Two other establishments – The Arena and Café Zola – had originally been on the list but had been removed by the time of the council meeting because they’d resolved their outstanding issues. They had all been on the list for potentially being recommended for non-renewal due to non-payment of personal property taxes.

The council’s Feb. 3 action also appointed Jane Lumm (Ward 2) as the hearing officer. Lumm serves on the council’s liquor license review committee, along with Mike Anglin (Ward 5) and Sumi Kailasapathy (Ward 1).

Lumm served as the hearing officer for this kind of proceeding in 2013 as well. Also on that occasion, Banfield’s Bar & Grill, Café Zola and The Arena were on the hearing list. However, by the time of the hearing, Café Zola had resolved its issue. And at the hearing itself, Banfield’s Bar & Grill made an arrangement to resolve its outstanding issue.

Only the hearing on The Arena ultimately resulted in a city council recommendation to the state liquor control commission not to renew a license. Subsequently, The Arena did pay its taxes, and the council withdrew its objection to a license renewal for The Arena.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron.

For Rush Street the recommendation was for the Michigan Liquor Control Commission to renew the license, because the bar had finally paid nearly $10,000 in back taxes.

But for Dream Nite Club, the recommendation approved by the city council was to object to the renewal of that bar’s license. The recommendation was consistent with the finding of hearing officer Tony Derezinski, a city councilmember representing Ward 2 who presided over a hearing earlier in the day on March 19. The hearing was scheduled to begin at 8 a.m., and lasted until the early afternoon.

During the portion of the hearing observed by The Chronicle, at least a dozen different Ann Arbor police officers offered testimony, elicited by assistant city attorney Bob West, in support of the city’s contention that the establishment maintains a nuisance. The legal counsel for Dream Nite Club sharply questioned the officers about their reports and the conclusions they drew from what they’d witnessed. Objections by Dream Nite Club’s counsel, contending hearsay evidence or a lack of foundation, became routine during the hearing – to the point that on several occasions, a “standing objection” was made to subsequent testimony and introduction of evidence.

In the end, Derezinski concluded that the city of Ann Arbor had a basis to object to the renewal of Dream Nite Club’s liquor license. With its vote on the evening of March 19 the city council forwarded that recommendation to the Michigan Liquor Control Commission. The license renewal will be decided by the MLCC.

The March 19 hearing had been set at the council’s March 5, 2012 meeting, when councilmembers had passed a resolution with an initial recommendation that liquor licenses for both businesses – Dream Nite Club and Rush Street – not be renewed this year. That initial vote was based on the recommendation of the city council’s liquor license review committee, which met on Feb. 23, 2012 to conclude its annual review of licenses in the city.

Initially, no one appeared on behalf of Rush Street at the March 19 hearing, but later, a representative did appear. Derezinski re-heard the matter and based on the report that the back taxes had been paid, which was verified by city treasurer Matt Horning, Derezinski made the recommendation that the council recommend renewal of Rush Street’s license to the MLCC.

[.jpg file of map showing liquor license locations in Washtenaw County] [link to dynamic map showing liquor license locations in Washtenaw County] Note: Maps include all liquor licensees, not just those with on-premise consumption.

This brief was filed from the city council’s chambers on the second floor of city hall located at 301 E. Huron. A more detailed report will follow: [link]

Dream Nite Club door sign. Reflected in the glass is the AATA bus stop next to the Blake Transit Center, across Fourth Avenue from the bar. (Photos by the writer.)

At their meeting, also attended by several city staff, the trio set in motion a process by which the licenses of Dream Nite Club (314 S. Fourth Ave.) and Rush Street (312 S. Main St.) might not be renewed by the Michigan Liquor Control Commission (MLCC).

The committee had begun the work at its previous meeting, on Feb. 7. City staff from various departments – building inspection, police, city attorney’s office and treasurer’s office – identified around a dozen establishments with problems ranging from delinquent taxes to building permit issues. Those businesses were sent letters notifying them of the problems. The majority of those businesses took steps before the Feb. 23 meeting to rectify their situation.

Left unresolved were licenses for two businesses. So the committee voted to recommend to the city council that licenses for those businesses not be renewed – Dream Nite Club (for maintaining a nuisance) and Rush Street (for delinquent taxes) – with a hearing on the matter to be set for March 19. That recommendation will appear on the city council’s March 5 agenda.

After the council authorizes notification of the licensee, and is followed by the hearing, the recommendation of the hearing officer will be forwarded to the council for its meeting that same day, on March 19. The hearing officer, previously appointed by the council, is chair of the liquor license review committee, councilmember Tony Derezinski.

The council will then need to confirm Derezinski’s recommendation at its March 19 meeting. The timeline is determined by the MLCC’s March 31 deadline for the city council to submit an objection to the renewal of a liquor license. The Ann Arbor city council’s last regular meeting before then is March 19.

Also discussed at the committee meeting was the Elks Lodge on Sunset Road, which holds a club liquor license. The regular entertainment that takes place at the lodge is a violation of the residential zoning of the parcel, according to city planning staff. The city has sent a letter to the Elks Lodge in an effort to bring the Elks into compliance with zoning regulations. Added on March 5, 2012 after initial publication of this article: [.pdf of letter from city of Ann Arbor to the Elks Lodge]

Introduction to the Meeting

After approving the minutes from the previous meeting and the agenda, committee chair Tony Derezinski welcomed several students from Skyline High School, who were completing a course requirement for a government class.

The Feb. 23 Ann Arbor liquor license review committee meeting. Starting with committee chair Tony Derezinski at the head of the table, in the foreground, clockwise around the table are: city clerk Jackie Beaudry, city treasurer Matt Horning, councilmember Mike Anglin, city council administrative coordinator Anissa Bowden, deputy treasurer Mike Pettigrew, assistant city attorney Bob West, assistant city attorney Mary Fales, city councilmember Jane Lumm, Lt. Bob Pfannes of the Ann Arbor police department, and the city's chief development officer Ralph Welton.

Derezinski sketched out what the students would witness. One was a fairly typical issue for the committee – a liquor license transfer.

The second agenda item, said Derezinski, was the continued review of the roughly 120 liquor licenses in the city for compliance with various requirements in the context of the annual renewal of those licenses. The committee would make recommendations to the city council, he explained – ordinarily the council would go along with the committee’s recommendations. The committee, he said, does “the spade work.”

Derezinski described the committee and the council’s recommendations on liquor license renewals in the context of a perception that there’s a lot of movement at the level of state government to “buck more authority down” to the local units. But Derezinski noted that the ultimate decision on license renewals rests with the Michigan Liquor Control Commission.

License Transfer: Mélange

Before the committee for consideration was the proposed transfer of a liquor license to Mélange Bistro LLC located at 312 S. Main from the previous owner of the restaurant – 314 S. Main LLC (resident agent Dilip K. Mullick).

Asked by Derezinski to summarize and review the transfer to Mélange, city clerk Jackie Beaudry led off by noting that the committee had considered the item at its previous meeting, but had postponed it. She said she was not sure the item was ready, but the committee had wanted it on the agenda.

Sign for Mélange on Main Street in Ann Arbor.

The committee had asked that the staff follow up on a letter received from the Michigan Liquor Control Commission (MLCC) outlining violations related to the way that some of the ownership interest in the license had been transfered. Bob Pfannes, of the Ann Arbor police department, described the communication from the MLCC as a vaguely-worded letter on some issues the MLCC was looking into regarding the transfer of ownership.

And because of that letter, Pfannes wanted further clarification before he gave the police department approval. He reported that he’d spoken with the MLCC investigator. The issues identified by the MLCC are separate issues from the transfer, he said. Regardless of what the local recommendation was, the MLCC would finish up with their investigation. The MLCC was focused on the previous owner. So, if all the other city departments have signed off, Pfannes felt like the license transfer could move forward. He would not withhold his approval – because of what he’d learned from the MLCC investigator, he said.

Linda Mayer, attorney for Mélange, attended the committee meeting and was asked if she wanted to comment. She essentially confirmed the description that Pfannes had given, saying the issue that’s pending with the MLCC involves the current owner of the licensed business, who transfered membership interest without prior approval from the MLCC. She wanted to be clear that it’s the seller’s violation, not the buyer’s. She was asking the local review committee to move ahead, because the MLCC won’t put Mélange on its docket until it has local approval. She wanted to assure the committee that the local body was not at risk.

Derezinski also noted that two assistant city attorneys were present – Bob West and Mary Fales. Neither commented on the statements that had already been made.

Outcome: The committee unanimously approved a recommendation for transfer of a liquor license to Mélange, and had it placed on the city council’s March 5, 2012 agenda.

Annual Review of Licenses

City clerk Jackie Beaudry reviewed how the committee at its previous meeting, on Feb. 7, 2012, had gone over most of the businesses for on-premise licenses – they’d met all the city requirements and had been approved. There were, however, quite a few businesses with outstanding issues – with the building department or with the treasurer’s office, due to failure to pay taxes.

At the committee’s direction, the city clerk’s office had sent letters to those businesses, Beaudry said. After receiving the letters, many of the businesses had rectified their outstanding issues, but some remained.

Annual Review of Licenses: Clarion Hotel

Clarion Hotel is still an issue, Beaudry said. The hotel, located at 2900 Jackson Road, had paid delinquent taxes ($2,070.97), but Ralph Welton, the city’s chief development officer, still had some issues with a building permit. Welton indicated that he’d now been contacted by Clarion and he was dealing with it. He called it a “weird situation” because there was another hotel that had started construction on the same site with the same address. That was something he would not allow to happen, he said. Some of the open permits are for that other construction. But there are also some open permits on the Clarion itself, he said. He felt the fact that Clarion has been in contact with him is enough to move it forward. Once his department is in the loop, compliance can be gained, he concluded.

After checking with city treasurer Matt Horning, Tony Derezinski allowed a motion to recommend renewal of Clarion Hotel’s liquor license.

Outcome: The committee unanimously recommended Clarion’s license be renewed.

Annual Review of Licenses: Rush Street

City clerk Jackie Beaudry characterized Rush Street as having the largest tax delinquency of all the licensees, at $8,040.42. Just that day, the letter that the city had sent to Rush Street had been returned as undelivered. She said her recollection was that the city had the same difficulty the previous year – the city had sent it to the business address and that mail was returned.

Beaudry wondered if city treasurer Matt Horning had the same experience with property taxes. Beaudry said the treasurer’s office notifies delinquent accounts monthly, so she felt the business was aware of the delinquency. But the letter that the city clerk’s office had sent was returned, she said. Assistant city attorney Mary Fales asked Horning if the treasurer’s office had records indicating whether mail has been returned – yes, but Horning didn’t know the status of the Rush Street parcel.

From left: city treasurer Matt Horning and city councilmember Mike Anglin, who represents Ward 5 and serves on the liquor license review committee.

Tony Derezinski wanted to know what happened last year. Beaudry indicated that Rush Street was delinquent last year, but they finally paid – they’re perpetually a year behind. Horning, having checked his records, indicated that 210 S. Fifth is the address where his office sends the tax bill. That’s the address where it’s legally required to be sent – the owner’s address of record, which comes from the assessor’s database. If it’s returned, Horning continued, his office sends it to the address of the property addressed to “current occupant.”

Beaudry indicated that the clerk’s office had been using a different address, the address of the business – 314 Main St. Derezinski asked what Beaudry’s recommendation would be, noting that the time for sending another letter was getting short.

Beaudry suggested that one option would be to advance Rush Street to a hearing on non-renewal of the liquor license. Her recollection was that a city clerk staffer last year had walked down to Rush Street and handed the letter to someone at the bar. Fales acknowledged Derezinski’s point that time was tight – the city council’s recommendation needed to go to the MLCC by March 31. Fales suggested that given the amount of taxes owed, the committee could move for non-renewal of the license, and that would still allow Rush Street time to correct the tax issue.

Derezinski recollected that last year, there were some businesses who rectified their taxes, once they got the notice of an actual hearing. He said he felt it’s important to send the hearing notice to both addresses and have someone go down to the business. He ventured that he “would undertake the burden myself” but he couldn’t go that night.

Some back-and-forth between Fales and Beaudry established that the hearing date could not be set sooner than 10 days after notification for the hearing, and that would take place on March 5, when the city council was advised of the committee’s recommendation for non-renewal.

Mike Anglin ventured that based on his experience in the District of Columbia, the onus is on a business owner to keep their contact information up to date. Jane Lumm said that hand-delivering a notice seemed like it was “bending over backwards.” Derezinski allowed that it shouldn’t be necessary, but that every effort needed to be made to make sure that the business was notified.

Outcome: The committee unanimously approved a resolution to set a hearing on its recommendation for non-renewal of Rush Street’s liquor license for March 19, 2012.

Annual Review of Licenses: Yamato Not Zal Gaz Grotto

Next up was Yamato, which had a tax delinquency of $710.06. Beaudry said she was not sure where the error arose, but on a list maintained by the city, Yamato was listed immediately above Zal Gaz Grotto. So the city had incorrectly identified Zal Gaz Grotto as the delinquent party. That’s why Yamato, a Japanese restaurant in Kerrytown, was not notified in the original cycle.

Based on her conversation with the city treasurer’s office, due to the lack of notification by the city, and because it’s such a small amount, Beaudry would suggest the treasurer continue to pursue compliance. However, the committee could simply approve a recommendation for annual license renewal. And if Yamato did not pay the taxes, they would automatically appear next year on the list for possible non-renewal.

Outcome: The committee unanimously approved a recommendation for the annual renewal of Yamato’s liquor license.

After the vote, Beaudry stressed that, for the record, Zal Gaz Grotto‘s status with respect to its liquor license is fine. The club is located at 2070 W. Stadium Blvd.

Annual Review of Licenses: Misc.

The committee then considered in one group nine business that had been notified of various issues: Live at PJs, Fraser’s, Mediterano, Paesanao’s, UMI Sushi, Ashley’s Miki Japanese, Theory, and West End Grill. Beaudry summarized the issues as either delinquent taxes that have been paid, a transfer of ownership issue, or building department issues that have now been cleared up. Staff had no remaining objections, Beaudry said.

Outcome: The committee unanimously approved a recommendation for the annual renewal of liquor licenses for the nine businesses.

Annual Review of Licenses: Elks Lodge

Assistant city attorney Mary Fales reported that the city was aware of potential zoning violations by the James L. Crawford Elks Lodge, located at 220 Sunset Road. She described the violations as stemming from “uses currently being activated at the site” that are not in conformance with the residential zoning of the site. Zoning compliance issues are initially handled by the city’s planning staff, but the planning staff hadn’t given notice to the Elks. However, it’s their intention to do so, said Fales.

On the liquor license issue, Fales said she was recommending approval of the license renewal, and the planning staff could then conclude their communication with the Elks Lodge. If the Elks Lodge is not complying with the constraints of their zoning, then they’ll come back on the list next year, she said.

Tony Derezinski asked if any other representative of different departments had any objections. They did not. He noted that the Elks Lodge would be sent a letter on the zoning issues. The zoning is one thing and the liquor license is another, he said. He said that recommending approval of the liquor license renewal gets the process going and doesn’t hold up the liquor license.

Mike Anglin asked what the activities were that the Elks Lodge was engaged in that had drawn the planning staff’s attention. Fales clarified that the Elks Lodge is located in a residential district, and the Elks are engaged in activities there that are not authorized under the city’s zoning code for residential districts. The planning staff, said Fales, would like to bring the Elks into compliance. Anglin asked what type of license the Elks held – was it the same or different from Zal Gaz Grotto?

City clerk Jackie Beaudry clarified that the Elks Lodge holds a club license similar to the kind held by the Performance Network Theater, The Ark, or Zal Gaz Grotto. Jane Lumm charcterized it as a “relatively minor zoning issue.”

By way of additional background, the Elks Lodge hosts an event with food and live jazz every Thursday–Saturday, from 6-10 p.m. and a DJ with dancing from 10 p.m.-2 a.m. Based on the listing in the printed edition of the March 2012 Ann Arbor Observer events calendar, most events don’t have a cover charge – but occasionally a cover of $3 or $5 is charged.

Outcome: The committee unanimously approved a recommendation for the annual renewal of the Elks Lodge’s liquor license.

Annual Review of Licenses: Dream Nite Club

Assistant city attorney Mary Fales reported that the police department has updated the violation list for the club. The police and the city attorney are recommending non-renewal, she reported – on the grounds of maintaining a nuisance, a pattern of patron conduct, numerous police reports, and specific liquor code violations. Bob Pfannes of the Ann Arbor police department noted that the department had documented details of the violations under Chapter 109, Rule 406 of the liquor control act. The club is located at 314 S. Fourth Ave., across from the Blake Transit Center.

City treasurer Matt Horning noted that Dream Nite Club had no delinquent taxes, so he had no objections to renewal of the club’s license on those grounds. But he concurred with the city attorney’s recommendation.

Tony Derezinski explained that with a recommendation of non-renewal, a hearing would need to be set. He described the hearing as a careful process where the committee provides the owner of the license with due process. The hearing is set up under the rules in the city ordinance, he said.

Mike Anglin noted that there’s just one hearing officer – a role to which Derezinski had been appointed by the city council. Anglin wanted to know if the hearing would be open to the public. Derezinski confirmed that such hearings are indeed open to the public. Last year, he said, there were attorneys and witnesses present. The owner of the license has a right to present evidence and to question the evidence that’s submitted. A recommendation goes from the hearing officer to the council, he said.

Back-and-forth between Fales and city clerk Jackie Beaudry established that the city council needed to be presented with a recommendation from the committee for non-renewal, then council would formally authorize notification of the licensee about the hearing (to be held no sooner than 10 days after notification). That would be followed by the hearing, and a recommendation would then come back to the council. [.pdf of Chapter 109 Section 9:79] The council would at that point be able to make a recommendation to the MLCC for non-renewal.

By way of background, the confusion on the sequencing of events likely stemmed from the fact that last year, the committee itself set the hearing on the recommendation for non-renewal and forwarded the final recommendation to the council only after the hearing. The language of the city’s ordinance indicates that it’s the city council that needs to serve notice to a licensee about a potential non-renewal recommendation: “… the city council shall do the following: Serve written notice on the licensee, which shall include: Notice of the proposed action and the reasons for the action …”

Outcome: The committee unanimously approved a recommendation for non-renewal of the Dream Nite Club’s liquor license and set a hearing date for March 19, 2012.

Next Steps

The timeframe in which the liquor license review committee is operating will be tight. The city council will have the recommendations for non-renewal – for Dream Nite Club and for Rush Street – on its agenda for the Monday, March 5 meeting. As of the morning of March 3, the item had still not been added to the agenda, but it’s expected that it will appear before the Monday meeting. The hearings associated with those non-renewal recommendations will be held March 19.

As the hearing officer, Tony Derezinski will need to turn around a recommendation to the council on the day of the hearing – March 19 is also the last regular city council meeting before the MLCC’s March 31 deadline.

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