6-Hour Hearing But No Decision for Hank’s Oyster Bar

by Borderstan.com October 20, 2010 at 12:28 pm 7,638 12 Comments

Hank’s Oyster Bar seeks to expand into the vacant property on the east side of the restaurant, and vacate its Voluntary Agreement or “V.A.” (Luis Gomez Photos)

From Tom Hay

Opening a restaurant in DC is not for the faint of heart these days. In addition to a tight credit market and sky-high rents, a business owner must meet the city’s regulatory requirements and sometimes face residents who may not want another restaurant in the area — especially one with a liquor license.

Even an expansion into an adjacent space may face challenges.

Jamie Leeds, chef and owner of Hank’s Oyster Bar at 1624 Q St. NW, is in such a situation. Since spring Leeds has been facing two obstacles in her desire to expand into an empty storefront: a group of protesting residents and the complicating moves of a citizens association.

Simultaneously, Leeds wants to get out of the Voluntary Agreement (V.A.) under which Hank’s has been operating since its 2005 opening.

In a nutshell, the protesting residents argue that expansion could be bad for the balance of businesses in the area, and threaten the “peace, order and quiet” of the surrounding area.

The protesting residents also argue that a bad precedent could results if Hank’s were allowed to operate without a V.A. – even though a number of other liquor-serving establishments on 17th St. operate without one. The Dupont Circle Citizens Association (DCCA) also opposes the dissolution of the V.A.

Leeds told Borderstan that the major operational restrictions under the V.A. are that Hanks’s must stop serving alcohol two hours before the restaurant’s closing time, and that dinner cannot be served outside one hour before closing time.

In addition to restrictions on hours, the only labeling that can be on the patio umbrellas is “Hank’s Oyster Bar.”

No Decision at Oct. 13 Hearing on V.A.

Despite a nearly six-hour hearing last Wednesday, Oct. 13, before the D.C. Alcoholic Beverage Control (ABC) Board on Hank’s request to terminate its V.A., the hearing ended due to lack of time, without a decision (The separate hearing on the expansion is Wednesday, Nov. 3.)

The parties to the V.A. are a group of six residents, led by David Mallof; DCCA was represented by its president, Robin Diener. All oppose Leeds’ request to dissolve the V.A. None of the six residents live on the 1600 block of Q St. where Hank’s is located.

The hearing adjourned just before 7 pm and the ABC Board has several weeks to rule whether the V.A. will be terminated. Before that decision is reached, it is likely that Leeds will be back in front of the ABC Board for the hearing related to her request to expand into the empty storefront adjacent to her restaurant. The protest hearing will be held Nov. 3 at 1 pm.

Legal Fees and Time

Leeds estimates that since 2005 her business has spent $40,000 to $50,000 in legal fees related to the liquor license, V.A. and plans to expand next door.

“This has overshadowed my life for the last months,” Leeds said.

Leeds said she and her attorney have appeared numerous times before the ABC Board at the U St. offices of the Alcoholic Beverage Regulation Administration (ABRA) on U St.: “Three times for original license, including mediation, and six times so far in connection with V.A. termination and expansion, with hearings upcoming.”

Leeds also appeared twice before ANC 2B in relation to the original liquor license.

What Might Change at Hank’s?

Leeds told Borderstan that if she is able to expand and operate without a V.A. that she would have more business options.

“I would have the ability to increase seating capacity, create a private dining room, possibly open for lunch and have later inside hours,” Leeds said.

Alphabet Soup: V.A., ABC, ABRA

The V.A. is a facet of D.C. regulatory processes by which residents and community organizations may negotiate with a liquor license holder to set mandates that are not part of standard regulations. The restrictions place on Hank’s Oyster Bar are a good example of what goes into a V.A.

The protests (another D.C. regulatory term) against the expansion of Hank’s Oyster Bar, and the termination of the V.A. are being handled as separate cases by the D.C. Alcoholic Beverage Control (ABC) Board. The ABC Board has seven appointees who are nominated by the mayor and approved by the D.C. Council. It hears cases and issues rulings related to liquor-serving establishments. Hearings before the ABC Board typically include the establishment, residents and community organizations. ABRA is the city agency that carries out the Board’s decisions and orders.

To understand how the ABRA protest process works, view their PowerPoint slide show.

Hearing Highlights: An Analysis

Wednesday’s hearing lasted nearly six hours. During discussion of a motion to dismiss the protests, talk focused on the appropriateness standards outlined in the D.C. Code and Municipal Regulations.

Appropriateness includes the effect an establishment will have on property values, peace, order and quiet, parking and pedestrian safety. ABC Board member Mital Gandhi asked DCCA’s Diener if their protest letter addressed these standards. Diener responded that she did not know. This was bad news for DCCA as she was later dismissed as a protestant in the V.A. hearing.

Some time was devoted to whether Leeds and her counsel, veteran D.C. restaurant attorney Andrew Kline, had made a good faith effort to amend the V.A. The prostestants argued that Leeds had no desire to negotiate and sought only termination. In response, however, one ABC Board member pointed out that termination of an agreement is a form of amendment.

At one point, Mallof expressed his belief that citizens are fearful of the entire ABC Board process. In response, Board Chairman Charles Brodsky asked the protestants to consider the fear of investing a million dollars in a business and having to face a community group who doesn’t want you to succeed. Diener replied that a business owner should know the risks involved before investing.

Brodsky then discussed the history of the V.A. and how the agreements were intended as a way to control licensees who frequently violated the regulations. But in recent years, he said, they are used even before a licensee opens. Brodsky said he has a “fundamental disagreement” with the protestants over how the V.A. should be used.

It was after a break for deliberations that the ABC Board voted unanimously to dismiss the DCCA protest. The vote on whether to dismiss the protest by the six residents was split, so their protest proceeded to the testimony stage.

Witness Testimony

Kline, Leeds’ counsel, called three witnesses, including Leeds. In addition, two nearby residents told the Board that Hank’s has brought a better class of restaurant to the area, thus improving the overall quality of life along the 17th St. corridor. They were asked questions from the ABC Board about property values and peace, order and quiet in the neighborhood.

Michael Hibey, acting as attorney for Mallof et al, also called several nearby residents as witnesses. One of Hibey’s witnesses was Abdi Poozesh, who lives at 1620 Q St. NW, and shares a wall with the newly rezoned commercial space into which Leeds would like to expand. Poozesh complimented Hank’s, but stated he will be “crucified” in terms of property values by living next to a restaurant.

Residents’ Testimony

Mallof was next to testify. Early in his statement to the ABC Board, Mallof decried what he alleged was a broken process, and suggested that ABRA could serve residents better by changing the regulations. He also expressed disappointment at what he claimed was a lack of attention to ABC issues by Advisory Neighborhood Commissions (ANCs). During questions from the Board about late night noise along the 17th St. corridor, Mallof admitted that you can’t discern where noise is coming from.

After Mallof was pressed by the ABC Board to quantify precisely how the current V.A. has protected quality of life in the area, he quickly became exasperated and suggested that one Board member (whom he did not identify) might as well come down from the dais and represent “her,” motioning toward Leeds.

At this point, Poozesh threw his hands in the air and abruptly left the hearing room. Brodsky then started questioning provisions of Hank’s V.A., including the requirement that Hank’s install a black wrought-iron tree box guard on Q St. as well as design guidelines for cafe table umbrellas — items that ABRA does not have the authority or desire to monitor.

DCCA Testimony

Despite being dismissed as a protestant earlier in the proceedings, Diener re-entered the proceedings as Hibey’s last witness for the protestants. In her remarks, Diener labeled Hank’s a neighborhood asset, but said that DCCA opposes termination of the V.A. in principle, fearing other V.A.s citywide could be placed on a slippery slope to termination.

Despite seeking to be recognized at the hearing’s outset as a formal protestant, Diener stated in her afternoon testimony that she did not realize her letter in opposition to vacating the V.A. would be considered a formal protest. Chairman Brodsky began questioning Diener on her authority to write the protest letter and speak for the DCCA. ABRA regulations state that community organizations filing protests must first vote on whether to protest a license or V.A. issue. (Click on slide 5 of ABRA’s PowerPoint presentation.)

Diener said she believed she had authority to write the letter and went on to suggest DCCA lacks a procedure in place for such protests. To this, Brodsky rhetorically asked, what keeps you from “going rogue?”

The ABC Board’s judgment is anticipated in the coming weeks.