HOUSE BILL 235
54th legislature - STATE OF NEW MEXICO - second session, 2020
Larry R. Scott and James G. Townsend
RELATING TO LIQUOR LICENSES; REQUIRING THE DIRECTOR OF THE ALCOHOLIC BEVERAGE CONTROL DIVISION OF THE REGULATION AND LICENSING DEPARTMENT TO ANNUALLY OFFER TO ISSUE NEW DISPENSER LICENSES IN AN AMOUNT EQUAL TO FIVE PERCENT OF THE TOTAL NUMBER OF DISPENSER LICENSES ISSUED; PROVIDING FOR A SEALED BID PROCESS TO AWARD OPPORTUNITIES TO APPLY FOR A LICENSE; REMOVING THE LIMIT ON THE NUMBER OF DISPENSER LICENSES THAT CAN BE ISSUED; REMOVING THE LOTTERY PROCESS FOR ISSUING NEW LICENSES; PROVIDING FOR A FEE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of the Liquor Control Act is enacted to read:
"[NEW MATERIAL] DETERMINATION OF AVAILABLE LICENSES--INVITATION TO BID--BID APPROVAL--LICENSE APPLICATION.--
A. On June 30 of each year, the director shall determine the total number of dispenser licenses issued and shall offer new dispenser licenses in an amount equal to five percent of that number.
B. The director shall offer the opportunity to obtain a new dispenser license to the public through a competitive sealed bid process.
C. The director shall issue an invitation for sealed bids through publication at least once in at least three newspapers of general circulation in the state and may publish the invitation electronically on the department's website. The invitation for bids shall specify an opening date and time, a fixed closing date and time and, for electronic submissions, an email account or other secure electronic location to which the electronic bid may be directed.
D. The director may allow electronic submission of sealed bids; provided that the submission process shall include:
(1) appropriate security to prevent unauthorized access to electronically submitted bids prior to the date and time set for opening of bids; and
(2) accurate retrieval or conversion of electronic forms of information into a medium that permits inspection and copying.
E. Bids shall be opened publicly in the presence of one or more witnesses at the time and place designated in the invitation for sealed bids. The amount of each bid, together with the name of each bidder, shall be recorded, and the record and each bid shall be open to public inspection.
F. The offer process shall proceed so that the opportunity to apply for the first new license shall be offered to the person that offered the highest bid, the opportunity to apply for the second new license shall be offered to the person that offered the second highest bid, and the process shall proceed thus until the opportunity to apply for the last new license has been offered.
G. A bidder that receives an offer to apply for a new license shall, on the date the director extends the offer, file a completed application pursuant to Section 60-2B-3 NMSA 1978 together with an irrevocable letter of credit or similar guarantee acceptable to the director ensuring that money in the bid amount shall be paid upon issuance of the license. The money shall be deposited into the general fund upon issuance of the license.
H. If a bidder declines an offer, fails to comply with Subsection G of this section, is denied a license or the license is not issued to the bidder for any other reason, the director shall offer the opportunity to apply for the new license to the next highest bidder.
I. The director shall return the irrevocable letter of credit or other guarantee ensuring payment of the bid amount if an application is denied. If the license is not issued for any reason other than denial of the license, the state shall return the irrevocable letter of credit or other guarantee ensuring bid payment, but shall retain a fee equal to five percent of the total bid amount. The fee shall be deposited into the general fund."
SECTION 2. Section 60-6A-18 NMSA 1978 (being Laws 1981, Chapter 39, Section 35, as amended) is amended to read:
"60-6A-18. LIMITATION ON NUMBER OF LICENSES--EXCEPTIONS.--
A. The maximum number of licenses to be issued under the provisions of [Sections] Section 60-6A-2 [and 60-6A-3] NMSA 1978 shall be as follows:
(1) in incorporated municipalities, not more than [one dispenser's or] one retailer's license [including canopy licenses which are replaced by dispenser's licenses as provided in Section 60-6B-16 NMSA 1978] for each two thousand inhabitants or major fraction thereof; and
(2) in unincorporated areas of each county, not more than [one dispenser's or] one retailer's license [including canopy licenses which are replaced by dispenser's licenses as provided in Section 60-6B-16 NMSA 1978] for each two thousand inhabitants or major fraction thereof, excluding the population of incorporated municipalities within the county.
B. For the purpose of this section, the number of inhabitants of a local option district shall be determined by annual population estimates published by the economic development department.
C. Subsection A of this section shall not be construed to prevent [any] a licensee holding a valid license issued under the Liquor Control Act, or [his] the licensee's transferee, from continuing the licensed business or from renewing [his] the license, subject to compliance with the Liquor Control Act and department regulations, notwithstanding that the continuance or renewal may result in an excess over the maximum number of licenses permitted in Subsection A of this section."
SECTION 3. Section 60-6A-19 NMSA 1978 (being Laws 1981, Chapter 39, Section 36, as amended) is amended to read:
"60-6A-19. NO PROPERTY RIGHT IN LICENSE--EXCEPTION.--
A. The holder of [any] a license issued under the Liquor Control Act or any former act has no vested property right in the license, which is the property of the state; provided that [retailer's licenses, dispenser's licenses and canopy licenses that were replaced by dispenser's licenses pursuant to Section 60-6B-16 NMSA 1978] licenses:
(1) shall be considered property subject to execution, attachment, a security transaction, liens, receivership and [all] other incidents of tangible personal property under the laws of this state, except as otherwise provided in the Liquor Control Act;
(2) may be assigned, transferred from person to person or leased, provided all requirements of the Liquor Control Act and department regulations are fulfilled; and
(3) shall be transferred as personal property upon attachment, execution, repossession by a secured party or lienor, foreclosure by a creditor, appointment of a receiver for the licensee, death of the licensee, filing of a petition of bankruptcy by or for the licensee, incapacity of the licensee or dissolution of the licensee. The director may, by rule or regulation, determine [any] an application or notice requirement for a person who temporarily holds a license pursuant to this subsection.
B. [Any] A license issued under the Liquor Control Act may be transferred to any location not otherwise contrary to law within the same local option district where the license is then located, provided all requirements of the Liquor Control Act and department regulations are fulfilled."
SECTION 4. Section 60-6B-2 NMSA 1978 (being Laws 1981, Chapter 39, Section 38, as amended) is amended to read:
A. Before a new license authorized by the Liquor Control Act may be issued by the director, the applicant for the license shall:
(1) submit to the director a written application for the license under oath, in the form prescribed by and stating the information required by the director, together with a nonrefundable application fee of two hundred dollars ($200);
(2) submit to the director for approval a description, including floor plans, in a form prescribed by the director, that shows the proposed licensed premises for which the license application is submitted. The area represented by the approved description shall become the licensed premises;
(3) submit the name and street address of a New Mexico resident who is not a felon, who has power of attorney and authority to bind the applicant to matters related to liquor sales and operations and upon whom the director may serve any notice related to ownership or operation of the license, including any notice of charge pursuant to Chapter 60, Article 6C NMSA 1978;
(4) if the applicant is a corporation, be required to submit as part of its application the following:
(a) a certified copy of its articles of incorporation or, if a foreign corporation, a certified copy of its certificate of authority;
(b) the names and addresses of all officers and directors and those stockholders owning ten percent or more of the voting stock of the corporation and the amounts of stock held by each stockholder; provided, however, a corporation may not be licensed if an officer, manager, director or holder of more than a ten percent interest in the applicant entity would not be eligible to hold a license pursuant to the Liquor Control Act; and
(c) such additional information regarding the corporation as the director may require to assure full disclosure of the corporation's structure and financial responsibility;
(5) if the applicant is a limited partnership, submit as part of its application the following:
(a) a certified copy of its certificate of limited partnership;
(b) the names and addresses of all general partners and of all limited partners contributing ten percent or more of the total value of contributions made to the limited partnership or entitled to ten percent or more of the profits earned or other income paid by the limited partnership. A limited partnership shall not receive a license if a partner or holder of a ten percent or greater interest in the applicant entity designated in this subsection would not be eligible to hold a license issued pursuant to the Liquor Control Act; and
(c) such additional information regarding the limited partnership as the director may require to assure full disclosure of the limited partnership's structure and financial responsibility;
(6) if the applicant is a limited liability company, submit as part of its application the following:
(a) a copy of the articles of organization, with a copy of the certificate of filing with the public regulation commission;
(b) the [name] names and addresses of all the managing members and all of the nonmanaging members that own a greater than ten percent interest in the limited liability company. Any direct or indirect parent entity of the limited liability company with an interest of ten percent or more in the applicant entity shall submit application forms and qualify to hold a license; and
(c) such additional information regarding the limited liability company as the director may require to assure full disclosure of the limited liability company's structure and financial responsibility;
(7) if the applicant is a trust, submit as part of its application:
(a) the names and addresses of the trustees;
(b) the names and addresses of any beneficiaries having control over the property of the trust or receiving regular and substantial distributions of principal and income from the trust. Any beneficiary receiving regular and substantial distributions from the trust shall qualify to hold a license. The director may request a copy of the trust agreement for review, which trust agreement need not become part of the application. Affidavits as to the operation and distribution of the principal and income may be requested in lieu of, or in addition to, the copy of the trust agreement that is supplied for review by the department; and
(c) such additional information regarding the trust as the director may require to assure full disclosure of the trust's structure and financial responsibility; and
(8) obtain approval for the issuance from the governing body of the local option district in which the proposed licensed premises are to be located in accordance with the provisions of the Liquor Control Act.
B. Except for individual officers, directors, shareholders, members or partners of entities that are publicly traded on a national stock exchange and for individuals who have been fingerprinted for another New Mexico license and had no prior criminal or arrest record, every applicant for a new license or for a transfer of ownership of a license shall file with the application two complete sets of fingerprints taken under the supervision of and certified to by an officer of the New Mexico state police, a county sheriff, a municipal chief of police, a police officer in a foreign country or an individual qualified to take fingerprints by virtue of training or experience, for each of the following individuals:
(1) if the applicant is a person, for the applicant;
(2) if the applicant or the holder of a ten percent or greater interest in the applicant entity is a corporation, for each principal officer, for each member of the board of directors and for each stockholder with a ten percent or greater interest in the applicant entity;
(3) if the applicant or the holder of a ten percent or greater interest in the applicant entity is a general partnership, for each partner;
(4) if the applicant or the holder of a ten percent or greater interest in the applicant entity is a limited partnership, for each general partner, for each limited partner holding a ten percent or greater interest in the applicant entity and for any principal officers of the limited partnership;
(5) if the applicant or the holder of a ten percent or greater interest in the applicant entity is a limited liability company, for each managing member, for each member who owns a ten percent or greater interest in the applicant entity and for any principal officer of the limited liability company; and
(6) if the applicant is a trust, for each trustee and for each beneficiary who has control over trust property and income or who receives substantial and regular distributions from the trust.
C. Upon submission of a sworn affidavit from each person who is required to file fingerprints stating that the person has not been convicted of a felony in any jurisdiction and pending the results of background investigations, a temporary license for ninety days may be issued. The temporary license may be extended by the director for an additional ninety days if the director determines there is not sufficient time to complete the background investigation or obtain reviews of fingerprints from appropriate agencies. A temporary license shall be surrendered immediately upon order of the director.
D. An applicant who files a false affidavit shall be denied a license. When the director determines a false affidavit has been filed, the director shall refer the matter to the attorney general or district attorney for prosecution of perjury.
E. If an applicant is not a resident of New Mexico, fingerprints may be taken under supervision and certification of comparable officers in the state of residence of the applicant.
F. Before issuing a license, the department shall hold a public hearing within thirty days after receipt of the application pursuant to Subsection [K] H of this section.
G. An application for transfer of ownership shall be filed with the department no later than thirty days after the date a person acquired an ownership interest in a license. It shall contain the actual date of sale of the license and shall be accompanied by a sworn affidavit from the owner of record of the license agreeing to the sale of the license to the applicant as well as attesting to the accuracy of the information required by this section to be filed with the department. A license shall not be transferred unless it will be placed into operation in an actual location within one hundred twenty days of issuance of the license, unless for good cause shown the director grants an additional extension for a length of time determined by the director.
[H. Whenever it appears to the director that there will be more applications for new licenses than the available number of new licenses during any time period, a random selection method for the qualification, approval and issuance of new licenses shall be provided by the director. The random selection method shall allow each applicant an equal opportunity to obtain an available license, provided that all dispenser's and retailer's licenses issued in a calendar year shall be issued to residents of the state. For the purposes of random selection, the director shall also set a reasonable deadline by which applications for the available licenses shall be filed. A person shall not file more than one application for each available license and no more than three applications per calendar year.
I. After the deadline set in accordance with Subsection H of this section, no more than ten applications per available license shall be selected at random for priority of qualification and approval. Within thirty days after the random selection for the ten priority positions for each license, a hearing pursuant to Subsection K of this section shall be held to determine the qualifications of the applicant having the highest priority for each available license. If necessary, such a hearing shall be held on each selected application by priority until a qualified applicant for each available license is approved. Further random selections for priority positions shall also be held pursuant to this section as necessary.
J. All applications submitted for a license shall expire upon the director's final approval of a qualified applicant for that available license.
K.] H. The director shall notify the applicant by certified mail of the date, time and place of the hearing. The hearing shall be held in Santa Fe. The director may designate a hearing officer to take evidence at the hearing. The director or the hearing officer shall have the power to administer oaths.
[L.] I. In determining whether a license shall be issued, the director shall take into consideration all requirements of the Liquor Control Act. In the issuance of a license, the director shall specifically consider the nature and number of prior violations of the Liquor Control Act by the applicant or of any citations issued within the prior five years against a license held by the applicant or in which the applicant had an ownership interest required to be disclosed under the Liquor Control Act. The director shall disapprove the issuance or give preliminary approval of the issuance of the license based upon a review of all documentation submitted and any investigation deemed necessary by the director.
[M.] J. Before a new license is issued for a location, the director shall cause a notice of the application for the license to be posted conspicuously, on a sign not smaller than thirty inches by forty inches, on the outside of the front wall or front entrance of the immediate premises for which the license is sought or, if no building or improvements exist on the premises, the notice shall be posted at the front entrance of the immediate premises for which the license is sought, on a billboard not smaller than five feet by five feet. The contents of the notice shall be in the form prescribed by the department, and such posting shall be over a continuous period of twenty days prior to preliminary approval of the license. The director shall prescribe the manner in which the posting may be accomplished by the licensee, the licensee's representative or the director's designee.
[N.] K. A license shall not be issued until the posting requirements of Subsection [M] J of this section have been met.
[O.] L. All costs of publication and posting shall be paid by the applicant.
[P.] M. It is unlawful for a person to remove or deface a notice posted in accordance with this section. A person convicted of a violation of this subsection shall be punished by a fine of not more than three hundred dollars ($300) or by imprisonment in the county jail for not more than one hundred twenty days or by both.
[Q.] N. A person aggrieved by a decision made by the director as to the approval or disapproval of the issuance of a license may appeal to the district court pursuant to the provisions of Section 39-3-1.1 NMSA 1978. If the disapproval is based upon local option district disapproval pursuant to Subsection H of Section 60-6B-4 NMSA 1978, the local option district shall be a necessary party to an appeal. The decision of the director shall continue in force, pending a reversal or modification by the district court, unless otherwise ordered by the court."
SECTION 5. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2020.