Four Buford Highway venues may take the city to court after their alcohol license renewal denials were upheld by the Brookhaven Alcohol Board Feb. 12.

Rush Lounge, Medusa Restaurant & Lounge, XS Restaurant & Lounge and Josephine Lounge were told by the city in January their licenses would not be renewed for 2018. They appealed to the Alcohol Board, which held two hearings before voting to uphold the denials.

Under the revised alcohol ordinance approved by the City Council in November 2017, the four venues are classified as “entertainment venues” — meaning they have either a DJ, dance floor or stage — and are now required to pay a $50,000 liquor license fee to sell distilled spirits for consumption on premises and $50,000 to sell beer and wine for consumption on premises.

The city says the high fees are needed to pay for police coverage to these venues due to high numbers of police calls. The city’s new alcohol ordinance also rolled back last call from 3 a.m. to 2 a.m. as the city cracks down on what it sees as troublesome businesses in the city. The earlier last call begins April 10.

Alan Begner, attorney for Rush Lounge, said in an interview he will appeal the Alcohol Board’s decision to DeKalb Superior Court within 30 days as allowed by law. The city says it will expect Rush Lounge and the other venues, should they also appeal, to pay the $100,000 fee during the appeals process.

Cary Wiggins, attorney for the other three venues, could not be reached for comment by press time. During arguments before the Alcohol Board on Jan. 30 and Feb. 8, Wiggins implied he had a basis for a federal constitutional violation lawsuit based on the First Amendment and equal protection.

“If they appeal to [DeKalb] Superior Court, the city contends that payment of the license fee into the registry of the court is required in order to continue business as usual during the appeal,” spokesperson Burke Brennan said.

“If they do not pay into the registry after being ordered by court to do so, then we take the position that the board’s order is immediately enforceable,” he said. “That does not mean the clubs have to close their doors. It means that they cannot serve alcohol.”

“We’re going to appeal [to DeKalb Superior Court] and they’ll fight the appeals process because there’s a lot at stake for them to try to uphold their new ordinance,” Begner said.

Begner’s main argument against the city’s new $100,000 liquor license fee is that he says state law does not allow cities or counties to charge more than $5,000 for a liquor license.

“A city in Georgia has never charged that much before. I don’t know any city that has tried this,” he said. “This is not an attempt to regulate businesses, this is an attempt to put them out of business.”

In the Feb. 8 hearing, Wiggins hammered on the city’s decision to include in its ordinance that a venue with a disc jockey is considered an “entertainment venue” and required to pay $100,000 to serve beer, wine and liquor.

“The elephant in the room tonight is the DJ thing,” Wiggins said, suggesting the city’s ordinance was illegal because it “would allow a heavy metal band to play at Outback or Applebee’s,” but penalizes the hiring of a DJ. He called the city’s focus on a DJ a “virulent form of speech restraint and speech regulation.”

He also ticked off the names of several other venues in the city that have DJ booths but were not required to pay the new $100,000 liquor license fee.

“The city knows that other businesses have the same format … and yet they’ve been renewed and my guys are being punished,” Wiggins said.

City Attorney Chris Balch said because other businesses may be getting away with having a DJ without paying the $100,000 liquor license fee does not mean the city is violating anyone’s constitutional rights.

“Will the city look at other venues Mr. Wiggins has mentioned and see if we made a mistake? Of course we will,” Balch said at the Feb. 8 hearing. But even if others get away with having a DJ without paying the new liquor license fees doesn’t mean Wiggins’ clients can, he said.

Linda Nabors, the city’s Finance Director, testified Feb. 8 that her decision to not renew the liquor license for XS Restaurant & Lounge was in part because they had not paid their excise taxes in a timely manner. She also decided to do so because Wiggins attached a letter with each of his clients’ liquor license renewals objecting to the new alcohol ordinance.

Wiggins said her decision being based on his complaint letter could be “First Amendment retaliation.”

Wiggins at both hearings also questioned Assistant City Manager Steve Chapman’s formula for coming up with the $100,000 figure. Chapman explained Jan. 30 he and Balch derived the figure by using the city’s current business model with the Pink Pony, a sexually oriented business with nude dancing and alcohol.

In 2014, the Pink Pony agreed to a legal settlement to pay the police department $225,000 a year for six years to cover public safety costs, to reimburse the city for its legal fees, to donate land along Peachtree Creek for a city park and to contribute up to $75,000 for that park. The settlement followed a lengthy legal battle with the city as it tried to close the strip club down shortly after incorporation five years ago. The Pink Pony is also slated to close in Brookhaven in 2020 as part of the settlement.

Chapman said the high number of police calls were also used to determine the new fee.

Wiggins introduced into evidence on Feb. 8 a memo from Chapman and City Manager Christian Sigman to the City Council about the fee-setting. Chapman agreed when Wiggins said that the memo said, “the first idea was to impose a tax” rather than the $100,000 licensing fee. But taxes have to be citywide and Chapman said the tax idea was “not practical.”

Wiggins pressed Chapman about the police incident numbers used to justify the $100,000 fee. Apparently the police department submitted to Chapman two different analysis documents. One stated that it omitted all 65 package stores, any businesses that had since closed, and all hotels/motels, leaving only 69 alcohol-selling businesses to be ranked. But another list had no such disclaimer and Chapman suggested it was compiled based on all alcohol-selling businesses.

Alcohol Board member Kris Sokolowski asked Chapman whether the licensing fee would be cut in half if the police incident numbers were cut in half. Chapman said yes and that the fee is “part of a program to reduce crime in the city of Brookhaven.” The number could be lowered, or “maybe we’d say we didn’t charge ’em enough and we need to bump it up to two [hundred thousand] and a quarter.”

Balch told the Alcohol Board, “Ordinarily, I’d tell the board, where there’s smoke, there’s fire, but sometimes there’s just a lot of smoke.”

The venues lied under oath when they filled out their liquor license renewals and said they did not have a DJ, Balch said.

“And somehow, in the face of all their admissions, the city is supposed to somehow turn a blind eye and let them flaunt all our rules. Not on my watch,” he said.

“It’s not too much to ask that when we give the privilege to a business to sell alcohol in this community that they don’t lie to us, they don’t make things up to try to get over, to try to game the system,” he said.

Wiggins said the $100,000 fee is a “death sentence” and the fee “makes absolutely no sense,” based on a wealthy strip club’s settlement, he said.

–Dyana Bagby and John Ruch