shall be supplied to the licensee on request when it is available on a first come first served basis. Discounted items and limited items may, at the discretion of the department, be provided to a licensee on an allocated basis.

(5)(a) Spirituous liquor may be returned by the licensee for the original purchase price only under the following conditions:

(i) the bottle has not been opened;

(ii) the seal remains intact;

(iii) the label remains intact; and

(iv) upon a showing of the original cash register receipt.

(b) A restocking fee of 10% shall be assessed on the entire amount on any returned spirituous liquor order that exceeds $1,000. All spirituous liquor returned that is based on a single purchase on a single cash register receipt must be returned at the same time at a single store, package agency, or satellite warehouse location.

(b) Wine and beer may not be returned by the licensee for the original purchase price except upon a showing that the product was spoiled or non-consumable.

 

R81-4E-6. Resort Licensee Operating Hours.

Allowable hours of liquor sales shall be in accordance with Section 32A-4a-305(18). However, the licensee may open the liquor storage area during hours otherwise prohibited for the limited purpose of inventory, restocking, repair, and cleaning.

 

R81-4E-7. Sale and Purchase of Alcoholic Beverages in Locations Operated Under a Restaurant or Limited Restaurant Sublicense.

(1) With respect to a restaurant sublicense or limited restaurant sublicense, alcoholic beverages (including light beer) must be sold in connection with an order for food placed and paid for by a patron. An order for food may not include food items gratuitously provided by the restaurant to patrons. A patron may pay for an alcoholic beverage at the time of purchase, or, at the discretion of both the licensee and the patron, the price charged may be added to the patron's tab, provided that a written beverage tab shall be commenced upon the patron's first purchase and shall be maintained by the restaurant during the course of the patron's stay at the restaurant regardless of where the patron orders and consumes an alcoholic beverage.

(2) The restaurant sublicense 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.

(3) Liquor dispensing shall be in accordance with Section 32A-4-106; and Section R81-1-9 (Liquor Dispensing Systems), and Section R81-1-11 (Multiple Licensed Facility Storage and Service) of these rules.

 

R81-4E-8. Liquor Storage.

With respect to restaurant, on-premise banquet, resort spa, and club sublicenses, liquor bottles kept for sale in use with a dispensing system, liquor flavorings in properly labeled unsealed containers, and unsealed containers of wines poured by the glass may be stored in the same storage area as approved by the department.

 

R81-4E-9. Alcoholic Product Flavoring.

Resort licensees may use alcoholic products as flavoring subject to the following guidelines:

(1) Alcoholic product flavoring may be utilized in beverages only during the authorized selling hours allowed by law. Alcoholic product flavoring may be used in the preparation of food items and desserts at any time if plainly and conspicuously labeled "cooking flavoring".

(2) No resort employee under the age of 21 years may handle alcoholic product flavorings.

 

R81-4E-10. Table and Counter Service.

A wine service may be performed by the server at the patron's table or counter for wine either purchased at a restaurant, limited restaurant, club, or resort spa sublicensed premises or carried in by a patron. The wine may be opened and poured by the server.

 

R81-4E-11. Consumption at Patron's Table or Counter in Locations Operated Under a Restaurant or Limited Restaurant Sublicense.

(1) With respect to restaurant sublicenses and limited restaurant sublicenses, a patron's table or counter may be located in waiting, patio, garden and dining areas previously approved by the department.

(2) Consumption of any alcoholic beverage must be within a reasonable proximity of a patron's table or counter so as to ensure that the server can maintain a written beverage tab on the amount of alcoholic beverages consumed.

 

R81-4E-12. Menus; Price Lists.

(1) Contents of Alcoholic Beverage Menu.

(a) Each restaurant, limited restaurant, on-premise banquet, resort spa, and club sublicensee shall have readily available for its patrons a printed alcoholic beverage price list, or menu containing current prices of all mixed drinks, wine, beer, and heavy beer. This list shall include any charges for the service of packaged wines or heavy beer. With respect to on-premise banquet sublicenses, this list or menu need only be available to the host of a contracted banquet. With respect to limited restaurant sublicenses, the list or menu may only include wine, heavy beer, and beer.

(b) Any printed menu, master beverage price list or other printed list is sufficient as long as the prices are current and it meets the requirements of this rule.

(c) Customers shall be notified of the price charged for any packaged wine or heavy beer and any service charges for the supply of glasses, chilling, or wine service.

(d) A sublicensee or employee of a sublicensee may not misrepresent the price of any alcoholic beverage that is sold or offered for sale on the licensed premises.

 

R81-4E-13. Identification Badge.

Each employee of a sublicensee who sells, dispenses or provides alcoholic beverages shall wear a unique identification badge visible above the waist, bearing the employee's first name, initials, or a unique number in letters or numbers not less than 3/8 inch high. The identification badge must be worn on the front portion of the employee's body. The sublicensee shall maintain a record of all employee badges assigned, which shall be available for inspection by any peace officer, or representative of the department. The record shall include the employee's full name and address and a driver's license or similar identification number.

 

R81-4E-14. Brownbagging.

When private social functions or privately hosted events, as defined in 32A-1-105(47), are held on the premises of a resort license, the proprietor may, at the proprietor's discretion, allow members of the private group to bring onto the resort premises, their own alcoholic beverages under the following circumstances:

(1) When the entire area is closed to the general public for the private function or event, or

(2) When an entire room or area within the premises such as a private banquet room is closed to the general public for the private function or event, and members of the private group are restricted to that area, and are not allowed to co-mingle with public patrons of the facility.

(3) This section does not apply to private banquet events conducted under the on-premise banquet sublicense.

 

R81-4E-15. Resort Spa Sublicense.

(1) Definitions.

(a) "Resort spa" means a facility within the boundary of a resort building that provides professionally administered personal care treatments such as, but not limited to, massages, facials, hair care, and nail care. Treatment providers must be licensed under Title 58, Division of Professional Licensing Act. The resort spa also must hold a license to conduct business as a spa or similar operation under local licensing laws.

(2) Application. Pursuant to 32A-4a-302(1) and (2), a resort spa sublicense is not required to file a separate application from the application for the resort license unless the resort spa sublicense is being sought after the resort license has already been granted. If a resort licensee seeks to add a resort spa sublicense after its resort license is granted, the application shall comply with 32A-4a-302(2), and this rule.

(3) Minors in Lounge or Bar Areas.

(a) Pursuant to 32A-4a-305(24), a minor may be on the premises of a resort spa if accompanied by a person 21 years of age or older, but may not be admitted into, use, or be on the premises of any lounge or bar area of a resort spa.

(b) "Lounge or bar area" includes:

(i) the bar structure as defined in 32A-1-105(4);

(ii) any area in the immediate vicinity of the bar structure where the sale, service, display, and advertising of alcoholic beverages is emphasized; or

(iii) any area that is in the nature of or has the ambience or atmosphere of a bar, parlor, lounge, cabaret or night club.

(c) A minor who is otherwise permitted to be on the premises of a resort spa may momentarily pass through the resort spa's lounge or bar area en route to those areas of the resort spa where the minor is permitted to be. However, no minor shall remain or be seated in the resort spa's bar or lounge area.

 

R81-4E-16. Applicability of Rules.

(1) 32A-4a-402 requires that a person operating under a resort sublicense comply with the operational restrictions of Title 32A for the type of license applicable to the sublicense, except where otherwise provided. For example, a club sublicensee must comply with the operational restrictions found in 32A-5-107 that are applicable to a club licensee.

(2) This rule requires that a person operating under a resort sublicense comply with the operational restrictions found in any commission rule for the type of license applicable to the sublicense, except where otherwise provided.

 

KEY: alcoholic beverages

Date of Enactment of Last Substantive Amendment: 2010

Authorizing, and Implemented or Interpreted Law: 32A-1-107

 

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