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January 10th, 2006

NYS SUPREME COURT REBUFFS SLA; 500-FOOT RULE CLARIFIED

by Sean Sweeney

Community Activists Hope that the Community Boards Will Pay Heed

In a scathingly worded decision to a lawsuit filed by the SoHo Alliance against the NY State Liquor Authority (SLA), a NY State Supreme Court judge ruled that the Authority was “arbitrary and capricious” when it granted a liquor license to a restaurant in a section of SoHo oversaturated with 35 bars and licensed restaurants, adding that the decision by the SLA was not “rationally based”.

In annulling the SLA’s determination and tautological reasoning, Judge Marilyn Shafer wrote that the Authority merely provided a “laundry list” of the reasons given by the applicant for approval and did nothing more than “reiterate, almost verbatim, the memorandum submitted by Lola’s attorney”.

The restaurant, Lola, had operated on a desolate commercial strip of West 22nd Street with few residents. However, its proposed new location at Watts and Thompson Streets has many surrounding neighbors, dozens of whom showed up at Community Board 2 and then trekked to the SLA offices on 125th Street to object to the issuance of a new liquor license in an area already oversaturated with licensed establishments.

The 500-Foot Rule, enacted in 1993 to prevent over saturation of licensed premises, states categorically that the SLA cannot issue any new liquor licenses if there exists three or more existing licenses within a 500-foot radius of the new establishment. The only exception is if the new license is in the “public interest”. Claims by the SLA in the past that the public interest is served in the form of employment opportunities and tax revenues, or that fancy cuisine serves the public interest, were rejected in earlier court decisions.

So, left with no legal excuses for denying the license, the SLA merely ignored the public- interest requirement and granted the license anyway, contrary to law.

Judge Schafer pointed out that the SLA had provided “no analysis of how issuing an on-premise liquor license to Lola is ultimately in the public interest”. She cited provisions in the Alcohol Beverage Control Law requiring the SLA to consider a number of factors, including “the effect in granting a license on vehicular traffic and parking&the existing noise level&any increase in noise level any other factors&relevant to determine the public convenience and advantage and public interest of the community”.

Traffic consultants hired by the SoHo Alliance testified that the location, on a block leading to the Holland Tunnel, is regularly gridlocked and cacophonous, and any additional traffic would exacerbate an already bad condition. The SLA ignored his expert testimony.

A zoning expert stated that the establishment did not have a proper certificate of occupancy to operate legally and that a new zoning change in SoHo would eliminate most parking spaces. The Authority ignored that testimony.

All the local elected officials representing the area wrote the SLA not to issue a liquor license. CB2 voted unanimously to recommend denial of the license. In defiance of a provision of the 500-Foot Rule that requires “consultation with the community”, the SLA ignored all these recommendations.

The State Liquor Authority is funded, and its commissioners paid, by the $5000 licensing fee paid by the applicants. Many see a conflict of interest in this arrangement. “The SLA never saw a liquor license it didn’t like”. It is like having the fox guard the hen house”, said SoHo resident, Marie Evans.

The SLA under the Pataki administration has been plagued with scandal. The late journalist, Jack Newfield, wrote a number of articles for the NY Post on the SLA that highlighted its defiance of the law. More recently, there is a scandal involving the Authority’s ignoring irregular marketing techniques by liquor companies. The long-time chair, Thomas Kelly, abruptly resigned last month.

None of the three commissioners live in the city and are Republican political appointees. There is talk of having a City Liquor Authority but that takes State legislative approval, which could prove difficult.

In another development, attorney for the SoHo Alliance, Barry Mallin, is filing a motion this week to obtain reimbursement from the SLA for all legal costs incurred in the lawsuit by the SoHo Alliance over the illegal issuance of a liquor license to Lola.

This is the first time Mallin has filed for reimbursement in his several suits against the SLA, all of which he has won.

“The SLA should now be accountable for its capricious and arbitrary behavior. Too many times the community has been left to pay the legal bills incurred in upholding the law and our quality-of-life. Over the years, this has been well in excess of $150,000. If the SLA chooses to behave unreasonably, it should now take responsibility for its actions”, Mallin said.

State Law permits non-profits and certain other groups the ability to collect legal fees against State agencies.

Lola Decision Highlights Divisions on Community Board 2

In an interesting twist, this struggle against Lola played out in the election of the community board chair last spring. Although the liquor license was unanimously rejected by the full board, initially the Business Committee, which hears applications for new licenses, recommended approval of the application despite the fact that dozens of residents appeared in opposition. At that time, the committee was chaired by Bob Rinaolo who had to resign shortly afterwards due to a conflict of interest.

During the meeting, Maria Derr, who is the current chair of the Community Board 2, was heard by board members repeatedly denouncing the residents as “complaining all the time”. When reminded that many of these were old-time South Village ethnic working-class residents who had lived in the neighborhood for generations and had never attended a community board before, Derr responded, “I’m tired of their whining”. Shown a copy of Zagat’s that referred to the high noise level of Lola, she replied, “Who believes Zagat’s?” When asked to explain that comment, Derr’s reiterated, “Who pays attention to Zagat’s?” Apparently Judge Shafer does, who referred in her decision to the “deafening noise” mentioned in the Zagat’s review.

Three months later, Derr was appointed to chair the same Business Committee. Her first hearing concerned an application for a late-night restaurant, Besito, around the corner from Lola. Although community residents from the SoHo Alliance appeared in force and despite letters from politicians in opposition to the license, the Business Committee again recommended approval, ignoring the fact that there were almost three dozen liquor establishments within 500 feet.

In what some on the board regarded as a conflict of interest, Derr inexplicably lobbied other board members to vote in favor of the applicant, which is not considered a normal function of a committee chair. The full board again did not concur with the committee and recommended denial of the license.

Contrary to its normal pattern, the SLA also sided with the community board and the SoHo Alliance, and denied the license to Besito.

“It is disturbing that the chair of the board would go out of her way to thumb her nose at the community. It shows a pattern of disrespect and a lack of empathy for residents and a pro-bar bias that exceeds that of the SLA. Interestingly, Derr lives on a quiet tree-lined block that doesn’t have ONE licensed premise within 500 feet. In SoHo, we have one license for every eighty residents. I guess she doesn’t know the meaning of walking a mile in another person’s shoes”, said Sean Sweeney, director of the SoHo Alliance.

According to Sweeney, it was Derr’s disregard for community input, her disrespect for long-time residents and her almost blanket acceptance of over saturation of bars in other people’s neighborhoods that spurred a hotly contested election for Board Chair. When Borough President C. Virginia Fields dropped several community activists and placed several of Rinaolo and Derr’s acquaintances on the board prior to the election, her opponent from SoHo withdrew from the election race. It is a matter of public record that, during her entire term, Fields did not appoint one new community activist to CB 2 yet appointed many bar and restaurant owners who had contributed to her campaign.

It is not known whether Lola or the SLA will appeal Judge Shafer’s decision.

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