Photo by M.V. Jantzen on Flickr.

Hank’s Oyster Bar owner Jamie Leeds has had about the worst time one can with the District’s alcoholic beverage licensing process. A years-old fight, which she’s essentially won, over outdoor seating popped back up last week and forced her to shut down half her patio during Pride weekend, one of the busiest of the year on 17th Street.

Sadly, Leeds lost out on a lot of business because former Alcoholic Beverage Control (ABC) Board chairman Charles Brodsky mis-applied the law. His decision letting Hank’s expand its outdoor patio was overturned by the DC Court of Appeals, and until the board can re-hear the case, Leeds is stuck.

This all starts back in 2005 when Leeds wanted to open Hank’s Oyster Bar at 17th and Q, NW in Dupont Circle. A number of residents, led by David Mallof and Lex Rieffel, opposed new liquor licenses and outdoor patios in the area, feeling that they created too much noise and other impacts to neighbors.

They went through the official process to protest a liquor license, which allowed them to negotiate a “voluntary agreement” with Leeds specifying various restrictions. ANC 2B, a party to the protest, wanted a standard set of limitations that it asks of all alcohol-serving establishments in Dupont’s residential areas, such as a closing time of 11 pm on weeknights and midnight on weekends, says Mike Silverstein, an ANC commissioner and now member of the ABC Board. Other protestants, however, asked for further restrictions.

Critics of VAs say that these are not really “voluntary,” and defenders of Hank’s have used this case as an example. The ABC Board granted motions to postpone its hearing over several months while neighbors pushed for more concessions. Leeds, meanwhile, was losing money quickly while she couldn’t open Hank’s, and, as she said in a later hearing (page 164-165), she had no choice but to give in.

Hank’s ultimately opened, it became a big success, and many residents enjoyed its great seafood and delicious brunch indoors or out on the patio. In 2098 2009, 17th Street’s liquor moratorium came up for renewal. The ABC Board extended it, but also included 2 “lateral expansions” for establishments to grow. At the time, most neighborhood leaders expressed an expectation, and hope, that the expansions would go to Hank’s and to Komi. They did; Hank’s expanded into the ground floor of the building next door and Komi opened up Little Serow in the basement next to its restaurant.

For Hank’s, expanding also required rezoning the property next door as commercial, and changing its voluntary agreement, which limited the amount of outdoor seating. It secured the rezoning, and in November 2010, the ABC board granted a motion to terminate the VA.

ABC board makes a curious move

According to the law, the board can terminate a VA if 3 criteria (one with 2 prongs) are met:

(4) The Board may approve a request by fewer than all parties to amend or terminate a voluntary agreement for good cause shown if it makes each of the following findings based upon sworn evidence:

(A)(i) The applicant seeking the amendment has made a diligent effort to locate all other parties to the voluntary agreement; or

(ii) If non-applicant parties are located, the applicant has made a good-faith attempt to negotiate a mutually acceptable amendment to the voluntary agreement;

(B) The need for an amendment is either caused by circumstances beyond the control of the applicant or is due to a change in the neighborhood where the applicant’s establishment is located; and

(C) The amendment or termination will not have an adverse impact on the neighborhood where the establishment is located as determined under § 25-313 or § 25-314, if applicable.

The board, with Brodsky in the lead, granted the termination, but made a strange legal choice. Instead of securing “sworn evidence” on all 4 parts of this test, it disregarded part A, and argued that it didn’t need to find evidence for all of the prongs to grant a VA termination.

Silverstein recused himself from this decision since he had been involved in the original case, but notes that he argued against such a practice in some other, similar cases.

Leeds went ahead and expanded her patio, and residents have now been able to enjoy even more outdoor seating at Hank’s.

Mallof and Reiffel appealed, and on May 17, the DC Court of Appeals agreed that the board needed to make a finding on all parts of the test, not just some of them.

The board moved quickly to schedule a hearing, which will happen this Wednesday, where people familiar with the situation expect they will find that Leeds met part A as well and grant her petition once again.

Hank’s has to close half its patio

But in the meantime, someone complained to the Alcoholic Beverage Regulation Administration (ABRA), the agency that manages liquor licenses, that Hank’s was using its whole patio, and on Friday, ABRA forced Hank’s to shut down half the patio to comply with the old VA.

In an email to the neighborhood, Leeds wrote,

We have our hearing on these last two issues next Wednesday before the ABC Board. We are confident we will prevail, because we did try to work this out with those opposed to us back when we first sought termination of the VA, but they refused to meet. Also, since the Court of Appeals decision was reached, we offered to address their concerns with a more limited VA, but they insist we cut our outdoor occupancy by 25%, even though there have been no complaints. As for changes in the neighborhood, I am sure they are well known to you. Of course, it could take months for the Board to rule.

Last night, as a result of a complaint by the protesters, we were visited by ABC investigators. We were told we cannot use half of our patio seating area, because of the Court of Appeals decision. This happened before we even have had a hearing before the ABC Board.

The board often takes up to 90 days to issue a ruling, but in this case, they may rule more quickly, Silverstein suggested, especially since this decision only requires rehearing a small part of the original case.

What’s wrong with the process?

Leeds and her attorney, Andrew Kline, are primarily pointing the finger at the law that any group of 5 residents can file a protest over a liquor license. Silverstein noted that a citizen task force is more comprehensively reviewing liquor license laws right now, and that group may recommend limiting how far away someone can live and still protest in order to ensure that protests come from immediate neighbors rather than people from blocks away.

However, Silverstein noted, voluntary agreements aren’t necessarily bad. Dupont’s, which set a neighborhood-wide standard for closing outdoor patios at 11 pm or midnight, just set a “level playing field” for all businesses in mixed-use parts of the neighborhood.

Silverstein also noted that the board has fixed some of the problems since 2009, such as the long timeline for approvals. Leeds suffered because she had to negotiate with residents for months while the board put off hearing after hearing. “Justice delayed is absolutely justice denied,” said Silverstein, “and justice delayed is absolutely favoring the protestant over the applicant.” Since then, he added, the board has significantly sped up the process to create a “rocket docket” where very few applications are pending for more than 90 days.

Since then, Brodsky also no longer chairs the board, having resigned in May 2011 the day before he was arrested for impersonating a police officer. That’s little comfort to Leeds, who is paying the price for his and his fellow board members’ actions, but the board can at least minimize the damage by making a quick ruling and getting Hank’s patio fully open this week.

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David Alpert is Founder and President of Greater Greater Washington and Executive Director of DC Sustainable Transportation (DCST). He worked as a Product Manager for Google for six years and has lived in the Boston, San Francisco, and New York metro areas in addition to Washington, DC. He lives with his wife and two children in Dupont Circle. Unless otherwise noted, opinions in his GGWash posts are his and not the official views of GGWash or DCST.