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BFC Enterprises, LLC v. City of Murray

United States District Court, W.D. Kentucky, Paducah

March 22, 2018

BFC ENTERPRISES, LLC, PLAINTIFF
v.
CITY OF MURRAY, KENTUCKY, DEFENDANT

          MEMORANDUM OPINION

          THOMAS B. RUSSELL, SENIOR JUDGE UNITED STATES DISTRICT COURT.

         This matter comes before the Court on Defendant City of Murray, Kentucky's, (“Murray”), Motion to Dismiss. [R. 7.] Plaintiff BFC Enterprises, LLC, (“BFC”), responded, [R. 8], and Murray replied, [R. 14.] Fully briefed, this matter is now ripe for adjudication. For the reasons stated herein, Murray's Motion to Dismiss, [R. 7], is GRANTED.

         BACKGROUND

         The factual allegations as set out in the Complaint, [R. 1], and taken as true are as follows.[1] In 1982, the Kentucky General Assembly enacted KRS 243.075, which authorized “[a] qualified city or a county containing a qualified city . . . to impose a regulatory license fee upon the gross receipts of the sale of alcoholic beverages of each establishment therein licensed to sell alcoholic beverages.” KRS 243.075(1)(a). The legislation allowed the fee to be levied “at the beginning of each budget period at a percentage rate as shall be reasonably estimated to fully reimburse the local government for the estimated costs of any additional policing, regulatory, or administrative expenses related to the sale of alcoholic beverages in the city and county.” KRS 243. 075(1)(b). On September 13, 2012, the City of Murray enacted an Alcohol Beverage Ordinance that established such regulatory license fees. [R. 1 at 3 (Complaint).] Section 2.5 of the Alcohol Beverage Ordinance states:

Pursuant to KRS 243.075, there is hereby imposed a regulatory license fee on the gross receipts of sale of alcoholic beverages of each license issued by the City ABC Administrator. As of the time of adoption of this ordinance, the regulatory license fee shall be eight percent (8%) of gross sales of all alcoholic beverages sold by the drink. In the case of retail sales of package distilled spirits and wine, the regulatory license fee shall be eight percent (8%) of gross sales. The regulatory license fee shall be eight percent (8%) on gross retail sales of package malt beverages. Thereafter, the City Council shall adopt at the budget adoption for each subsequent fiscal year, such annual rate for the regulatory license fee as shall be reasonably estimated to ensure full reimbursement to the City for the cost of any additional policing, regulatory, or administrative expense related to the sale of alcoholic beverages in the City. Should the City fail to address the regulatory license fee in any budget, then the regulatory license fee shall remain at the level at which it was last fixed until such time as the City Council shall adjust the fee.

         Murray, Ky., Alcoholic Beverages Control Ordinance 2012-1585, § 2.5 (2012). Kentucky Administrative Regulation 804 KAR 10:031 defines the following as included under “reasonable costs and expenses”:

(1) Employment, salary, and benefits of the city or county alcoholic beverage control administrator and staff who administer alcoholic beverage control laws;
(2) Office supplies and equipment for the city or county to administer an alcoholic beverage control office;
(3) Office space for an alcoholic beverage control administrator and staff;
(4) Travel costs and expenses for the city or county alcoholic beverage control administrator and staff;
(5) Additional policing expenses that are directly related to the discontinuance of prohibition, which shall include only those costs and expenses incurred solely as a result of the discontinuance of prohibition that are over and above any policing expenses previously incurred; and
(6) Miscellaneous costs and expenses solely and directly related to the discontinuance of prohibition, if the following information is included on the Calculation Form for Alcohol Regulatory Fee in First Year Following Repeal of Prohibition:
(a) A description of the expenditure;
(b) A detailed explanation of the necessity of the expenditure as it related to the discontinuance ...

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