CITY OF
LONG
April 12, 2022
HONORABLE MAYOR AND CITY COUNCIL
City of Long Beach
California
RECOMMENDATION:
Department of Financial Management
411 West Ocean Boulevard, 6th Floor
(562) 570-6425
C-8
Refer to Hearing Officer the business license application denial appeal by JP23 Hospitality Company located at 110 East Broadway Avenue, Long Beach, CA 90802. (District 1)
DISCUSSION
On March 14, 2022, the Department of Financial Management denied the business license application for JP23 Hospitality Company to operate a restaurant with alcohol establishment at 110 East Broadway Avenue (Attachment A), due to the failure of the business to comply with applicable laws and regulations, pursuant to the following Chapters of the Long Beach Municipal Code (LBMC), Sections 1.32.040, 3.80.210,
5.06.020, 5. 72.11 0(A) and 5. 72.130.
On March 24, 2022, the applicant filed an appeal for the business license application denial (Attachment 8).
Pursuant to LBMC Section 3.80.421.6, an applicant for a business license whose application for such license has been denied by the Director of Financial Management may appeal to the City Council. Whenever it is provided that a hearing shall be heard by the City Council, the City Council may, in its discretion, conduct the hearing itself or refer it to a hearing officer, in accordance with LBMC 2.93.050(A). If the City Council refers the matter to a hearing officer, then staff and the hearing officer will set the hearing date for not less than twenty (20) days nor more than thirty (30) days after the City Council referral.
Such hearing may for good cause be continued by the order of the City Council. Further, Notice of the Hearing shall be sent to the interested parties at least twenty (20) days before the hearing, in accordance with LBMC 2.93.050(8)(1 ). In practice, the City Council decision to refer the matter to a hearing officer means that the hearing would occur anytime from May 2, 2022 through May 12, 2022.
This matter was reviewed by Deputy City Attorney Arturo D. Sanchez on March 28, 2022.
TIMING CONSIDERATIONS
If referred, upon selection of a hearing officer, the matter will be heard not less than ten (10) days nor more than thirty (30) days thereafter.
HONORABLE MAYOR AND CITY COUNCIL
April 12, 2022
FISCAL IMPACT
There is no fiscal or local job impact associated with this item.
SUGGESTED ACTION:
Approve recommendation.
Respectfully submitted,
J<~~- yt/J
KEVIN RIPER
DIRECTOR OF FINANCIAL MANAGEMENT
ATTACHMENT A: DENIAL LETTER
ATTACHMENT B: DENIAL APPEAL LETTER
APPROVED:
THOMAS B. MODICA
CITY MANAGER
ATTACHMENT A
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ATTACHMENT A
March 23, 2022
VIA ELECTRONIC MAIL AND FEDEX
City of Long Beach Business License Division
Attn: Marla Camerino
411 W. Ocean Blvd., 6th Floor
Long Beach, CA 90802
E-Mail: [email protected]
Re: JP23 Hospitality Company, Inc. Notice of Appeal - Denial of Business License Application BU22114159
Dear M
s. Camerino:
This firm is counsel for JP23 Hospitality Company, Inc. (hereinafter, “JP23”). JP23, located at 110 East Broadway Avenue, is a full service restaurant and bar. JP23 employs over 70 people and offers residents and visitors premium dining and nighttime entertainment in an upscale, contemporary space in Long Beach’s vibrant downtown district. This letter will serve as JP23’s Notice of Appeal, pursuant to Long Beach Municipal Code (“LBMC”) Chapter 3.80.421.6, with regard to the City of Long Beach Director of Financial Management Kevin Riper’s (the “Director”) denial of JP23’s Business License Application BU22114159.
The Director’s decision threatens to shut down a thriving and profitable business and put over 70 people out of work. The Director cites a number of alleged permitting violations as grounds for denial of the license. But the Director’s denial fails on two fronts: (1) neither LBMC 3.80.421 nor 5.040.060, which the Director cited for authority to deny JP23’s application, is applicable under these circumstances; and (2) any discretion the Director may have to deny the application is outweighed by the facts favoring issuance of the busine ss license; i.e., the Director’s own unreasonable and unwarranted delays in processing and issuing the applicable permits, JP23’s good faith efforts to cooperate with the Director, and the substantial time and resources JP23 has poured into the business. The denial should be reversed and the business license should be issued.
I. Brief Summary of Facts
JP23’s endeavor to give the City of Long Beach an exceptional establishment dates back to 2018. The City approved the transfer of an Alcoholic Beverage Control (“ABC”) license to JP23. JP23 met with City officials in a predevelopment meeting to discuss the substantial improvements JP23 planned for the premises; including an accessory entertainment space, decks, a commercial kitchen and mezzanine. Further discussed in the predevelopment meeting were JP23’s plans for both dining and entertainment and the proper permitting for each side of the
ATTACHMENT B
busi
ness. JP23 was specifically told that it could operate under a temporary entertainment permit once the buildout was completed, pending issuance of the permanent entertainment permit. In September 2019, plans for the improvements were approved and construction commenced. In March 2020, in the middle of construction, the COVID-19 pandemic brought JP23’s buildout to a sudden halt for nearly a year. However, JP23 persisted through the difficulties and resubmitted new plans for the buildout, which were approved in February 2021. Construction recommenced in March 2021.
On September 16, 2021, JP23 submitted complete applications for a Business License and an Entertainment Permit. All necessary departments signed off on JP23’s temporary certificate of occupancy, and it was issued on October 13, 2021. In anticipation of opening JP23’s restaurant on October 14, 2021, nearly a month after submitting the application, JP23 contacted the Business License Division and was told that an invoice had finally been created for the business license tax.
JP23 logged onto the payment portal as instructed; but was unable to pay using the “E -Account” number provided. After multiple follow ups to the Business License Division, JP23 was finally able to pay the invoice, which posted on October 19, 2021. Meanwhile, despite believing in good faith that JP23 was in compliance, JP23 was cited for operating without a license. JP23 attempted to follow up by telephone multiple times on October 18, 19, 20, 21, and 22 in a good faith effort to get direction from the Business License Division. Not until JP23 was forced to get legal counsel involved did the Business License Division finally respond and agree to set up a meeting for November 3, 2021 (still well over six weeks after the applications were submitted).
At the November 3, 2021 meeting, City officials were unable to give satisfactory explanations about why the business license had not been issued; nor why the application process had been delayed so significantly. Further, JP23 requested a temporary entertainment permit, but inexplicably, the City represented that JP23 did not qualify for one. After the meeting on November 3, 2021. the Business License Division agreed to issue a conditional business license retroactive to the date of JP23’s application, September 16, 2021.
JP23 continued to operate the restaurant side of the business, keeping the lounge side closed pending issuance of the entertainment permit. On January 11, 2022, nearly four months after JP23 submitted the application , JP23 followed up on its application. JP23 emphasized the fact that the Los Angeles area would see an enormous influx of visitors for the Super Bowl on February 13, and JP23 requested assistance via e-mail to the Business License Division in getting the permit approved before then. On January 17, nearly a week later and over four months after JP23 submitted its application, Ms. Tara Mortenson responded simply to say she needed to “check on a few things” and promised to get back to JP23. On January 19, JP23 again followed up via e-mail.
Ms. Mortensen responded simply by saying a meeting would be set.
On January 25, 2022 JP23 attended a meeting via videoconference with City officials. To JP23’s surprise, the City claimed, for the first time , that JP23’s application for a n entertainment permit was “incomplete” due to (1) nonpayment of an invoice for application fees allegedly sent out on October 25, 2021; and (2) nonpayment of an invoice for a business license for allegedly
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nt out on December 17, 2021. Neither invoice was received until Ms. Mortenson sent them via e-mail on January 27, 2022.
Worse still, at the January 25, 2022 meeting, the Director made certain comments to which JP23 took offense. The comments appeared to be directed at JP23’s principal, Jacob Poozhikala, and legal counsel’s, Niral Patel, ethnic background. Enclosed herewith is the declaration of Niral Patel, setting forth the Director’s comments. The comments caused JP23 to question whether the Director could fairly process and make determinations on JP23’s applications.
Regardless, JP23, in further good faith efforts, requested guidance on having entertainment for Super Bowl weekend in light of the City’s position that the application was “incomplete.” Ms.
Mortenson suggested a solution wherein JP23 could apply for a “special events permit.” Ms.
Mortenson specifically told that JP23 could have a 3-day event under the special events permit. In reliance on this information from Ms. Mortenson , JP23 moved forward with applying for the special events permit and booking an artist for Super Bowl weekend, including remitting down payments.
On March 14, 2022, the Director sent a letter to JP23 denying its business license application, “pursuant to the provisions of LBMC Chapters 3.80.421.5 and 5.04.030 . . . because of the Applicant’s repeated failure to comply with applicable laws and ordinances of the City.” Specifically, the Director alleges two instances of noncompliance on 9/17/21 and 9/18/21 for allowing occupancy prior to obtaining a temporary certificate of occupancy (despite the citations being issued weeks before JP23 opened to the public); five from 10/14/21 to 10/21/21 for conducting business without a business license (despite JP23’s business license application being submitted on 9/16/21 and the Director issuing a conditional business license retroactive to that date); and seven from 12/9/21 to 2/12/22 for operating without an entertainment permit (despite the Director failing to issue an entertainment permit within 60 days of JP23’s application as he was required to do).
II. Neither LBMC 3.80.421 Nor 5.040.060 Furnishes the Director With Authority to Deny a Business License Application Under These Circumstances
As set forth in the denial letter, the Director relies on LBMC Chapters 3.80.421.5 and
5.04.030 for authority to deny JP23’s application. However, the Director’s reliance on those chapters is misplaced. Neither chapter furnishes the Director with authority to deny JP23’s application.
LBMC 3.80.421.5 provides as follows:
In the event that a particular department of the City rejects an application for the reason that such business or the location at which
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it
is proposed to conduct the same will not so comply with applicable laws and ordinances, the Director Of Financial Management shall not issue such license.
LBM
C 3.80.421.5 mandates the Director not to issue a license under one condition: that a department rejects an application because the business or the location of the business “will not so comply with applicable laws and ordinances.” (Emphasis Added.) The language of LBMC
3.80.421.5 is forward-looking, not backward-looking. Under LBMC 3.80.421.5, the Director may only deny the application where JP23’s business will not comply with some provision of law. For example, in the event a City department found that JP23’s business was incompatible with its zoning district (i.e., if JP23 tried to open in a residential -only district) , the Director may be authorized to deny JP23’s application under LBMC 3.80.421.5 But neither the Director, nor any other department, made such a finding. Instead, the Director cited past instances of alleged noncompliance as grounds to deny JP23’s application.
In c
iting LBMC 3.80.421, the Director is necessarily making the finding that past instances of alleged noncompliance means that JP23 “will not comply with applicable laws and ordinances.” The Director’s position is absurd, particularly given JP23’s applications on file and good faith efforts to comply:
• Wi
th regard to the alleged noncompliance for allowing occupancy prior to obtaining a temporary certificate of occupancy, JP23 obtained a temporary certificate of occupancy on October 13, 2021.
• With regard to the alleged noncompliance for conducting business prior to obtaining a business license, JP23 applied for a business license on or about September 16, 2021, paid the business license tax after multiple good faith efforts, and obtained a conditional business license retroactive to September 16, 2021. • With regard to the alleged noncompliance for operating without an entertainment permit, JP23 applied for an entertainment permit on or about September 16, 2021, followed up multiple times about approval of the entertainment permit, and, due to the Director’s delays and reticence, inquired about alternative means of compliance via a temporary entertainment permit and a special events permit.
JP
23’s applications for the proper permitting and licensure, as well as its extensive good faith efforts to work with the City, cannot be discounted. The alleged past noncompliance cannot reasonably be used as grounds for a finding that JP23 “ will not so comply with applicable laws and ordinances.” Even if JP23 conceded its noncompliance in the alleged instances the Director cites, it does not follow that JP23 will not comply in the future.
JP23 will comply with all applicable laws and ordinances once its business license is issued. LBMC 3.80.421.5 is inapplicable and does not furnish the director with authority to deny JP23’s application.
ATTACHMENT B
LB
MC 5.04.030 provides as follows:
In
the event that a particular department of the City rejects an application for the reason that such business or the location at which it is proposed to be conducted will not comply with applicable laws and ordinances, no permit shall be issued, and the application shall be denied.
LBMC 5.04.030 applies to applications for a permit under Title 5 of the LBMC; e.g., an entertainment permit application. 5.04.030 is inapplicable to a business license application submitted under LBMC 3.80.420.1. However, even if 5.04.030 had any application to a business license, the language of 5.04.030 is substantially similar to that of LBMC 3.80.421 and functions identically. LBMC 5.04.030 is similarly forward looking in that past noncompliance cannot reasonably be used as grounds for a finding that JP23 “will not so comply with applicable laws and ordinances.” LBMC 5.04.030 is inapplicable and does not furnish the director wit h authority to deny JP23’s application.
III. The Director Did NOT Cite LBMC 3.80.421.1B as Authority to Deny the Application
LBMC 3.80.421.1B provides that during the 180 -day conditional business license period, “the applicant may be rejected for failure to comply with applicable laws and regulations at any time.” Arguably, the Director could have cited 3.80.421.1B for the proposition that the Director has discretion to deny an application for prior instances of noncompliance. But the Director failed to do so.
Even if the Director had cited 3.80.421.1B for authority to deny JP23’s application, it would have been a complete abuse of discretion. It would have ignored the facts surrounding the alleged instances of noncompliance (including the Director’s own delays and misinformation upon which JP23 relied to its detriment); it would have ignored the substantial time and resources JP23 poured into the business; and it would have ignored JP23’s substantial good faith efforts to cooperate with the Director’s office and enjoy a healthy, mutually beneficial relationship with the City of Long Beach.
First, JP23 did not open to the public until October 14, 2021, after issuance its temporary certificate of occupancy on October 13, 2021. On September 17 and 18, 2021 JP23’s doors were closed to the public. At no point before the temporary certificate of occupancy was issued did JP23 allow public occupancy of its premises. There is no factual basis to support the City’s citations for public occupancy prior to a TCO being issued.
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econd, JP23 submitted its application for a business license on or about September 16, 2021. Nearly a month later, the Director’s office finally generated an invoice for the business license tax, which JP23 timely paid. The Director subsequently issued a conditional business license for the period of September 16, 2021 (the date of JP23’s application) to March 15, 2022.
Effectively, JP23 was retroactively approved to operate dating back to September 16, 2021.
Accordingly, the citations for operating without a business license from October 14, 2021 to October 21, 2021 are void and the Director may not reasonably rely on those citations to now deny JP23’s application.
Third, JP23 submitted a complete application for an entertainment permit on or about September 16, 2021. The Director, pursuant to LBMC 5.72.120G, was required to “refer it to all concerned City departments for investigation.” Within 60 days , each department was to file their respective reports and recommendations and the Director was to then transmit the application with the reports and recommendations to the City Council. But instead of following his obligations under the Code, the Director unreasonably and unlawfully delayed processing JP23’s application.
Despite JP23’s multiple good faith follow- ups, JP23 did not learn that the Director deemed the application “incomplete” due to nonpayment of invoices until January 25, 2022, over four months after JP23 submitted its application. However, nonpayment of invoices (which JP23 did not receive until January 27, 2022) is not grounds to fail to process the application under LMBC 5.72.120D.
Indeed, among the enumerated items constituting a complete application in LMBC 5.72.120A, payment of any fees is not one of them. Additionally, the Director’s office’s misinformation with regard to the special events permit, upon which JP23 reasonably relied and booked entertainment to JP23’s detriment, directly resulted in the alleged noncompliance over Super Bowl weekend. It is inexplicable why the Director’s office gave JP23 apparently false information and then refused to make an exception based thereon. Moreover, it is puzzling, at best, why the Director’s office represented to JP23 that it did not qualify for a temporary entertainment permit. JP23 can find no good reason why it would not qualify for a temporary permit under LMBC 5.72.125. Indeed, the Director would have been required under LMBC 5.72.125 to issue a temporary permit and the alleged noncompliance for operating without an entertainment permit would have been avoided entirely.
In sum, JP23 has worked exhaustively to cooperate with the City of Long Beach and the Director’s office over the course of four years, even weathering and persisting through the devastation of t he COVID- 19 pandemic. JP23 has poured millions of dollars into creating an attractive and desirable establishment for the residents and visitors of Long Beach. JP23 has employed over 70 people. The alleged instances of “noncompliance” cited by the Director are either not factually supported or directly resulted from the Director’s own delays, conduct, and representations. The Director’s decision to deny JP23’s business license threatens to result in a complete waste of four years and millions of dollars while putting over 70 people out of work.
Had the Director cited 3.80.421.1B as authority for the Director’s discretion to deny JP23’s application, it would be an unequivocal abuse of that discretion.
ATTACHMENT B
IV. Conclusion
Pursuant to the foregoing, JP23 respectfully requests the City Council overrule and/or modify the Director’s decision in accordance with the Council’s authority under LBMC
3.80.421.6. Further, JP23 respectfully requests that the City set the hearing on this appeal concurrently with a hearing on JP23’s application for an entertainment permit pursuant to LBMC
5.72.120 and approve issuance of said entertainment permit.
This correspondence is intended to give notice of JP23’s appeal and generally set forth the “the decision and the grounds upon which [JP23] deems himself aggrieved thereby” in accordance with LBMC 3.80.421.6. This correspondence shall not be intended to be an exhaustive account of every fact, argument, and/or claim upon which JP23 may rely at the time of the hearing on this appeal. JP23 specifically reserves the right to provide additional facts, evidence, and details in support of its appeal as appropriate.
Respectfully,
MESSNER REEVES LLP
Ethan Reimers
Encl.: Chk #113370 in the amount of $1,398.00 for filing fee.
Declaration of Niral Patel
cc: Kevin Riper via E-mail ([email protected])
Tara Mortenson via E-mail ([email protected]) Art Sanchez via E-mail ([email protected])
Jennifer Harris via E-mail ([email protected]) Niral Patel via E-mail ([email protected]) Client via E-mail
ATTACHMENT B
DECLARATION OF NIRAL PATEL
I, NIRAL PATEL, declare and state as follows:
1. I am an attorney at law duly licensed to practice before all courts in the State of California, and principal of NIRAL PATEL INJURY LAW, former attorney(s) of record of JP23 Hospitality Company for the purpose of obtaining a business license from the City of Long Beach.
2. On January 25, 2022, I attended a meeting with the Department of Financial Management of the City of Long Beach in my capacity as legal representative of JP23 Hospitality Company.
3. In attendance at the meeting were Jacob Poozhikala, owner of JP23 Hospitality Company, Tara Mortenson, Bureau Manager, Kevin Riper, Director of Long Beach Financial Management Department, and Art Sanchez, Deputy City Attorney.
4. During the meeting, Kevin Riper, who was visibly frustrated, commented about how things are done in this country, implying that my self and Jacob Poozhikala were not.
5. I was offended by the statement and felt it had negative racial undertones.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
Executed on this 23rd day of March 2022, at the City of Newport Beach, California.
__________________________
Niral Patel
ATTACHMENT B