Bill seen as attack on state's business-friendly climate

A bill before the state legislature may torpedo the plans of a large California company to relocate in Nevada.A coalition of business and county officials are lining up to oppose the measure.

At stake is the arrival of Frank-Lin Distillers Products Ltd., which planned to build a facility at the Reno-Tahoe Industrial Center in Storey County.

The company imports, blends and bottles distilled spirits, then warehouses and distributes the liquors.Many of its blends are sold to national grocery chains to be sold under house brands.

Scott Craigie, lobbyist for Frank-Lin, says the company has been speaking with officials from the Nevada Department of Taxation for two years, and understood that there would be no problems.

However, on March 29, a bill was introduced by the Committee on Commerce and Labor to prohibit a rectifier industry term for a company that mixes alcohol into blends such as scotch from warehousing

the product.

"If this bill passes in this form, they can't relocate here," says Craigie.

After its planned relocation, Frank-Lin would employ about 130 people at a 400,000- square-foot facility, says Tony DeMaria, chief financial officer.

Frank-Lin plans to break ground on its 40-acre parcel this summer.

Devcon Construction is the contractor.

DeMaria expects about half the current employees to relocate from San Jose with the company, with the remainder hired locally.He estimates that it would take six to nine months to build the facility and another six to nine months to shift production and complete the move.

Miles Ottenheimer, spokesman for the industrial center, says,"This bill would not only hurt Frank-Lin, which has a lot of time and money invested in its planned relocation, but it will set a dangerous precedent that would seriously damage Nevada's image as a great place for businesses." "This legislation is aimed directly at Frank-Lin in an attempt to use the legislative process to keep the company out of northern Nevada," says Ottenheimer.

Alfredo Alonso, lobbyist for Southern Wine and Spirits, a large distributor operating in 11 states, brought the bill to the attention of Barbara Buckley, chairwoman of the Committee on Commerce and Labor, which brought the request before the Nevada Assembly, according to records at the Legislative Council Bureau in Carson City.

It's a battle between giants: Frank-Lin Distillers Products sells about four million cases of product a year while Southern Wine and Spirits is the largest distributor in the country, says Craigie.

The Economic Development Authority of Western Nevada, having spent nearly two years helping Frank-Lin solve relocation problems, estimates that the company would bring about $50 million into the local economy, says President and Chief Executive Officer Chuck Alvey.

EDAWN worries the bill might scare off other new companies, Alvey says.

If they see that a competitor can go to the legislature to enact an anti-competitive bill, they may rethink their own move to Nevada.

Also in opposition is the Carson Citybased Northern Nevada Development Authority.

"It's an anti-competitive measure in a Republican state that practices the free enterprise system," says Ron Weisinger, its executive director."I would expect a bill like this coming out of California, but not coming out of Nevada.

Those lobbyists taking money should be adamantly ashamed of themselves."

Alfredo Alonso, lobbyist for the Nevada Beer Wholesalers Association and for Southern Wines and Spirits, says the bill is simply a restatement of existing law.

That law delineates a three-tier system: manufacturer,wholesaler, retailer.A company can occupy only one niche.

Blending, or rectifying, liquors is currently grouped with wholesalers, but could be viewed as manufacturing because it creates a new product.

The system was designed to ensure that state tax is properly collected."The state depends on those excise taxes," says Alonso.

Frank-Lin is welcome to come to Nevada, he says, but they need to choose one of the tiers.

Because if companies were allowed to fill more than one of the three-tier functions, "Imagine what it would do to the small guys." Until now, the issue of a company in Nevada being both a rectifier and a wholesaler had not arisen.Hence, the new law is meant to license a part of the industry that hasn't been licensed before, says Alfonso.

Craigie takes a different view.

"It's not a clarification of the law, it's a substantial change," he says.

Rectifiers are mentioned in current law in the grouping that includes importers, wholesalers and rectifiers.

The proposed new law, he says, is designed to specifically uproot the niche in the marketplace that Frank-Lin serves.

The bill passed the Nevada Assembly on April 26 with a vote of 35-7; it now goes to the Nevada Senate.