(a) The provisions of this subchapter authorizing on-premises consumption shall be effective only in cities and counties, or portions thereof, in which the manufacture or sale of intoxicating liquor is not prohibited as a result of a local option election held pursuant to Initiated Act No. 1 of 1942, §§ 3-8-201 — 3-8-203 and 3-8-205 — 3-8-209, and in which the sale of alcoholic beverages for on-premises consumption has been approved by a majority vote at a referendum election as herein provided.
(b) A favorable vote at a referendum election shall authorize on-premises consumption in licensed premises, as provided in this subchapter, in only those areas of the city or county which are not dry areas.
(c)
(1) A referendum election held in a city shall be for the purpose of determining whether the sale of alcoholic beverages for on-premises consumption shall be authorized in the portions of the city in which the sale of alcoholic beverages is not otherwise prohibited by law.
(2) A referendum election held in a county shall be for the purpose of determining whether the sale of alcoholic beverages for on-premises consumption shall be authorized in all areas of the county, including cities of the first class and second class and incorporated towns therein, in which the sale of alcoholic beverages is not otherwise prohibited by law.
(d)
(1) A property owner's association with a population of five thousand (5,000) or more or a county, city, or town may authorize by ordinance the sale of alcoholic beverages for on-premises consumption under this subchapter if the property owner's association or the county, city, or town is located in or is a county that authorized the manufacture and sale of intoxicating liquor.
(2) The authority of a county quorum court under subdivision (d)(1) of this section applies only to unincorporated areas of the county.