Interim Joint Committee on Licensing and Occupations


Minutes of the<MeetNo1> 5th Meeting

of the 2014 Interim


<MeetMDY1> October 10, 2014


Call to Order and Roll Call

The<MeetNo2> 5th meeting of the Interim Joint Committee on Licensing and Occupations was held on<Day> Friday,<MeetMDY2> October 10, 2014, at<MeetTime> 10:00 AM, <Room>at Chrisman Mill Winery, Nicholasville, KY. Senator John Schickel, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator John Schickel, Co-Chair; Senators Julie Denton, Denise Harper Angel, Jimmy Higdon, Christian McDaniel, Morgan McGarvey, Dan "Malano" Seum, and Damon Thayer; Representatives Julie Raque Adams, Denver Butler, Larry Clark, David Floyd, Joni L. Jenkins, Adam Koenig, Reginald Meeks, Charles Miller, Brad Montell, David Osborne, Arnold Simpson, and Susan Westrom.


Guests: Senator Albert Robinson, Norman Jones, President-elect of the Kentucky Association of Realtors, Joe McClary, CEO, Kentucky Association of Realtors and Michael Wooden, Executive Director, Kentucky Real Estate Commission; Representative Brad Montell, Scott Benningfield, Captain, United States Air Force, Owner of Thirsty Pedaler; Frederick Higdon, Commissioner, Stephanie Stumbo, Malt Beverage Administrator, and Steve Humphress, General Counsel, Department of Alcohol Beverage Control.


LRC Staff: Tom Hewlett, Bryce Amburgey, Jasmine Williams, Michel Sanderson, and Susan Cunningham.


Approval of minutes for September 12, 2014 meeting

A motion to approve the minutes of the September 12, 2014 meeting was made by Representative Floyd and seconded by Representative Westrom. The motion carried by voice vote.


Denise Nelson, who along with her husband Chris own Chrisman Mill Winery, welcomed the committee to their vineyard. She said that their wine is made from 100 percent Kentucky-grown grapes obtained from 15 local growers, and from the 28 acres that Chrisman Mill harvests at its own site. Shanna Osborne, General Manager, Elk Creek Winery, Eddie O’Daniel, owner, Spring Hill Winery, and Tom Beall, owner, First Vineyard, were also present in support of small farm winery progress in Kentucky.


Realtor Licensing Requirements

Norman Jones, President-Elect of the Kentucky Association of Realtors said that ensuring the protection of the public in real estate transactions is an important issue for the industry and buyers in the Commonwealth. Purchasing a home is the single largest investment most consumers will ever make. The association is asking for consideration of additional, but reasonable, education requirements for real estate licensees who are just entering the industry.


The trend nationally is a three-part requirement: pre-license, post-license, and continuing education requirements. Kentucky has a 96 hour pre-licensing education requirement, and six hours of annual continuing education before licensing. There is no post-licensing requirement in place. The association would like to require 45 hours of post-licensing training within the first two years after a person receives a real estate license. Twenty-four other states require post-licensing education. Maintaining high standards and professional competency is more important than ever; the proposed post-license education requirements are designed to aid new licensees who have less selling experience. Research shows that 20 percent of the new licensees have received complaints during the first two to five years after getting their licenses. The proposed legislation will protect consumers and encourage responsibility and accountability for the licensee. The proposed changes would go into effect January 1, 2016.


In response to a question from Representative Westrom, Mr. Jones said he, Senator Robinson, and Michael Wooden have met with Real Estate Commission and various education providers and local associations, including LBAR, to develop the recommendations.


Senator Robinson said that the legislation is a consensus of the Kentucky Real Estate Commission, realtors, and agents in an effort to resolve the problems that come up in the first two to three years in a realtor’s career.


In response to a question from Senator Seum, Mr. Jones said the legislation will only affect new licensees after January 1, 2016. New agents will then be required to complete expanded education within the first or second year of getting their licenses.


In response to a question from Representative Koenig, Mr. Jones said 20 percent of the complaints received at the commission involve agents that have been licensed less than five years. Mr. Wooden said that, from 2004-2013, there were 377 actions taken. 172 active licensees had been in the profession 10 years or less, which is about 45 percent. There were also 83 licensees within six to 10 years of licensing.


In response to a question from Representative Floyd, Mr. Jones said pre-license education is theoretical education. The legislation proposes post-license education that would involve more applicable business education.


In response to a follow-up question from Representative Westrom, Mr. Jones said, including licenses in escrow, there are approximately 22,000 licensed realtors in Kentucky. Approximately half of that total are active licensees. Joe McClary, CEO, Kentucky Association of Realtors, said that there are 40 approved providers that offer real estate education.


Senator Schickel said that realtors in northern Kentucky believe that older realtors need more training rather than new licensees who have just been trained.


Senator Thayer said the bill as it was presented during the last session disenfranchised agents. However, the present legislation was a step in the right direction.


Alcohol Sales Clean-up Legislation

Fredrick Higdon, Commissioner of the Department of Alcoholic Beverage Control (ABC), said that his office has been working collaboratively with industry partners and lobbyist. The parties include the Kentucky Distillers Association, brewery representatives, small farm wineries, the Kentucky Liquor and Wine Wholesale Association, both of the Kentucky distributors associations, the Kentucky Retail Federation, the Kentucky Association of Counties, and the Kentucky League of Cities.


Stephanie Stumbo, Malt Beverage Administrator for ABC, said there will be one piece of legislation with two different aspects. One aspect will be “clean up” legislation that either addresses statutory conflicts, deals with inconsistencies, or codifies court rulings. The other aspect is “new” legislative items that are pending issues from last session, or requests from the industry for assistance to address existing problems.


The following are items that would be considered new items:


·        Prohibit the sale of powdered alcohol. The FDA originally ruled that it is a permissible product, but in recent weeks the FDA has recanted their ruling. There is a public safety concern that the powder could be added to an alcoholic drink making the alcohol by volume significantly stronger, but immeasurable.


·        Allow special precinct elections for nine and eighteen hole golf courses. Marinas may also be included in the special precinct elections. Presently, all parties are working on a consensus definition of a qualified marina.


·        Permit a bed and breakfast to sell alcohol to guests. This would allow a qualified bed and breakfast to obtain a license like a restaurant license. The guest would be able to purchase an alcoholic beverage with dinner or take it to their room.


There is a special, temporary, distilled spirits and wine auction license that permits qualified charities to obtain a license to receive donated alcohol for auction fundraisers. The ABC will propose to add a malt beverage license that will permit charities to raffle malt beverages as well.


The Kentucky League of Cities and industry members requested that all local ABC licenses expire on the same schedule as the state licenses. Senate Bill 13 simplified schedules to renew by county on a certain month. Local governments have set their own schedules. The industry feels that it is burdensome to try to keep up with multiple license renewal dates. If a renewal is missed, ABC will cite the business. ABC is meeting with Fayette and Jefferson county licensees to make sure that this will not have a negative impact on their businesses.


The distilleries have requested multiple changes to enhance their growing industry. The Bourbon Trail is expanding, and changes to boost the visitor experience have been requested. Visitors on a distillery tour are permitted a one and one-half ounce sample. The request is to raise the sample size to three ounces, which would be a cumulative amount over the course of the day. This would allow the visitor to sample a larger variety of products. Another request to support the Bourbon Trail experience is to provide a financially minimal novelty item that would be branded with the distillery logo. This would permit the distillery to give a souvenir glass, key chain, or a coaster to the visitor or at a charitable event. Production by-products such as barrel staves would also be included in this definition.


The distillers have asked for authority in statute to allow Master Distillers to taste their product during the production of the batch.


Package retailers in the state were impacted by changes in Senate Bill 13. Therefore, they are asking to expand the sampling license to allow retailers to offer a sample size, less than a drink size, of high end product rather than holding a drink license for sampling. This would keep the store in compliance with having a minor on the premise.


Currently in Kentucky, beer sampling is not permitted in retail package stores. Out-of-state brewers are asking to go into a retail business to participate in malt-beverage samples. Industry representatives have agreed to a sampling permit that would allow samples, limited to 16 ounces of malt beverage per day, during regular business hours. This allows customers to sample high end product from small farm wineries or brewers before they make a purchase.


Small farm wineries have requested a license for “Custom Crushing.” This would allow two licensed Kentucky small farm wineries to contract with each other co-operatively to permit one winery to use their equipment to crush, produce and bottle wine on behalf of the other licensed small farm winery. All product under the “custom crushing” agreements shall be the sole product and property of the small farm winery providing the fruits and seeking assistance.


The ABC will seek to create a state-wide server program. The department is working with the retail industry to work out details, such as fees. Currently, the STAR server training charges a fee. However, the new program would certify the industry based on an existing national program to provide training, modified to cover Kentucky law. ABC will issue a certified servers card. There will be a fee for this card and the card will be valid for multiple years, yet to be determined.


Senator Schickel said he was not in favor of server training at first. However, after learning more about the program and understanding that cities and counties do not have uniform regulations, he realized that standardized training is necessary.


Representative Clark said that he felt the clean-up language should stand in a separate bill request due to all the items listed.


Senator Higdon said the committee should consider a task force in the future to work on changes when there are a large number, in order to gain overall consensus.


Representative Floyd commented that custom crushing is a good way to help diversify agriculture. There are people who grow grapes but are not able to purchase equipment to make small amounts of wine. Nelson County is the birthplace of the Bourbon Trail; increasing sampling amounts would have a positive impact on tourism.


Representative Westrom said she appreciated the opportunity to hear the details of a bill that includes multiple alcohol changes.


Senator Thayer said the committee process was educating members and stakeholders. It is important not only to ensure consumer protection but to aid the growth of an industry that is adding to the economy. Many of the discussed changes are overdue.


Senator McGarvey said that it is important to grow this signature industry.


House Bill 86 from the 2014 Regular Session--Quadricycle

Representative Brad Montell said that House Bill 86 was about economic development and that this is more than a novelty business. Metropolitan cities around the country are bringing this business to their cities. The bill does three things: 1) it defines a commercial quadricycle; 2) it directs local governments to adopt an ordinance setting forth regulations for the operations of the quadricycles, such as licensing requirements, insurance requirements, disclosure and approval of area of operation, safety and equipment standards, inspection requirements, and restrictions on hours of operation; and 3) it exempts passengers on the bike from laws prohibiting individuals from drinking in public places. With passage of the bill, passengers could imbibe while on the bike, but could not step onto the sidewalk with a drink. It is a great opportunity for more people to come into the city to experience what Louisville has to offer.


Scott Benningfield, owner of the Thirsty Pedaler, said he has a 15 passenger bike that currently operates in Louisville, and he plans to expand to Lexington. Tours are pre-booked, lasting two hours through the downtown area. There is a designated driver on the bike who has complete operational control at all times. The riders provide the propulsion by pedaling. There is no motor on the bike; however, there is a battery to operate the headlights, taillights, turning signals, overhead lights and the stereo system. Patrons bring their own adult beverages. The tour has three stops at various bars, attractions, or businesses that allow the passengers to get off the bike for a brief visit.


Senator Higdon said that there are a lot of questions, and he is willing to work on the legislation.


There being no further business, the meeting was adjourned at 11:16 A.M.