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HomeMy WebLinkAboutFury Rok & Rol revocation of Use PermitsCITY OF NEWPORT BEACH PLANNING COMMISSION STAFF REPORT January 17, 2008 Meeting Agenda Item No. 6 SUBJECT: Revocation of Use Permit Nos. 3162 and 2005 -018 (PA2005 -087) Fury Rok & Rol Sushi Lounge 4221 Dolphin Striker Way APPLICANT: Fury, LLC CONTACT: Patrick J. Alford, Senior Planner (949) 644 -3235, palforde-citv.newport- beach.ca.us PROJECT SUMMARY The Planning Director has determined that there are reasonable grounds for revocation of Use Permit No. 3162 and Use Permit No. 2005 -018. The Planning Commission is therefore requested to set a revocation hearing pursuant to Section 20.96.040 (Revocation of Discretionary Permits) for February 21, 2008. RECOMMENDATION Staff recommends that the Planning Commission adopt Resolution No. to initiate proceedings to revoke Use Permit No. 3162 and Use Permit No. 2005 -018. (See Exhibit 1). Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 2 VICINITY MAP Subject Property ZONING 0. LO_ CATION GENERAL PLAN ZONING CURRENT USE Mixed Use Horizontal 2 ON-SITE Mixed Newport Place Planned Barinighfclub Communit PC -1 t) NORTH MU -H2 PC -11 RestauraritJipool hall SOUTH MU -H2 PC -11 _ Offices EAST MU -H2 Koll Center Planned Offices Corn munit PC -15 WEST MU -H2 PC -11 Offices Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 3 Proiect Settin Fury is located on the westerly side of MacArthur Blvd., between Martingale Way and Newport Place Drive at 4221 Dolphin Striker Way. The property is approximately 1. 107 acres in size and is improved with a 7,996 square foot single -story commercial building. The building is situated at the southeast corner of the property, adjacent to MacArthur Blvd. The project is one of three restaurants that share a common parking area. The site is within the PC -11 (Newport Place Planned Community) Zoning District. The site is located within an area identified in the PC -11 text as "Restaurant Site 1." Restaurants are the only permitted use within Restaurant Site 1, subject to the approval of a use permit. The General Plan land use classification for the site and the surrounding area is Mixed Use Horizontal 2 (MU -1­12). The MU -H2 designation applies to properties located in the Airport Area. It provides for a horizontal intermixing of uses that may include regional commercial office, multi - family residential, vertical mixed -use buildings, industrial, hotel rooms, and ancillary neighborhood commercial uses. The 7,996 square foot restaurant has a Net Public Area ( "NPA ") of approximately 4,162 square feet, which includes the dining areas, bar and lounge areas, the waiting area and the outdoor smoking patio. The occupancy level established by the Certificate of Occupancy dated May 26, 1995 is 299 persons (See Exhibit 3). Minor modifications made to seating reduced the occupancy level to the current posted occupancy of 279 persons. Use Permit No. 3162 established the off - street parking requirement for the restaurant use of one parking space for each 40 square feet of NPA. Currently, the restaurant must provide a minimum of 105 spaces (4,162 divided by 40): 89 on -site and 16 off -site. At the present time, the site has a total of 195 parking spaces, 10 of which are handicap spaces. These spaces are a part of a parking pool shared with the adjacent properties (Currently the two other businesses operating in the adjacent properties are Classic Q and Saagar Restaurant). The 16 off -site parking spaces are located at the US Bank's parking structure, at 1500 Dove Street and 4141 MacArthur Blvd., documented by an off -site parking agreement recorded with the County Recorder April 15, 1986 as a Covenant and Agreement. This Agreement was set in place when the subject property was El Torito Restaurant. This recorded covenant establishes, among other things, parking charges that shall be paid to the owner of the parking garages by the restaurant and that the agreement term shall continue in effect as long as the subject property is used as a restaurant. A copy of the recorded off -site parking agreement is attached hereto as Exhibit 4. 5 Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 4 Background The subject property located at 4221 Dolphin Striker Way was originally developed as an El Torito Restaurant in 1973, prior to the need to obtain a use permit. In 1985, the Planning Commission considered and approved Use Permit No. 3162 when the existing restaurant expanded dinning and drinking to a patio existing on the property at the time. On July 7, 2005, the City approved an amendment to Use Permit No. 3162 as Use Permit No. 2005 -018 (PA2005 -087) which authorized a restaurant with accessory live entertainment and dancing with conditions requiring strict adherence to safety, parking and noise regulations. The current establishment, Fury Rok and Rol Sushi Lounge ( "Fury"), opened for business in July 2007. The operators are Brian Schillizzi and David Gonzales. The business is owned by Fury, LLC, whose sole member is Fury Management, Inc. The President for Fury Management, Inc. is David Gonzales. In August 2007 the City became aware that Fury was operating a valet service in violation of the Use Permit and not utilizing the parking provided for in the off -site parking agreement. The City also became aware that the Police Department was responding to an unusually high number of calls for assistance and a high number of alcohol related arrests were occurring directly related to Fury's patrons. To address these issues, City staff coordinated a meeting with the operators of Fury to discuss concerns the City had regarding the high number of arrests and violations of the Use Permit. On October 18, 2007, City staff from Planning, Police, Fire, Code Enforcement, Building and the City Attorney's Office met with Fury's operators, their corporate and alcohol license attorneys, head of security, and their public relations representatives to discuss Fury's operations. After being advised of the violations of the terms of the Use Permit, the Assistant City Attorney noted Fury via correspondence on October 23, 2007 that they must comply with the terms and conditions of the Use Permit and actively pursue steps to modify their operations so as to not cause a nuisance or detriment to the health, safety, peace or general welfare of the community. Fury has not effectively complied with the City's requested corrective actions. This includes, but is not limited to, providing the requested quarterly gross sales receipts, ceasing its operation as a bar, cocktail lounge or nightclub, serving a full menu during all hours of operation, and complying with the off- site parking agreement. Use Permit No. 3162 On July 7, 2005, the Planning Commission approved an amendment to Use Permit No. 3162 which authorized a restaurant with accessory live entertainment and dancing with conditions requiring strict adherence to safety, parking, and noise regulations. The current Use Permit Conditions established by Resolution 1671 are attached hereto as 0 Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 5 Exhibit 5. The minutes from the July 7, 2005 Planning Commission meeting and the corresponding staff report are attached hereto as Exhibit 6. The current use allows for a "bona fide public eating place" with live entertainment and dancing allowed in the evenings, subject to obtaining Live Entertainment and Cafe Dance Permits; both of which have been obtained by the operators and are attached hereto as Exhibit 7. According to the minutes from the July 7, 2005 Planning Commission Meeting, the Planning Commission was concerned that this establishment would convert to a dance hall, night club or bar instead of a restaurant. Further, the Planning Commission was concerned about public safety issues that would arise if the establishment did not operate as a restaurant. To address these concerns, the following specific conditions were included in the Use Permit: • Condition 15: This Use Permit shall be terminated if the operation is no longer maintained as a "bona fide public eating place" as defined by the California Department of Alcoholic Beverage Control. • Condition 16: Food service shall be available for ordering at all times that the restaurant establishment is open for business. • Condition 19: Any event or activity staged by an outside promoter or entity, where the restaurant owner or his employees or representatives share in any profits, or pay any percentage or commission to a promoter or any other person based upon money collected as a door charge, cover charge or any other form of admission charge, including minimum drink orders or sale of drinks is prohibited. • Condition 20: The approval of this Use Permit does not permit the premises to operate as a bar, tavern, cocktail lounge, nightclub or commercial recreation and entertainment use as defined in Section 20.05.050.1 of the Municipal Code. • Condition 26: All owners, managers and employees selling alcoholic beverages shall undergo and successfully complete a certified training program in responsible methods and skills for selling alcoholic beverages. The certified program must meet the standards of the California Coordinating Council on Responsible Beverage Service or other certifying /licensing body, which the State may designate. The establishment shall comply with the requirements of this section within 180 days of the issuance of the certificate of occupancy. Records of each owner's, manager's and employee's successful completion of the required certified training program shall be maintained on the premises and shall be presented upon request by a representative of the City of Newport Beach within sixty (60) days upon hiring. • Condition 27: The eating and drinking establishment shall take reasonable steps to discourage and correct objectionable conditions that constitute a nuisance in parking areas, sidewalks and areas surrounding the alcoholic 1 Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 6 beverage outlet and adjacent properties during business hours. If the operator fails to discourage or correct nuisances, the Planning Commission may review, modify or revoke this Use Permit in accordance with Chapter 20.96 of the Zoning Code. ■ Condition 29: The quarterly gross sales of alcoholic beverages shall not exceed the gross sales of food during the same period. The licensee shall maintain records that reflect separately the gross sale of food and the gross sale of alcoholic beverages of the licensed business. Said records shall be kept no less frequently than on a quarterly basis and shall be made available to the Department on demand. • Condition 36: Prior to the issuance of the certificate of occupancy, the applicant shall submit a comprehensive security plan for the permitted uses for review and approval by the Newport Beach Police Department. The procedures included in the plan and any recommendations made by the Police Department shall be implemented and adhered to for the life of the Use Permit. Code Enforcement Investigations On September 4, 2007, Code Enforcement notified Fury via correspondence that pursuant to Conditions 3 and 5, all employees were required to park in the 16 off -site parking spaces located at 1500 Dove Street and 4141 MacArthur Blvd. In addition, Code Enforcement noted that Fury need to cease conducting a valet service which was a change in operational characteristics which would need an amendment of the Use Permit in accordance with Section 20.82.060(A)(7). (See Exhibit 8.) On September 13, 2007, the valet service was still in operation and Code Enforcement issued Administrative Citation 12007 -0836 for violations of the Municipal Code regarding nuisances, violating the Use Permit and for un- permitted changes in operation characteristics. This citation was not appealed and is now final. (See Exhibit 9.) On September 20 -22, 2007, the Fury held several promoted events including a "First Annual Lingerie Ball." Code Enforcement issued Administrative Citation 12007 -0836 for violations of the Municipal Code regarding nuisances, violating the Use Permit and for un- permitted changes in operation characteristics. Code Enforcement Officer Shannon Levin issued Citation 12007 -0836 with the following required corrections: Abide by all conditions of the Use Permit, discontinue nightclub and nightclub activities immediately and operate as a restaurant, and contact the Planning Department to discuss conditions of the Use Permit. This citation was not appealed and is now final. (See Exhibit 10.) To determine whether the Fury was in compliance with the terms of the Use Permit, Code Enforcement conducted follow -up inspections on November 1, 10, 15, and 29, 2007 (See Exhibit 11 for Code Enforcement Reports). On the 1st, 10th, and 15"', Code Enforcement observed employee parking and logged license plate numbers for employees that parked in the common parking lot. On November 29h, Code D Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 7 Enforcement monitored the back (employee) entrance to Fury and the 5th level of the US Bank's parking structure (AMPCO Parking) from 4:30 p.m. until approximately 5:30 p.m. At no time did any person park on the 5 floor of the parking structure and walk to Fury. The code enforcement officer noted that several known employees were observed walking between cars parked in the shared restaurant lot and Fury. (See Exhibit 11.) !Newport Beach Police Department Investigations As part of their regular duties, the Newport Beach Police Department inspects the local restaurants and bars for compliance with ABC license requirements and use permit conditions. Officer activity reports referencing Fury repeatedly cite excessive alcohol related arrests and patrons being over served alcoholic beverages. In addition, there have been several reported instances of intoxicated patrons starting physical and verbal altercations with each other and with uniformed Newport Beach Police Department Officers. Fury is located in Police Reporting District (RD) number 34. RD 34 encompasses an area approximately three quarters (0.74) of a square mile in the north - eastern portion of the City (See map Exhibit 12). There have been a total of 87 arrests in RD 34 in the time period between July 1, 2007 and November 30, 2007. Thirty-three of these arrests are directly related to Fury patrons. This accounts for over 37.9% of the total arrests in this reporting district. Further, in this same four month time frame, the Police Department reports a total of 36 drunk and disorderly arrests in RD 34, of those arrests, 22 are directly related to Fury patrons. This accounts for over 61.1% of the drunk and disorderly arrests for RD 34 during this time period. (See map Exhibit 12, arrest reports Exhibit 13.) Between July 1, 2007 and November 30, 2007, Newport Beach Police Department reports there have been 33 arrests directly related to Fury patrons. These arrests include: 22 arrests for drunk and disorderly; 3 drug related arrests; 3 arrests as a result of fights; 1 arrest forcarjacking; 1 arrest for assault with a deadly weapon; and 1 battery on a police officer. In addition to these arrests, there are at least 4 reports of assault or battery with unknown suspects and numerous physical altercations between patrons. The Police Department has responded to local emergency rooms on 2 occasions from the time Fury opened until November 30, 2007, to interview severely injured assault victims of unknown suspects that assaulted them while they were at Fury. (See arrest reports, Exhibit 13.) On October 18, 2007, officers inspected Fury and observed that patrons' identifications were checked at the door. The dance floor was full with approximately 30 to 40 patrons dancing and the disc jockey was playing club music extremely loud. The officers spoke with the bartender about ordering food and they were told they could order the full menu until 11:00 p.m. and then just sushi after 11:00 p.m. The officers observed that food service was not available after midnight and that by 10:30 p.m. the majority of the tables 0 Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 8 in the establishment were set for V.I.P. bottle service, consisting of cocktail glasses and an ice bucket. (See Exhibit 14.) On November 2, 2007, officers inspected the premises, surrounding property and parking lots at Fury. Officers observed the common parking lot was full by 9:30 p.m. and that there were at any point during the night a range of 3 to 6 security personnel at the entrance and ramp way to Fury. They observed a patron drinking alcohol in the common parking lot before entering Fury and a patron leave Fury and urinate in the parking lot. Officers also observed an over served female patron leave Fury and vomit in the parking lot and a male patron leave Fury yelling at security. At one point during the night, there were approximately 40 patrons in line outside the establishment. One officer observed an overly intoxicated female leave Fury attempt to get into her car and drive. The officer was forced to intervene in the situation. At no point during the night did the officers observe the security personnel for Fury monitor or walk through the parking lot. Another officer stood in the line outside the establishment beginning at 11:00 p.m. He observed the manager, who he identified as Brian Schillizzi, say to the door employees that "we're full." Shortly after, a door employee told customers that the bar was full except for "prepaid bottle service." The officer then observed the door employee collect cash from a large group of patrons and let them into the establishment. The officer noted that after standing in line for 45 minutes, the door employee told him there was a $20.00 cover charge; the officer paid and was let in. After entering the establishment, the officer tried to order food at the bar. He noted that the bar chairs were all removed from the bar area. He was offered the "late night" menu which consisted of 3 items, pizza, chicken fingers, and fries. The officer ordered pizza and a beer and had to eat standing up. He observed that no other patrons were eating food in the establishment but did observe dancing. The officers in the parking lot observed that the door to the smoking patio remained open throughout the night and therefore the music could be heard and felt from the parking lot. An officer at another vantage point observed the front door remained open between 1:30 a.m. and 2:00 a.m. while the music was still playing. At closing time the officers observed security yelling at the crowd outside the establishment. He was yelling at the crowd, "Go home! Get in a taxi and go home! Leave!" By 2:00 a.m. additional officers had reported to the establishment to respond to a report of an assault between patrons that involved one patron getting hit with a bottle. Also on November 2, 2007, an officer inspected Fury from within the establishment. The officer made dinner reservations a few days earlier for 9:30 p.m. He was contacted by a host named Theresa that said "they should not have given you a reservation for 9:30 p.m. due to the fact that bottle service starts at 10:00 p.m. on Fridays and they would need the table." He was able to get a reservation for 9:00 p.m. The officer sat at 0 Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 9 his table at 9:00 p.m. and waited for the rest of his party. At 9:35 p.m., "Kristina" told the officer that the last dinner order needed to be in by 9:45 p.m. When the officer asked her why, she responded that "I'm part of the bottle service shift on the other side of the restaurant." When the officer told her he was still waiting for his party, she informed him that the hot portion of the menu closes at 10:00 p.m. and the cold portion of the menu is shut down at 11:00 p.m. The officer observed that at 9:50 p.m. the lights dimmed inside the bar and staff began putting clear trays with glasses and a bucket of ice on the tables for the "bottle service." The officer noted that he did not observe any patrons pour their own drinks at the bottle service tables, but he did note several overly intoxicated individuals throughout the evening. In addition, the officer observed dancing in the establishment. (See Exhibit 15.) On November 9, 2007, another inspection was performed outside Fury in the surrounding parking lots to the property. An officer observed that the neighboring businesses have placed orange cones blocking parking spaces in their lots. The officer observed several patrons drive through the parking lot before going to another parking lot and entering Fury. The officer noted that he could hear the music from Fury and did not hear any music coming from the other two restaurants that share the common lot. The officer observed numerous over intoxicated patrons leave Fury and several patrons from Fury urinate in the parking lot. The officer noted that security personnel did not do anything when they observed two intoxicated females from Fury in a verbal argument. The officers estimated that at one point the crowd in the parking lot was approximately 180 to 200 people. They noted that while this crowd was in the parking lot, they heard glass breaking and a few fights erupt. Security personnel were observed running to problem areas and breaking up fights, but the officers noted that security never called the Police Department for assistance. The officers were working in an undercover capacity and eventually called for police assistance themselves (See Exhibit 16). On November 27, 2007, another inspection was performed to determine whether Fury was complying with the parking terms of the Use Permit. During the inspection the officers spoke with PM Realty Group's Property Manager and the General Manager for PM Realty Group. Their business is responsible for property management at the AMPCO parking structure adjacent to Fury, which is the subject of the off -site parking agreement. These persons relayed to the officers that they were having numerous problems with the patrons from Fury to the point where they needed to hire an extra all night security guard for their buildings. In particular, they noted that they have had problems with the patrons urinating, defecating, littering, and breaking bottles in the parking structures. Further, the property manager advised that she recalled a fax from an individual she remembered as "Brian" who described himself as the new owner of Fury. The fax was a request for authorization to allow employees of Fury to park in the parking structure per the terms of their agreement with the City. According to the property manager, this individual needed this document to close escrow. It was determined that they would not Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 10 authorize the parking arrangement to occur and they relayed this to Brian. Further investigation by the officers revealed that at no time has Fury compensated the parking structure owners for use of the garage (See Exhibit 17) DISCUSSION 1. Are Fury's operations causing injury, or are they operating in a way that is detrimental to the health, safety, peace, morals, comfort, or general welfare of the community? At the October 18, 2007 meeting the City informed Fury about the repeated instances of nuisances that were occurring in the parking lot directly outside Fury. These activities constituted a pattern of documented violations of local laws and the Penal Code and included, but are not limited to, a high number of arrests for drunk in public, frequent fights, public urination, and illegal drug use as well as alcohol consumption in the parking lot. The City requested at this meeting and again in the October 23`d letter that Fury takes reasonable steps to discourage and correct these conditions (See Exhibit 18). Based on the information gathered by the Police Department, the conditions at Fury constitute a public nuisance that is detrimental to the public health and welfare in violation of Condition 6 and Condition 27 which the operators of Fury have failed to abate. Specifically, there are excessive alcohol related arrests and disturbances originating from patrons of Fury. The Police Department gathered and analyzed police reports and police activities relating to Fury. All reports were reviewed for specific ties to Fury such as admissions from suspects or observations from officers since Fury shares a parking lot with two other establishments that serve alcohol. Between July 1, 2007 and November 30, 2007, Newport Beach Police Department reports there have been 33 arrests directly related to Fury patrons. These arrests include: 22 arrests for drunk and disorderly; 3 drug related arrests; 3 arrests as a result of fights; 1 arrest for carjacking; 1 arrest for assault with a deadly weapon; and 1 battery on a police officer. In addition to these arrests, there are at least 4 reports of assault or battery with unknown suspects and numerous physical altercations between patrons. The Police Department has responded to local emergency rooms on 2 occasions from the time Fury opened until November 30, 2007, to interview severely injured assault victims of unknown suspects that assaulted them while they were at Fury. (See arrest reports, Exhibit 13.) Moreover, officers have observed that the neighboring businesses have placed orange cones blocking parking spaces in their lots, music being heard from outside Fury, numerous over intoxicated patrons inside and leaving Fury, and several patrons urinate in the parking lot. A video of some of the activities occurring in the parking lot is attached hereto as Exhibit 19. `' Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 11 Furthermore, the business which is responsible for property management at the AMPCO parking structure adjacent to Fury has reported numerous problems with the patrons from Fury to the point where they needed to hire an extra all night security guard for their buildings. In particular, they noted that they have had problems with the patrons urinating, defecating, littering, and breaking bottles in the parking structures. Based on the information obtained by the Police Department, Fury has created a nuisance and has failed to control nuisances in its parking lot and surrounding areas in violation of Conditions 6 and 27. 2. Is full menu food service available for ordering at all times the establishment is open for business? Condition 16 requires full menu food service to be the restaurant is open for business. Based on tl Department on multiple inspections, Fury is n approval. Specifically, on October 18, 2007, the could order the full menu until 11:00 p.m. and t officers observed that food service was not avail, available for ordering at all times that e information gathered by the Police rt complying with this condition of bartender informed officers that they ien just sushi after 11:00 p.m. The able after midnight and that by 10:30 p.m., the majority of the tables in the establishment were set for V.I.P. bottle service, consisting of cocktail glasses and an ice bucket. On November 2, 2007, an officer attempted to order food at the bar and noted that the bar chairs were all removed from the bar area. He was offered the "late night" menu which consisted of 3 items, pizza, chicken fingers, and fries. The officer ordered pizza and a beer and had to eat standing up. He observed that no other patrons were eating food in the establishment. (Exhibit 15) Another officer reported that he made dinner reservations a few days prior to November 2, 2007 for 9:30 p.m. He was contacted by a host named Theresa prior to arriving and was told by her that "they should not have given you a reservation for 9:30 p.m. due to the fact that bottle service starts at 10:00 p.m. on Fridays and they would need the table." He was able to get a reservation for 9:00 p.m. on November 2, 2007. The officer sat at his table at 9:00 p.m. and waited for the rest of his party. At 9:35 p.m., "Kristina" told the officer that the last dinner order needed to be in by 9:45 p.m. When the officer asked her why, she responded that "I'm part of the bottle service shift on the other side of the restaurant." When the officer told her he was still waiting for his party, she informed him that the hot portion of the menu closes at 10:00 p.m. and the cold portion of the menu is shutdown at 11:00 p.m. In addition to the Police Department Reports, Fury admitted to City staff at the October 18, 2007 meeting that the premiere service menu was only available from 6 p.m. to 11 p.m., that the full menu was only available until 10:00 p.m. and that a limited menu is available thereafter. A copy of the full menu and limited menu are attached hereto as Exhibit 20. 0 Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 12 3. Are all owners, managers and employees trained in responsible methods and skills for selling alcoholic beverages? Use Permit Condition 26 requires that "all owners, managers and employees selling alcoholic beverages shall undergo and successfully complete a certified training program in responsible methods and skills for selling alcoholic beverages. Records of each owner's, manager's and employee's successful completion of the required certified training program shall be maintained on the premises and shall be presented upon request by a representative of the City of Newport Beach." At the October 18, 2007 meeting, the City expressed concerns that this training had not been completed by all employees. In response, the operators indicated that their employees had not received this training but that a certified training program was scheduled for all Fury employees on December 20, 2007. The Police Department reports that no employees from Fury attended the scheduled training on December 20 conducted at the Police Department. On January 4, 2008, after Fury received notice of the Planning Commission public hearing, Fury's attorney, Michael Cho, submitted to the City Attorney's Office a letter (Exhibit 25) along with a copy of a Department of Alcoholic Beverage Control attendance roster (Exhibit 26), a summary of gross receipt sales (Exhibit 27) and Fury's security plan (Exhibit 24). In Mr. Cho's letter he explains that Fury staff attended a training program on -site on December 20, 2007. The City responded on January 4t" requesting a current list of Fury staff to determine whether all of the employees attended the training. The City is also waiting for Department of Alcoholic Beverage Control confirmation of the successful completion of this training program by Fury staff. 4. Has Fury submitted its gross receipts in accordance with Condition No. 29? Condition 29 requires Fury to maintain records that reflect separately the gross sale of food and the gross sale of alcoholic beverages of the business. In addition, Condition 29 provides that the quarterly gross sales of alcoholic beverages shall not exceed the gross sales of food during the same period. These records are to be kept no less frequently than on a quarterly basis and shall be made available to the City on demand. At the October 18, 2007 meeting between Fury and City Staff, the operators indicated that they were not able to provide their quarterly receipts as of that date because they had only been open since July 28, 2007. Evidence gathered by way of police reports indicates that Fury has been open since at least early July. Specifically, two field interview cards completed by an officer on July 2, 2007 reference speaking with and warning two men about distributing handbills on cars for a July 2nd event hosted by the "Social Group" at Fury located at 4221 Dolphin Striker Way on July 2, 2007 (Exhibit 21). Further, a quarter is three months long and from all accounts, Fury has been in operation for at least six months and should be able to provide the City with at least one quarter of gross sales receipts. Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 13 Despite requesting records on October 18 and in the October 23, 2007 correspondence, records were not produced by the date of November 21, 2007, which was the agreed to date of production by the City and Fury representatives. On January 4, 2008, after Fury received notice of the Planning Commission public hearing, Fury's attorney, Michael Cho, submitted to the City Attorney's Office a letter (Exhibit 25) and, amongst other items, a summary of gross receipt sales (Exhibit 27). The summary of gross receipt sales report provided by Mr. Cho covers June through September 2007. Supporting documentation for these figures was not provided, as is required under the terms of Condition 29 and as was requested on October 18 and in the October 23, 2007 correspondence. Pursuant to the gross receipts summary report Fury provided, the combined gross sales of beer, wine and liquor for this time period was 70% of their sales. Liquor alone accounted for 44% of their sales. The quarterly gross sales of alcoholic beverages significantly exceeds the gross sales of food in violation of Condition 29. In Fury's defense, Mr. Cho points out that Fury recently opened for lunch service [in October] and recently started marketing and public relation efforts to promote their food. Mr. Cho provides a copy of a "Daily Consolidated System Sales Detail" for the month of December to show the changes in the alcohol sales. Supporting documentation for these figures was not provided. Pursuant to Fury's December Sales Detail report, the combined liquor, beer and wine sales were $229,468.54 while the total food sales were $177,436.77; thus, Fury's total food and alcohol sales for the month of December was $406,905.31. Alcohol sales are approximately 56.4% of the December sales while food sales are approximately 43.6% of the December sales. On January 4t', the City once again requested that Fury provide the City with gross quarterly receipts for review (Exhibit 28). Compliance with Condition 29 cannot be ascertained until the actual gross receipts are provided and reviewed by the City. 5. Has Fury submitted a security plan that has been approved by the City? Pursuant to Condition 36, Fury is required to submit a comprehensive security plan for the permitted uses for review and approval by the Newport Beach Police Department. The security plan is required to include any recommendations made by the Police Department. At the October 18, 2007 meeting, Fury admitted that they did not have an approved security plan. In the October 23, 2007 correspondence, the City requested that Fury submit a detailed security plan by November 21, 2007. On November 8, 2007, Mike Murray of MPP Security and Bodyguards; contacted the Police Department with "Draft 1, The Basics," as Fury's Security Plan (See Exhibit 22). The plan was not very comprehensive, but it did include a section stating that they were "exploring putting a uniformed security guard in the parking lot." An officer discussed the "draft" plan with Mr. Murray and explained that the security plan would need more Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 14 detail and that Fury management needed to authorize submission of the plan and indicate they intended to implement the security plan. On January 3, 2007, after Fury received notice of the Planning Commission meeting, MPP Security and Fury submitted a binder "2007 Security Plan" to the Police Department's front desk. The City is currently reviewing the provided security plan (Exhibit 24). Thus far, most notably missing from this security plan is a plan for security coverage in the parking lot outside Fury. On October 18, 2007, the Police Department requested that Fury monitor their parking lot in conjunction with their security plan to curb the repeated instances of nuisances that were occurring in the parking lot area. Investigations by the Police Department reveal that Fury has not implemented a plan to monitor their parking lot and the Police Department notes in their November 2, 2007 reports specifically (Exhibit 15) that there are no security personnel visible in the parking lot. In violation of Condition 36, the security plan as submitted by Fury does not incorporate the recommendation made by the Police Department. 6. Is Fury in compliance with the off -site parking agreement? Use Permit Condition 4 requires that the current operators of the restaurant "[m]aintain the recorded covenant against the property comprising the approved off- street parking location, the form and content of which is acceptable to the City Attorney, binding the applicant and its successors in interest in perpetuity, to provide a minimum of 16 parking spaces for the subject restaurant. This covenant shall continue in effect until such time as the restaurant has been discontinued or suitable replacement parking is provided at a location acceptable to the Planning Commission." And further, Condition 5 states that "[t]he restaurant employees shall be required to use the 16 off -site spaces." (See Exhibit 3 for the recorded covenant). On September 4, 2007, Code Enforcement issued correspondence to Fury alerting them that they need to cease conducting a valet service and that they need to abide by the Use Permit in regards to off -site employee parking. On September 13, 2007, the valet service was still in operation and Code Enforcement issued Administrative Citation 12007 -0836 for violations of the Municipal Code regarding nuisances, violating the Use Permit and for un- permitted changes in operation characteristics. On October 18'", the City reminded Fury to comply with the off -site parking agreement. Fury agreed that their staff would park in the off -site location. On October 23 , the City further requested compliance with the off -site parking agreement and Conditions 4 and 5 of the Use Permit. Police Department Investigation On November 27, 2007, officers interviewed staff members of the parking garage (AMPCO Parking) and the property manager for this garage. Staff members relayed their complaints to the detectives about Fury patrons leaving trash, broken bottles, vomiting, urinating, and in some cases defecating in the parking structure. The officers were directed to speak with the property manager at PM Realty Group who told the `1,0 Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 15 detectives that the problems with the Fury patrons in their parking garages located in the immediate vicinity to Fury had gotten so bad they had to hire an extra all night security guard for their buildings. She further stated they have installed additional "No Parking" signs and have had 3 or 4 cars towed from their properties. The property manager further advised the officers that she had been contacted by a "Brian" who described himself as the new owner of Fury. "Brian" was requesting signed authorization to allow employees of Fury to park in the parking structure per the terms of their agreement with the City of Newport Beach. He apparently needed this signed authorization to close escrow. She informed the officers that she did not provided the requested authorization and did not hear from him again. In addition, Code Enforcement conducted follow -up inspections on November 1, 10, 15 and 29, 2007 (See Exhibit 16 for Code Enforcement Reports). On the Ist, 10`h, and 15`h Code Enforcement observed employee parking and logged license plate numbers for employees that parked in the common parking lot. On November 29th, Code Enforcement monitored the back (employee) entrance to Fury and the 5th level of the US Bank's parking structure (AMPCO Parking) from 4:30 p.m. until approximately 5:30 p.m. At no time did any person park on the 5 floor of the parking structure and walk to Fury. The code enforcement officer noted that several known employees were observed walking between cars parked in the shared restaurant lot and Fury. The Police Department and Code Enforcement inspections confirm that Fury is not utilizing the off -site parking nor are they abiding by the payment terms outlined in the recorded covenant (Exhibit 4). 7. Is Fury operating as `Bona fide public eating place ". A "bona fide public eating place" is defined in Business and Professions Code Section 23038 and incorporated into the Department of Alcoholic Beverage Control's definition of a type 47 license. In part, a "bona fide public eating place" is a place which is regularly, and in a bona fide manner, used and kept open for the serving of meals to guests for compensation. According to the Department of Alcoholic Beverage Control, a Type 47 license "[a]uthorizes the sale of beer, wine and distilled spirits for consumption on the licensed premises. Must operate and maintain the licensed premises as a bona fide eating place. Must make actual substantial sales of meals, during the normal meal hours that they are open, at lest five days a week. Normal mealtimes are 6:00 a.m. -9:00 a.m., 11:00 a.m. 2:00 p.m. and 6:00 p.m. -9:00 p.m. Premises that are not open five days a week must serve meals on the days they are open. Minors are allowed on the premises." Police Department bar check reports indicate that Fury is a restaurant until 10:00 p.m. and then becomes a "club" after 10:00 p.m. Patrons are allowed to sit anywhere inside during dinner, but as the club begins, the tables are available only by reservation and patrons attending dinner must vacate those tables. \1 Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 16 At the October 18, 2007 meeting between the City and operators, the operators admitted that on Thursday, Friday and Saturday evenings, they were focusing on night life activities and that residents of the City and others were given VIP passes to enter the establishment. Further, they stated that they have a limited menu after 11:00 p.m., remove dinner guests after 10:00 p.m. (so that bottle service patrons can sit at their reserved booths), do not admit minors after 10:00 p.m. and check ID's at the door. Corrective actions were requested on October 23, 2007 to comply with Use Permit No. 3162 including compliance with operating as a "bona fide eating establishment ". (See correspondence attached hereto as Exhibit 18). On Friday, November 2, 2007, officers inspected Fury to document compliance or lack thereof with the Use Permit since the City met with the operators. The officers made a reservation for dinner at 9:30 p.m. Friday night, November 2nd. A day after the reservation was made, a host from Fury called the officer and notified him that Fury could not accommodate the 9:30 p.m. dinner reservation because the table was needed for 10:00 p.m. bottle service. The latest the host would accommodate the officer's request for a dinner reservation was 9:00 p.m. That night, the plain clothes officers were advised by their server that the last dinner order had to be put in by 9:45 p.m., since most of the tables were sold for "bottle service" at 10:00 p.m. Their server further told them that the "hot" portion of the menu was only available until 10:00 p.m. and that after 10:00 p.m., the "cold" portion of the menu (sushi only) was available until 11:00 p.m. (See full menu and limited menu attached hereto as Exhibit 20). Since Fury has opened their doors, the Police Department has consistently reported activities at Fury that are inconsistent with a "bona fide eating establishment." Reports consistently identify bouncers or door hosts at the entrance to the establishment, there are frequently long lines of patrons waiting to enter the establishment, the tables are only available for pre -paid bottle service after 10:00 p.m., the kitchen is observed as completely closed after midnight, and there are large crowds outside the establishment around 1:30 a.m. which often lead to fights in the parking lots and numerous drunk and disorderly arrests. Further, Fury has elected to not comply with the City's request on October 23, 2007 to provide the quarterly gross sales receipts for City review by November 21, 2007. Any evidence that Fury's sales are consistent with a "bona fide eating establishment" would only be ascertainable by review of these receipts. Based on the evidence, the operation is not being operated for the permitted use of a "bona fide eating establishment." The full menu is not available at all hours the establishment is open, a limited menu is available after 10:00 p.m. Further, food service is not available at all hours the establishment is open in violation of Condition 16. J� Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 17 8. Is Fury operating as a bar, cocktail lounge, dance hall or nightclub? Condition 20 provides that "the approval of this Use Permit does not permit the premises to operate as a bar, tavern, cocktail lounge, nightclub or commercial recreation and entertainment use as defined in Section 20.05.050.1 of the Municipal Code." Section 20.05050(1) includes dance halls which are defined by Section 5.32.010 as "a place open to the public upon payment of an admission fee where music is provided and people are allowed to dance.' Bars and cocktail lounges are defined by Municipal Code Section 20.05.050(K) as "establishments with the principal purpose to sell or serve alcoholic beverages for consumption on the premises or any establishment having any of the following characteristics: a. Is licensed as a "public premises" by the California Department of Alcoholic Beverage Control; b. Provides an area for serving alcoholic beverages that is operated during hours not corresponding to regular meal service hours. Food products sold or served incidentally to the sale or service of alcoholic beverages shall not be deemed as constituting regular meal service." Officers report in their investigations into the operations of Fury and from statements given by patrons, managers, and servers that Fury is operating like a bar, cocktail lounge, dance hall and /or nightclub after 10:00 p.m. The general characteristics that identify the principal purpose of an establishment as a nightclub or cabaret are live entertainment and /or dancing occupying more than 20% of the net public area in conjunction with the serving of food and/or beverages. Fury is a large establishment and it has not been definitively ascertained by staff that dancing and live entertainment is occupying more than 20% of the net public area. Although, based on the evidence, City staff believes the principal purpose of the establishment after 10:00 p.m. is for the consumption of alcoholic beverages, dancing, and live entertainment by way of guest club disc jockeys. The featured Guest DJ's remix tracks from a variety of music genre's creating a form of electronic dance music that is popular in the "club" scene. Police Department Investigations On October 18, 2007, plain clothes officers walked through Fury and reported their observations. They noted the music levels at approximately 10:30 p.m. were extremely loud, reminiscent of a night club atmosphere. The booths and tables were prepared for V.I.P. bottle service with large buckets of ice and stacked glasses on each table, these tables were not set for food service. When the officers walked around the establishment at midnight, they did not observe any food service in the restaurant. On November 2 "d, a plain clothes officer waited in line to enter Fury from about 11:00 p.m. until 11:45 p.m. During this time he observed one of the operators, Brian Schillizzi, tell staff that the bar was full. The officer notes that after this announcement, the door host told patrons in line that the bar was full except for "pre -paid bottle service," the host Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 18 collected cash and credit cards for this pre -paid service before patrons were allowed inside. The officer was charged a $20.00 cover charge to enter Fury at approximately 11:45 p.m. which makes the establishment, among other things, a "dance hall" because he was charged admission. The officer attempted to order food at the bar and was not able to order from the full menu; instead he was given a "late night" menu that consisted of three choices of pizzas, chicken fingers and french fries. The officer reports that the chairs had been removed from the bar and he had to eat standing up. He noted that he did not observe any other patrons in the bar or patrons seated in the booths eating or ordering food; rather, all patrons at tables had bottle service. The summary sales report provided to the City by Fury, on January 4, 2008, further evidences that Fury is operating like a bar, cocktail lounge, dance hall and/or nightclub after 10:00 p.m. in violation of Condition 20. The summary report outlines a quarterly trend of alcohol sales at approximately 70% of their sales, indicating that food is sold or served incidentally to the sale or service of alcoholic beverages. (Exhibit 27). 9. Is Fury Violating the Law? Condition 18 provides that the applicant shall comply with all federal, state, and local laws. Material violation of any of those laws in connection with the use will be cause for revocation of this permit. As set forth in detail above, there are multiple violations of the Use Permit occurring at this Property, each of which is a violation of the Municipal Code. Fury has also been issued two citations for violations of the Municipal Code and these citations were not appealed and are now final. CONCLUSION A use permit is a discretionary permit and may be revoked. Fury continues to operate in such a way as to constitute a nuisance to the community that is detrimental to the health, safety, morals, comfort and general welfare of the community. The Terms of the Use Permit are continuously violated. Pursuant to Municipal section 20.96.040, the Planning Commission may revoke a use permit upon making the applicable findings set forth in Section 20.96.040. (Municipal Code Section 20.96.040 is attached hereto as Exhibit 29). Fury's operators and attorney's are aware of the conditions of the Use Permit and have been noticed over the course of four months about the concerns the City has due to violations of the Use Permit, the high number of alcohol related arrests and calls for service generated directly from Fury patrons. Fury elects to not comply with the City's requests for documentation and has continually failed to comply with staff direction in pursuing reasonable steps to control nuisances. It is staffs recommendation that the Planning Commission initiate proceedings to revoke Use Permit 3162 as amended. RE Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 19 Environmental Review The proposed project has been reviewed and it has been determined that it is categorically exempt from the requirements of the California Environmental Quality Act under Class 21 (Enforcement Actions by Regulatory Agencies). This exemption applies to actions by regulatory agencies to enforce or revoke a lease, permit, license, certificate, or other entitlement for use issued, adopted, or prescribed by the regulatory agency or enforcement of a law, general rule, standard, or objective, administered or adopted by the regulatory agency. Public Notice Notice of this hearing was published in the Daily Pilot, mailed to property owners within 300 feet of the property (excluding roads and waterways) and posted at the site a minimum of 10 days in advance of this hearing consistent with the Municipal Code. Notice of this hearing was also mailed to the property owner and the last known operator. The environmental assessment process has also been noticed in a similar manner and all mandatory notices per the California Environmental Quality Act have been given. Finally, the item appeared upon the agenda for this meeting, which was posted at City Hall and on the city website. Submitted by: David Lepo, Planning Director EXHIBITS (in the order they are referenced within the report) 1. Draft Resolution No. 2. Vicinity Map 3. Certificate of Occupancy 4. Covenant and Agreement Off -site Parking Agreement 5. Resolution 1671: Current Use Permit Conditions 6. July 7, 2005 Planning Commission Meeting Minutes and Staff Report 7. Live Entertainment Permit; Caf6 Dance Permit 8. September 4, 2007 Correspondence to Fury from Code Enforcement 9. September 13, 2007 Administrative Citation 10. September 21, 2007 2nd Administrative Citation 11. Code Enforcement Investigation Reports 12. Reporting District 34 Map 13. July 1, 2007 to November 30, 2007 Fury Arrest Reports 14. October 18, 2007 NBPD Investigation Report 15. November 2, 2007 NBPD Investigation Reports 16. November 9, 2007 NBPD Investigation Report 17. November 27, 2007 NBPD Investigation Report 18. October 23, 2007 Correspondence to Fury from City Attorney's Office 19. , 2007 NBPD Patrol Video Fury Parking Lot (under separate cover) Revocation of Use Permit Nos. 3162 and 2005 -018 January 17, 2008 Page 20 20. Fury Full Menu and Limited Menu 21. July 2, 2007 Field Interview Card 22. November 8, 2007 "Draft 1 The Basics" MPP Security Plan for Fury 23. Notice of Public Hearing 24. "2007 Security Plan" submitted to NBPD January 3, 2008 25. January 4, 2008 Correspondence to City Attorney's Office from Michael Cho, Fury's Attorney 26. December 20, 2007 ABC Leads Training Attendance Roster 27. Food & Liquor Sales Gross Receipts Summary June 2007 - Sept 2007; December 2007 Summary 28. January 4, 2008 Correspondence from City Attorney's Office to Michael Cho, Fury's Attorney FAUSERSIFLMSharec lPA's1PAs - 2002WA2002- 1671Recocationl2006-0} -}7 PC