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HomeMy WebLinkAboutSejour Revocation of Use Permit No. 2001-005CITY OF NEWPORT BEACH PLANNING COMMISSION STAFF REPORT January 17, 2008 Meeting Agenda Item 5 SUBJECT: Revocation of Amended Use Permit No. 2001 -005 (PA2002 -167) Sejour European Bistro & Lounge 3400 Via Lido APPLICANT: Arthur F. Stockton and Carolyn C. Stockton CONTACT: Patrick J. Alford, Senior Planner (949) 644 -3235, Palford(cdcitv.newaort- beach.ca.us PROJECT SUMMARY The Planning Director has determined that there are reasonable grounds for revocation of Amended Use Permit No. 2001 -005. 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. 2001 -005, as amended. (See, Exhibit 1.) Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 2 LOCATION I GENERAL PLAN ZONING CURRENT USE Mixed Use Water - Related ON-SITE Retail Service Restaurant, bar and lounge 2 MU -W2 Commercial RSC.) NORTH MLJ -W2 RSC Retail .stores and restaurants SOUTH General RSC Retail stores (Commercial EAST MU -W2 RSC Retail stores InIEST MU -W2 RSC Office and retail stores Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 3 Proiect Settin Sejour is located at the northwest corner of the Via Lido and Via Oporto intersection within the Lido Village area. The area is primarily commercial. The site is not adjacent to sensitive land uses, and there are no day care centers, schools, or park and recreation facilities in the vicinity. The nearest residential uses are located approximately 600 feet to the west across Newport Boulevard and approximately 600 feet to the southeast along the easterly side of Via Lido. The prior General Plan designated the site as Retail and Service Commercial, with an allowable floor area ratio for the Lido Village area of 0.510.75 FAR. As noted in the original staff report prepared for the April 5, 2001 Planning Commission meeting, the building exceeded the allowable General Plan FAR with an existing FAR of 0.83, although, the building is considered legal nonconforming. The April 5, 2001 staff report, meeting minutes and Use Permit No. 2001 -005 are attached hereto as Exhibit 3. The current General Plan designation is Mixed Use Water - Related 2 (MU -W2). The MU -W2 designation is applied to waterfront locations in which marine - related uses may be intermixed with buildings that provide residential on the upper floors. Permitted uses include those permitted by the Recreation and Marine Commercial (CM), Visitor- serving Commercial (CV), and Mixed Use Vertical (MU -V) designations. Background Use Permit 2001 -005 On April 5, 2001, Use Permit No. 2001 -005 was approved by the Planning Commission. (See, Exhibit 3). The primary use of the property was to be a retail establishment for the sale of general alcoholic beverages for off -site consumption with accessory wine tasting and seminars. According to the floor plan, the property was broken down into two Units (Unit A which later becomes Unit A -1 and Unit B which later becomes Unit A -2). Unit A was to be used for the retail operation and Unit B was to be used for on -site consumption. The on -site consumption (wine tasting) was to be accessory to the primary retail use. The hours of operation approved by the Use Permit for the retail portion of the operation was 10:00 a.m. to 11:00 p.m. and the on -site wine tasting was to be conducted between 1:00 p.m. and 11 p.m. At the time the Use Permit was approved, the applicant had a Type 21 (off -site sale general) and Type 42 (on -site sale beer and wine — no distilled spirits) alcohol license. 6 Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 4 According to the minutes from the April 5, 2001 Planning Commission meeting, the Planning Commission was very concerned that the property would convert into a bar or eating and drinking establishment. To address these concerns, specific conditions were included in the Use Permit which prohibited the sale of beer and limited alcohol sales for on -site consumption to Unit B. In addition, conditions were included to limit wine tasting sales to twenty percent (20 %) of gross sales so that the property would not become an eating and drinking establishment, restaurant, bar, tavern or cocktail lounge. Amendment to Use Permit 2001 -005 On November 7, 2002, the Planning Commission approved Resolution No. 1579 amending Use Permit No. 2001 -005 authorizing a Type 47 ABC License for on -site consumption of general alcoholic beverages, live entertainment and an expansion of the business hours on Friday and Saturday nights to 12:00 midnight. Due to continuing concerns that this establishment would convert to a bar or eating and drinking establishment, the Use Permit contained specific conditions on the operation as follows: • Condition 1: The development shall be in substantial conformance with the approved plot plan, floor plan, and elevations dated January 22, 2001. ■ Condition 3: That any change in the operational characteristics, hours of operation, expansion in area, or operation characteristics, or other modification to the floor plan, shall require an amendment to the Use Permit or the processing of a new use permit. ■ Condition 4: Should this business be sold or otherwise come under different ownership, any future owners or assignees shall be notified of the conditions of this approval by either the current business owner, property owner or the leasing agent. Future owners, operators or assignees shall submit, within 30 days of transfer or sale of the business or alcohol license, a letter to the Planning Department acknowledging their receipt and acceptance of the limitations and conditions of approval of this Use Permit. ■ Condition 5: 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. ■ Condition 10: The alcoholic beverage outlet is defined as a retail establishment for the sale of general alcoholic beverages for off -site consumption as the primary and principal use of the project site. On -site consumption of alcoholic beverages shall be accessory and subordinate to the principal retail use and alcoholic beverages sales for on -site consumption shall not exceed 20% of gross sales for the business. The applicant or operator shall maintain adequate records to determine compliance with this condition and shall provide the City said records when requested. The time Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 5 period for the purposes of conducting this review shall be in accordance with Alcoholic Beverage Control Board standards. Condition 11: The sale of distilled spirits for off -site consumption shall not exceed 15% of gross receipts of all off -site alcohol sales. The sale of distilled spirits for on -site consumption shall not exceed 10% of the total sales for on- site consumption of all alcoholic beverages. The applicant or operator shall maintain adequate records to determine compliance with this condition and shall provide the City said records when requested. The time period for the purposes of conducting this review shall be 6 months. Condition 12: Gross receipts shall be reviewed by the City for purposes of compliance with the requirements of the Zoning Code and Use Permit if the use is believed to be operating in non - compliance. If the sales percentages review finds that the applicant is not in compliance, this application shall be brought forward to the Planning Commission for review. ■ Condition 13: Approval does not permit the premises to operate as an eating and drinking establishment, restaurant, bar, tavern, cocktail lounge or night club as defined by the Municipal Code, unless the Planning Commission first approves a Use Permit. Condition 14: The interior area authorized for on -site alcoholic beverage consumption in conjunction with a Type 47 license shall be limited to 1,263 sq. ft. as delineated on the approved floor plans as "Unit A2" with a maximum of 29 seats. The interior area authorized for the retail sales for general alcoholic beverages for off -site consumption shall be limited to 1,328 sq. ft. as delineated on the approved floor plans as "Unit Al" with a maximum of 3 seats. On -site consumption of alcoholic beverages shall be prohibited in Unit Al. Substantial changes to the floor plans shall require prior approval by the Planning Commission. Any increase in area of either Unit Al or Unit A2 shall be deemed substantial for the purposes of requiring review by the Planning Commission. • Condition 15: Hours of operation shall be from 10:00 a.m. to 11:00 p.m. daily for the retail portion of the project, and 1:00 p.m. to 12:00 midnight Fridays and Saturdays and 1:00 p.m. to 11:00 p.m. Sunday through Thursday for the eating and drinking portion of the project. Organized educational seminars shall not be conducted more than 3 days per week. Condition 16: Live entertainment may occur subject to the approval of a Live Entertainment Permit and dancing is prohibited. Live entertainment shall not occur more than 3 days per week. Music shall be limited to indoor areas only and all windows and doors shall remain closed during performances, except for incidental ingress and egress of patrons. Management of the business shall make every effort to keep the doors closed during performances. 1 Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 6 ■ Condition 18: A Special Events Permit is required for any event or promotional activity outside the normal operational characteristics of this retail business that would increase the expected occupancy beyond 29 patrons and 6 employees at any one time or any other activities as specified in the Newport Beach Municipal Code to require such special events permit. ■ Condition 20: The alcoholic beverage outlet operator shall take reasonable steps to discourage and correct objectionable conditions that constitute a nuisance in parking areas, sidewalks, and areas surrounding the alcoholic beverage outlet and adjacent properties during business hours, if directly related to the patrons of the subject alcoholic beverage outlet. 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 23: Loitering, open container, and other signs specified by the Alcoholic Beverage Control Act shall be posted as required by the State Department of ABC. The November 7, 2002 staff report, meeting minutes, Resolution 1579 adopting Amended Use Permit No. 2001 -005 are attached hereto as Exhibit 4. Newport Beach Police Department, Code Enforcement and Planning Investigation In January 2007, the Newport Beach Police Department received a verbal complaint that Sejour was operating as a club for dancing and entertainment on Friday and Saturday nights. A subsequent inspection by the Newport Beach Police Department revealed that on April 15, 2007, Sejour had placed a wooden fence over most of the sidewalk adjacent to Via Oporto for the purpose of creating a smoking area. Sejour had also placed chairs and tables in the fenced area. A Newport Beach Police Officer contacted the manager and asked her if she had modified the Use Permit to increase the size of the establishment. The manager replied that the Use Permit had not been amended and she was instructed to remove the fence. (See, Exhibit 6.) On April 19, 2007, the Newport Beach Police Department inspected the property and observed that the front entrance /exit, located off of Via Lido, was roped off to accommodate a line. The roped off area extended past Sejour and blocked off half of the public sidewalk. Officers also observed that there was a fenced off patio area along Via Oporto. The fence was approximately 4 feet high, 10 feet wide, and 35 feet long, which completely blocked access to the public sidewalk. The doors on the side facing Via Oporto had two doors that were open all night, the front door was open all night and the kitchen door was open most of the night. Officers also observed that music was playing and could be heard through the open doors. At 9:00 p.m., when the disc jockey began playing music, the music got n Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 7 measurably louder and more intense. In fact, officers were able to hear the music and the disc jockey from the City Hall parking lot. Upon entering the establishment, the officers observed that there were five rooms in the establishment. The room immediately to the left (Floor Plan Unit A -1 — Retail Sales on Exhibit 5) had a bar area with beer, soda and an assortment of wine. There were approximately ten patrons inside this room eating dinner. The room to the right (Floor Plan Unit A -1 — Exist Sales on Exhibit 5) was occupied by four patrons who were eating and drinking. The other rooms, except for Unit A -2, had couches and coffee tables. These rooms were unoccupied. The rear bar (Unit A -2 on Exhibit 5) had approximately 15 people and 2 bartenders at the bar. The bar appeared to be a 'full bar' with an assortment of beer, liquor and wine. The officers who conducted the investigation of the interior of the establishment then requested to have dinner and were provided with full menus. The menus included four (4) soups, six (6) salads, nine (9) appetizers, six (6) sandwiches, twelve (12) entrees and seven (7) sides. The server asked if the officers wanted a drink and said that they have beers for sale including Amstel Light, Heineken, Coors Light, Corona, Corona Light and Stella Artois. The officers ordered a meal and were served beer (Corona and Stella Artois), filet mignon, calamari and cake. During their investigation, officers also observed approximately 4 to 5 people dancing in Unit A -1 and at least 7 to 10 people dancing in Unit A -2. The officers asked a server if "bottle service," which is a term used to describe a VIP area where people pay for a bottle of liquor as well as a place to sit and additional attention from servers, was available and were told by the server that bottle service was available. The officers asked how much and were told the cost, "it's $275 plus tax." When the officers left at 12:15 a.m. on April 20, 2007, Sejour was still open for business and the disc jockey was still playing music. A copy of the police reports related to the April 19 -20, 2007 investigation is attached hereto as Exhibit 7. On April 28, 2007, the Newport Beach Police Department inspected the exterior of the property and noted that the white wooden fence covering the sidewalk adjacent to Via Oporto was present and that 20 to 30 people were standing in this area. (See, Exhibit 8.) Based on reported observations by the Police Department on May 1, 2007, Code Enforcement Officer Charles Spence determined that Sejour was operating in violation of Conditions 3, 4, 10, 13, 14, 15, 17, 18 and 22 and issued, Ms. Carolyn Stockton and Sejour, Administrative Citation 12007 -0395. This citation was not appealed by Ms. Stockton or Sejour. A copy of Administrative Citation 12007 -0395 is attached hereto as Exhibit 9. On May 4, 2007, the City's Planning Department informed Mr. Arthur Stockton via correspondence that the Planning Department had received a copy of Administrative Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 8 Citation No. 12007 -0395 and requested Sejour's gross receipts for review pursuant to Use Permit Condition No. 12. A copy of the May 4, 2007 correspondence is attached hereto as Exhibit 10. On May 4, 2007, an inspection of the interior of the property was performed by Code Enforcement. In the entrance, Code Enforcement Officers observed couches, tables and chairs. In Unit A -1, Code Enforcement Officers observed a small bar that had wine and soft drinks as well as tables, couches, chairs and booths. In the room directly after the entrance, Code Enforcement Officers observed additional couches, tables and chairs. In a small room near the bathroom, additional couches and chairs were observed. A copy of the photographs from the inspection is attached hereto as Exhibit 11. On May 10, 2007, Mr. Stockton responded to the May 4, 2007 correspondence. In the correspondence, Mr. Stockton admitted that the use of the property was a combination of restaurant, bar and lounge. He also noted that the Use Permit, as currently written, would prohibit Sejour from successfully operating and that he could not comply with the conditions as written. (See, Exhibit 12) In regards to the sales for the past 12 months ending May 30, 2007, Mr. Stockton admitted that total sales were $730,871 and that the sales components break down as follows: 41% food, 36% wine /champagne, 17% cordials /liquor and 6% beer. On -site sales were 78% of the total and retail sales were 22 %. The off -site sales ratios as to food, wine, liquor and beer were 48% food and 52% wine /champagne (no off -site sale of beer or hard alcohol). While the percentages are difficult to follow, based on Mr. Stockton's own admissions over 40% of his business comes from the sale and consumption of alcohol on -site (i.e. 17% cordials /liquor (only on -site sales), 6% beer (only on site sales) 17.28% wine /champagne (i.e. 36% of total sales wine /champagne multiplied times 48% sold for on -site consumption). (No documentation was submitted by Mr. Stockton to verify these percentages.) Mr. Stockton also admitted in his correspondence that it is virtually impossible for him to comply with the terms of the Use Permit because of the retail sales requirement. In fact, in the 19 months preceding the May 10, 2007 correspondence, Mr. Stockton admitted that less than $10,000 had been generated by walk -in consumer retail purchases. Further, Mr. Stockton admitted that most of the retail component was comprised of off -site events, such as corporate parties. Mr. Stockton also admitted in his correspondence that he was using Unit A -1 for the purpose of serving alcohol and food. In conclusion, Mr. Stockton asked for clarification regarding the terms and conditions of the Use Permit and noted that he would like to explore appropriate amendments to the Use Permit. A copy of the May 10, 2007 correspondence is attached hereto as Exhibit 12. 1b Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 9 On May 14,2007, the Planning Department issued a letter requesting submittal of a use permit application for the new use as a bar or cocktail lounge or that Sejour operate within the current conditions of the existing Use Permit. No application for an amendment to the Use Permit has been received to date. A copy of the May 14, 2007 correspondence is attached hereto as Exhibit 13. On May 26, 2007, the Newport Beach Police Department conducted an investigation of the establishment and determined there were approximately 35 people in Unit A -2 and approximately 15 -25 patrons in Unit A -1. Many people in Unit A -1 were consuming alcoholic beverages, including one table that had a bottle of vodka that they were sharing. The officer contacted the manager, Simone Miranda, and explained that he was concerned because Sejour was not complying with the terms of the Use Permit. Ms. Miranda informed the officer that she was not aware of the Use Permit restrictions and was never told that alcoholic beverages could not be consumed in Unit A -1. The Officer then issued Administrative Citation No. 11686 for violation of Condition No. 14 of the Use Permit. This citation was not appealed by Sejour or Ms. Miranda. A copy of Administrative Citation No. 1168B is attached hereto as Exhibit 14. On November 9, 2007, another inspection was performed to determine whether Sejour was complying with the terms of the Use Permit. During the inspection the officers noted that alcohol was available via waiter service in Unit A -1 and throughout the establishment. Very loud music was playing from two very large speakers in the area known as Unit A -1. There were also two large booths capable of holding 10 -12 peple installed in Unit Al. At about 9:30 p.m., the officers asked if they could eat and the waiter, Kyle, stated "Sure, go ahead, sit anywhere you want. I'll get you a menu, it's new." The officers elected to sit in the area designated on the floor plan as "exist/sales" between Unit A -1 and A -2. The officers ordered a filet and a tri -tip platter. The officers also observed that "bottle service" was occurring in the area located just off Unit A -2, near the bar in a small room. Kyle advised that bottle service could be had anywhere in the business and there was no menu for that. The price for bottle service was $300 for a bottle of "Grey Goose" vodka, while anything else was $250. The patrons having bottle service (Grey Goose) in the small room did not appear to be assigned a waiter who would be responsible for the party. Officers observed several patrons in the approximate party of ten pouring their own drinks. At approximately 10:30 p.m., Unit A -1 was quite crowded and the table booths were full. Dancing was occurring in this section and the music was maintained at a high level. At approximately 11:00 p.m., the officers observed that there were approximately 45 people in Unit A -1 and approximately 125 other patrons throughout the establishment. In addition, there were approximately 20 people outside the establishment smoking cigarettes. A copy of the police report related to the November 9, 2007 investigation is attached hereto as Exhibit 15. k` Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 10 On November 13, 2007, the Planning Department again issued a request for records to determine compliance with conditions of Use. Permit No. 2001 -005. The Planning Department requested that the records be submitted by December 13, 2007. A copy of the November 13, 2007 correspondence is attached hereto as Exhibit 16. On November 30, 2007, another inspection of Sejour was performed. Officers inspecting the establishment observed that all areas of the establishment were being utilized. A private party was ongoing in the area of the business identified as Unit A -1 and there were approximately 4 tables set up in the middle of the room. Waiters were delivering drink orders to Unit A -1 and it was obvious food had been served as there were several uncleared plates on numerous tables. At approximately 10:00 p.m., the officers ordered dinner which consisted of beef skewers, a grilled chicken paninni sandwich and grilled chicken breast. A rough count of the number of patrons was conducted and the officers determined there were 150 to 160 patrons in the establishment. No ABC postings or maximum occupancy postings were observed by the officers. While there was no obvious dance floor, as previously observed, patrons were dancing throughout the establishment. All areas of the establishment were open throughout the evening and alcohol was served to one of the officers at 12:25 p.m. At 12:35 p.m. a last call for alcohol was announced by the disc jockey. The business remained open until approximately 1:00 a.m. As the officers left, music from the establishment could be heard outside of the business. A copy of the police report related to the November 30, 2007 investigation is attached hereto as Exhibit 17. On December 12, 2007, Mr. Stockton informed the City that he had elected to sell Sejour and asked whether he could allow the new owner to submit records and resolve the other issues related to the business. In the correspondence, Mr. Stockton claimed that he had been operating the business in substantial conformance with the Use Permit. A copy of the December 12, 2007 e-mail is attached hereto as Exhibit 19. In response, on December 12, 2007 the Planning Department sent a letter to Mr. Stockton noting the violations at the property and noting that the documents related to gross sales requested on May 4 and November 13, 2007 had not been provided. A copy of the December 12, 2007 correspondence is attached hereto as Exhibit 20. On December 26, 2007, Mr. Stockton notified the City that Sejour was now closed because operation of the business was dependent upon their operation as a bar and restaurant as they bargained for in their lease. A copy of the December 26, 2007 e-mail is attached hereto as Exhibit 21. Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 11 DISCUSSION At the time the Use Permit was approved in 2002, the City applied a standard requirement that should the operational characteristics of the establishment change, including hours of operation, an amendment to the Use Permit or the processing of a new use permit would be required (Condition 4). Based on the minutes, the Planning Commission's intent when approving Use Permit 2001 -005 was to approve the establishment as a retail wine shop with wine tasting seminars. The current establishment does not operate as a retail establishment at all; rather, it operates as an eating and drinking establishment, restaurant, bar, cocktail lounge and /or night club. 1. Is Sejour Violating the Requirements Which Limit the Overall Sale of Alcohol? Condition 10 reads: The alcoholic beverage outlet is defined as a retail establishment for the sale of general alcoholic beverages for off -site consumption as the primary and principal use of the project site. On -site consumption of alcoholic beverages shall be accessory and subordinate to the principal retail use and alcoholic beverages sales for on -site consumption shall not exceed 20 percent of gross sales for the business. The applicant or operator shall maintain adequate records to determine compliance with this condition and shall provide the City said records when requested. The time period for the purposes of conducting this review shall be in accordance with Alcoholic Beverage Control Board standards. The authorized primary use of the establishment is retail which requires on -site sales not exceed 20% of gross sales. To determine compliance with this condition, the City needs to be able to review the operator's gross receipts. On May 4 (Exhibit 10) and November 13, 2007 (Exhibit 16), the Planning Department issued formal notices requesting Sejour's gross receipt records required by the Use Permit to be maintained by the operator. To date these records have not been provided in violation of Condition 10. While Sejour has refused to produce these records, it is evident from the overall operation of the business and Mr. Stockton's admissions in his May 10, 2007 correspondence that Sejour is not complying with the terms of the Use Permit. Specifically, in his May 10, 2007 correspondence, Mr. Stockton admits that for the past year over 40% of his gross sales were related to on -site alcohol consumption. In addition, the operation of the business, based on police officer observations, indicates that the vast majority of the gross sales are derived from alcohol sales. 0 Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 12 Condition 11 reads: The sale of distilled spirits for off -site consumption shall not exceed 15% of gross receipts of all off -site alcohol sales. The sale of distilled spirits for on -site consumption shall not exceed 10% of the total sales for on -site consumption of all alcoholic beverages. The applicant or operator shall maintain adequate records to determine compliance with this condition and shall provide the City said records when requested. The time period for the purposes of conducting this review shall be 6 months. As with Condition 10, to determine compliance with this condition, the City needs to be able to review the operator's gross receipts. As noted above, these records were requested on May 4 and November 13, 2007. To date these records have not been provided in violation of Condition 11. While Sejour has refused to produce these records, it is evident from the overall operation of the business and Mr. Stockton's admissions in his May 10, 2007 correspondence that Sejour is not complying with the terms of the Use Permit. Specifically, in his May 10, 2007 correspondence, Mr. Stockton admits that for the past year 17% of his gross sales were related to on -site consumption of hard alcohol. In addition, the operation of the business, based on police officer observations, indicates that the vast majority of the gross sales are derived from the sale of hard alcohol. Condition 12 reads: Gross receipts shall be reviewed by the City for purposes of compliance with the requirements of the Zoning Code and Use Permit if the use is believed to be operating in non - compliance. If the sales percentages review finds that the applicant is not in compliance, this application shall be brought forward to the Planning Commission for review. Based on the citations issued to Sejour and the overall operation of the business, there is sufficient evidence to find that Sejour is not complying with the terms and conditions of the Zoning Code and the Use Permit. Based thereon, gross receipt records were requested on May 4 and November 13, 2007. However, Sejour has refused to produce its gross receipt records in violation of Condition 12. 2. Is Sejour Operating as an Eating Establishment, Bar or Night Club? The City authorized a "retail establishment" for the sale of general alcoholic beverages for off -site consumption as the primary and principal use with the authorized on -site consumption of alcoholic beverages as an accessory and subordinate use to the principal retail use. Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 13 Condition 13 reads: Approval does not permit the premises to operate as an eating and drinking establishment, restaurant, bar, tavern, cocktail lounge or night club as defined by the Municipal Code, unless the Planning Commission first approves a Use Permit. Municipal Code Section 20.050.050(L) defines a retail food and beverage operation as being an establishment where 20% or less of the transactions is sales of prepared food for on -site consumption. If sales exceed 20 %, the operation must be classified as a catering service or eating and drinking establishment. Based on Mr. Stockton's own admissions in his letter dated May 10, 2007, the sales for on -site consumption of alcohol and food exceed the 20% limit. In addition, the Police Department reports indicate this establishment is not operating as a wine tasting bar, but instead operating like a nightclub, cocktail lounge or bar with full food service available. On April 19, 2007, plain clothes officers indicated that loud disc jockey house music started at 9:00 p.m. The volume of the music was such that an officer reported hearing it clearly from the City Hall's parking lot. The officers reported that their identifications were checked at the door before entering the establishment around 9:15 p.m. and that "bottle service" was offered at $275 a bottle. "Bottle Service" is a term frequently used to describe a V.I.P. area where people pay for a bottle of liquor as well as a place to sit and receive additional attention from the servers. (See, Exhibit 7.) On Friday night, November 9, 2007, the Police Department reports more of the same conditions and activities occurring at Sejour as were occurring during their April 19, 2007 visit. In the retail portion of the establishment, Unit A -1, officers reported that two large booths were situated in the room and could sit approximately 10 to 12 people each. Use Permit Condition 14 specifically prohibits more than 3 seats in this portion of the establishment. Condition 14 also prohibits on -site consumption of alcohol in Unit A- 1. As the night went on, this room became crowded with patrons dancing in the center of the room to the loud music provided by the disc jockey. The server stated to the officers that the center of the room (Unit A -1) is specifically kept clear for use as the dance floor. Servers were observed taking sales orders for, and serving alcoholic beverages to, patrons in this room throughout the evening. The officers were provided menus at this visit and ordered full meals. (See, Exhibit 15.) On November 28, 2007, Code Enforcement conducted an announced inspection of Sejour at the permission of the owner Arthur Stockton. At this inspection, Mr. Stockton stated his normal operating hours are from 5:00 p.m. to 12:00 a.m. The opening hour of 5:00 p.m. is not a normal hour for a retail establishment to open, rather, more typical of a restaurant or bar operation. (See, Exhibit 18.) t5 Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 14 On the evening of November 30, 2007, the plain clothes police officers conducted a follow up investigation into the operations at Sejour. The officers arrived at a later time in the evening at approximately 9:30 p.m. A full dinner menu was available. The officers were able to order appetizers, dinner entrees and drinks. The officers reported that the music played by the disc jockey was so loud they could not easily carry on a conversation and the establishment was quickly crowded with at least 150 patrons. (See, Exhibit 17.) Based on the evidence, the operation is not being operated for the permitted use of retail sales. Rather, the business is being operated as an eating or drinking establishment and bar /lounge. Specifically, Municipal Code Section 20.05.050(K) defines an eating and drinking establishment as a "businesses with the principal purpose to serve prepared food or beverages for consumption on or off the premises." Bars and cocktail lounges are further defined 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." 3. Is Sejour Operating in Violation of Permitted Occupancy Levels and Serving Alcohol in Unit A -1? In regards to occupancy, Condition 14 reads: The interior area authorized for on -site alcoholic beverage consumption in conjunction with a Type 47 license shall be limited to 1,263 sq. ft. as delineated on the approved floor plans as "Unit A2" with a maximum of 29 seats. The interior area authorized for the retail sales for general alcoholic beverages for off - site consumption shall be limited to 1,328 sq. ft. as delineated on the approved floor plans as 'Unit Al" with a maximum of 3 seats. On -site consumption of alcoholic beverages shall be prohibited in Unit Al. Substantial changes to the floor plans shall require prior approval by the Planning Commission. Any increase in area of either Unit Al or Unit A2 shall be deemed substantial for the purposes of requiring review by the Planning Commission. In addition to the requirements in the Use Permit, there is an overall occupant load for the property. Specifically, the Fire Department has confirmed the following occupancy load conditions: Using the original retail sales basis for determining the occupancy load based upon 1 person for each 30 square feet, Unit A -1 has an aggregate permitted occupancy load of thirty -three (33) persons. Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 15 The occupancy load factor for a drinking establishment is 1 person for each 15 square feet. Using a drinking establishment basis, the same aggregate area could have a permitted occupancy load of 66. For both drinking and retail sales, an occupancy load of 50 or more requires two exits. Unit A -1 does indeed have two exits and the exits are properly spaced. Unit A -2 has a drinking establishment occupancy load of 29 persons based upon fixed seating. If Unit A -2 were used as a stand alone unit, its exiting would be adequate. However, when both Units A -1 and A -2 are used together the building code requires them to be considered as a single area for exiting purposes. The combined occupant load of both Units A -1 and A -2 when used as a drinking establishment is 95. Because the total combined occupancy load of both units exceeds 50, the occupants of Unit A -2 must have access to a second exit. The second exit must be spaced a distance from the first exit equal to % of the maximum diagonal distance of the area. Additionally, access to the second exit may be through only one intervening room. In Unit A -2's case neither of these conditions is found; the distance to the second exit is greater than Yz the diagonal distance and the occupants will be required to travel through three intervening rooms. Therefore, it can not be used in conjunction with Unit A -1 as a single occupancy. As set forth above, Unit A -1 is the retail portion of the establishment while the main bar is located in Unit A -2. A copy of the floor plan is attached hereto as Exhibit 5. On Friday, November 9, 2007, the Police Department reported that by 10:30 p.m. Unit A -1 was crowded with dancing patrons and the two booths were full. At approximately 11:00 p.m., the officers observed that there were approximately 45 people in Unit A -1 and approximately 125 other patrons throughout the establishment. In addition, there were approximately 20 people outside the establishment smoking cigarettes. (See, Exhibit 15.) On Friday night, November 30, 2007, the plain clothes officers conducted a follow up investigation of the activities at Sejour. The officers report that by 11:30 p.m. there were approximately 150 to 160 patrons at Sejour and that is was very difficult to walk through the establishment. The officers were unable to locate a door host or any other employee keeping a record of the number of patrons. There was no clear area set aside for a dance floor as there was on the previous visit; instead, patrons were dancing throughout the establishment. (See, Exhibit 17.) Newport Beach Police Department reports indicate that both Units A -1 and A -2 are frequently used together and that the combined occupancy loads have been found to be far in excess of 50 people, there by creating not only an unsafe condition but also a condition that is prohibited by the California Building Code. Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 16 In addition, Newport Beach Police Department reports indicate that the overall occupancy of the establishment exceeds the limits set forth in the Use Permit. Furthermore, officers have documented that alcohol sales are occurring in Unit A -1 in violation of Condition 14 on April 14 and November 9 and 30, 2007. 4. Is Sejour Operating in Compliance with Permitted Hours of Operation? Condition 15 reads: Hours of operation shall be from 10:00 a.m. to 11:00 p.m., daily for the retail portion of the project, and 1:00 p.m. to 12:00 midnight Fridays and Saturdays and 1:00 p.m. to 11:00 p.m. Sunday through Thursday for the eating and drinking portion of the project. Organized educational seminars shall not be conducted more than 3 days per week. Officers have reported on a number of occasions that Sejour is not operating within their permitted hours of operation set by the Use Permit and their ABC License. During the April 19 -20, 2007 inspection the officers noted that when they left at 12:15 a.m. on April 20, 2007, Sejour was still open for business and the disc jockey was still playing music. (See, Exhibit 7.) On May 14, 2007, the Senior Planner Patrick Alford provided a letter to Arthur Stockton explaining that the City will consider Sejour in compliance with their hours of operation if at the specified closing time (11 p.m. or 12 midnight) no additional patrons were admitted and no additional food and beverage orders were taken and served. Planning indicated the interpretation is intended to allow patrons who were admitted and served prior to the specified closing time to finish their food and drinks. (See, Exhibit 13.) After the City's May 14th letter, the operators of Sejour continued to violate the Use Permit "hours of operation" condition and the underlying ABC license condition which only allows sales and service of alcohol until midnight on Friday and Saturday nights. Specifically, on Friday, November 30, 2007, the Police Department conducted a plain clothes investigation into complaints of Conditional Use Permit violations at Sejour. To document compliance with the hours of operation and the underlying compliance with ABC license regulations, the officers proceeded to order alcoholic beverages after 12:00 midnight. They reported that they ordered a cocktail and a glass of wine at 12:25 a.m. and were subsequently served. Further, the disc jockey was still playing music and did not announce "last call" until 12:35 a.m. All areas of the establishment reportedly remained open until 1:00 a.m. (See, Exhibit 17.) Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 17 5. Is Sejour Complying with Special Event Permit Requirements? Condition 18 reads: A Special Events Permit is required for any event or promotional activity outside the normal operational characteristics of this retail business that would increase the expected occupancy beyond 29 patrons and 6 employees at any one time or any other activities as specified in the Newport Beach Municipal Code to require such special events permit. The "normal operational characteristics" of a retail establishment, more specifically a retail wine shop offering wine tasting, would not typically include late night disc jockey music, dancing, V.I.P. bottle service, and crowds of patrons in excess of 100 people. Police Department investigations reveal that the occupancy levels within Sejour are well beyond the Use Permit condition requiring a Special Events Permit for patron occupancy above 29. On Friday, November 9, 2007, officers counted approximately 170 patrons in the establishment at 11:00 p.m. On Friday, November 30, 2007, occupancy was reported at approximately 150 patrons. Sejour did not file applications for Special Event Permits for either date. (See, Exhibits 15, 17) 6. Is the Noise Generated by Live Entertainment Exceeding Noise Standards? Although the City has not actually measured the decibel levels of the music emanating from Sejour, reports indicate that the noise levels of the live entertainment provided by the disc jockey was so loud that officers could hear the music clearly outside the establishment and as far away as several blocks from the establishment. No speck noise complaints have been recorded by the City against Sejour. This is probably due to the fact that the immediate vicinity is for commercial use; there are no nearby residential properties. Condition 16 states in part that all windows and doors shall remain closed during performances except for incidental ingress and egress of patrons. Further, Condition 33 states in part that the operator of the restaurant facility shall be responsible for the control of noise generated by the subject facility. The noise generated by the use shall comply with the provisions of Chapter 10.26 of the Newport Beach Municipal Code. Additionally, Condition 34 reads upon evidence that noise generated by the project exceeds the noise standards established by Chapter 20.26 (Community Noise Control) of the Municipal Code, the Planning Director may require that the applicant or successor retain a qualified engineer specializing in noise/acoustics to monitor the sound generated by the restaurant facility to develop a set of corrective measures necessary in order to insure compliance. On April 19 -20, 2007, officers observed that music was playing and could be heard through the open doors. At 9:00 p.m., when the disc jockey began playing music, the Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 18 music got measurably louder and more intense. In fact, officers were able to hear the music and the disc jockey from the City Hall parking lot. (See, Exhibit 7.) 7. Is Sejour Allowing Dancing in Violation of the Use Permit and ABC license? Condition 16 provides that: Live entertainment may occur subject to the approval of a Live Entertainment Permit and dancing is prohibited. Live entertainment shall not occur more than 3 days per week. Music shall be limited to indoor areas only and all windows and doors shall remain closed during performances except for incidental ingress and egress of patrons. Management of the business shall make every effort to keep the doors closed during performances. In addition, the ABC License for this facility prohibits dancing. A copy of the ABC License is attached hereto as Exhibit 22. As set forth above, dancing is prohibited at this establishment. Officers have observed dancing on several inspections at this establishment including dancing on April 19, November 9 and 30, 2007. In addition, on November 9, 2007, a server informed officers that a portion of Unit A -1 is specifically kept clear for dancing. (See, Exhibits 7, 15,17) 8. Is Sejour Complying with ABC Regulations? Condition 23 provides that: Loitering, open container, and other signs specified by the Alcoholic Beverage Control Act shall be posted as required by the State Department of ABC. Based on the observation of the officers on November 30, 2007, no ABC signs were posted at this establishment in violation of Condition 23. (See, Exhibit 17) 9. Has Sejour Changed the Floor Plan Without Approval? Condition 1 provides that: The development shall be in substantial conformance with the approved plot plan, floor plan, and elevations dated January 22, 2001. Condition 3 provides that: Any change in the operational characteristics, hours of operation, expansion in area, or operation characteristics, or other modification to the floor plan, shall require an amendment to the Use Permit or the processing of a new Use Permit. P Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 19 Significant changes to the floor plan have been made without approval by the Planning Commission. Specifically, on April 19, 2007, the Newport Beach Police Department inspected the property and observed that there was a fenced off patio area along Via Oporto. The fence was approximately 4 feet high, 10 feet wide, and 35 feet long, which completely blocked access to the public sidewalk. In addition, upon entering the establishment, the officers observed that there were five rooms in the establishment (See, Exhibit 7). The room immediately to the left (Floor Plan Unit A -1 — Retail Sales on Exhibit 5) had a bar area with beer, soda and an assortment of wine. On April 28, 2007, the Newport Beach Police Department inspected the exterior of the property and noted that the white wooden fence covering the sidewalk adjacent to Via Oporto was present and that 20 to 30 persons were standing in this area. (See, Exhibit 8.) On May 4, 2007, an inspection of the interior of the property was performed by Code Enforcement. In the entrance, Code Enforcement Officers observed couches, tables and chairs. In Unit A -1, Code Enforcement Officers observed a small bar that had wine and soft drinks as well as tables, couches, chairs and booths. In the room directly after the entrance, Code Enforcement Officers observed additional couches, tables and chairs. In a small room near the bathroom, additional couches and chairs were observed. A copy of the photographs from the inspection is attached hereto as Exhibit 11. On November 9, 2007, another inspection was performed. During the inspection the officers noted that there were also two large booths capable of holding 10 -12 people installed in Unit Al. (See, Exhibit 15.) On November 30, 2007, another inspection of Sejour was performed. Officers inspecting the establishment observed that there were booths and tables in Unit A -1. (See, Exhibit 17.) 10. Did Sejour Acknowledge Receipt of the Use Permit? Condition 4 provides that: Should this business be sold or otherwise come under different ownership, any future owners or assignees shall be notified of the conditions of this approval by either the current business owner, property owner or the leasing agent. Future owners, operators or assignees shall submit, within 30 days of transfer or sale of the business or alcohol license, a letter to the Planning Department acknowledging their receipt and acceptance of the limitations and conditions of approval of this Use Permit. Despite the fact that Sejour has operated the business at this location since November 2005, to date, Sejour has not submitted a letter to the Planning Department acknowledging their receipt and acceptance of the limitations and conditions of approval �0 Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 20 of this Use Permit. In fact, on May 26, when the officer contacted the manager, Simone Miranda, and explained that he was concerned because Sejour was not complying with the terms of the Use Permit, Ms. Miranda informed the officer that she was not aware of the Use Permit restrictions and was never told that alcoholic beverages could not be consumed in Unit A -1. (See, Exhibit 14.) Similarly, in Mr. Stockton's May 10, 2007 correspondence, he admits he was not aware of the conditions related to the use of the property. (See, Exhibit 12.) 11. Is Sejour Violating the Law? Condition 5 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. In addition, there are documented violations of the Building Code and ABC Regulations at the property. Furthermore, Sejour's blocking of the sidewalk during April 2007 is a violation of Municipal Code Section 10.50.020. Sejour has been issued two citations for violations of the Municipal Code and these citations were not appealed and are now final. (Exhibits 9, 14.) CONCLUSION A use permit is a discretionary permit and may be revoked. The terms and conditions of approval of the Use Permit have been continuously violated. Further, the establishment fails to fully comply with all the rules, regulations and orders of the California State Department of Alcoholic Beverage Control. Pursuant to Municipal Section 20.89.060(C) and 20.96.040, the Planning Commission may revoke a use permit for an alcoholic beverage outlet upon making the applicable findings set forth in Section 20.89.060(C). (Municipal Code Sections 20.89.060 and 20.96.040 are attached hereto as Exhibit 24.) The operational characteristics of Sejour and the hours of operation are drastically different from the intended use that was approved by the Planning Commission when approving Use Permit No. 2001 -005. The Operator has been provided 8 months to come into compliance with the Use Permit since the City first put Sejour on notice of the violations of the Use Permit. Since the first formal notice on May 1, 2007, Mr. Stockton has failed to comply with multiple conditions of the Use Permit and has also failed to comply with staff direction in pursuing the proper steps to apply for an amended use permit. ,a- Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 21 Mr. Stockton is aware of the conditions of the Use Permit and admits he is not in compliance with the conditions of the Use Permit. It is staffs' recommendation that the Planning Commission initiate proceedings to revoke Use Permit No. 2001 -005 as amended. 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 were 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: 011, i ;iwi EXHIBITS (in the order they are referenced within the report) 1. Resolution No. 2. Vicinity Map 3. April 5, 2001 Planning Commission Minutes, Staff Report 4. November 7, 2002 Planning Commission Minutes, Staff Report, Resolution 1579 5. Floor Plan 6. April 15, 2007 E -mail from Officer C. Freeman to Detective D. Jones 7. April 19 -20, 2007 Newport Beach Police Report 8. April 28, 2007 E -mail from Officer C. Freeman to Detective D. Jones 9. May 1, 2007 Administrative Citation 10. May 4, 2007 letter from David Lepo, Planning Director to Arthur Stockton 11. May 4, 2007 Code Enforcement Investigation Pictures 12 May 10, 2007 letter from Arthur Stockton to City of Newport Beach 13. May 14, 2007 letter from Patrick Alford, Senior Planner to Arthur Stockton Revocation of Amended Use Permit No. 2001 -005 January 17, 2008 Page 22 14. May 26, 2007 Administrative Citation 15. November 9, 2007 Newport Beach Police Department Report 16. November 13, 2007 letter to Carolyn Stockton from City Attorney's Office 17. November 30, 2007 Newport Beach Police Department Report 18. November 28, 2007 Code Enforcement Inspection 19. December 12, 2007 E -mail from Arthur Stockton to City of Newport Beach 20. December 12, 2007 E -mail from David Lepo, Planning Director to Stockton 21. December 26, 2007 E -mail from Arthur Stockton to City of Newport Beach 22. Sejour, LLC ABC Conditional License, Type 21 & Type 47 23. Notice of Public Nearing 24. NBMC §§ 20.89.060 and 20.96.040 25. January 4, 2008 letter from Dennis & Christine Overstreet to City of Newport Beach FIUSERSIPLMSharedtPA'SIPAS - 20021PA2002- 16712008 -01 -17 PC �k