HomeMy WebLinkAbout01 REVOKE CUP 98-029 11-18-08• Agenda Item ~
AGENDA REPORT Reviewed:
City Manager
Finance Director NIA
MEETING DATE: NOVEMBER 18, 2008
TO: WILLIAM A. HUSTON, CITY MANAGER
FROM: ELIZABETH A. BINSACK, COMMUNITY DEVELOPMENT DIRECTOR
SUBJECT: REVOCATION OF CUP 98-029 AND LIVE ENTERTAINMENT PERMIT
SUMMARY:
Revocation of Conditional Use Permit 98-029 would invalidate Conditional Use Permit
98-029 which was originally approved on April 19, 1999 for on-site sale and
consumption of beer, wine, and distilled spirits (ABC License Type 47) along with a Live
Entertainment Permit in conjunction with a restaurant located at 14131 Red Hill Avenue.
Over the past several years, the businesses operating at 14131 Red Hill Avenue have
not been operating as a bona fide "restaurant use" as approved and conditioned in
Conditional Use Permit 98-029. The property has been owned by Mr. Larry Smith since
1999 and the business owners of the establishment have included Mr. Smith of Bourbon
Street; Mr. Gregory Fitzgerald of Fitz's Pub and Lounge; and Mr. Matthew Huston of
Roderick's. An investigative report has been prepared (Exhibit A of Attachment I) which
shows that regardless of ownership, business name or restaurant menu, the businesses
at this location have continually violated the conditions of approval for Conditional Use
Permit 98-029, ABC licensing requirements, and State law.
On October 28, 2008, the Planning Commission adopted Resolution No. 4103
recommending that the City Council revoke Conditional Use Permit 98-029 for on-site
sale and consumption of beer, wine, and distilled spirits (ABC License Type 47) and the
Live Entertainment Permit in conjunction with a restaurant located at 14131 Red Hill
Avenue.
RECOMMENDATION:
That the City Council adopt Resolution No. 08-80 revoking Conditional Use Permit 98-
029 for on-site sale and consumption of beer, wine, and distilled spirits (ABC License
Type 47) and the Live Entertainment Permit in conjunction with a restaurant located at
14131 Red Hill Avenue.
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 2
FISCAL IMPACT:
The use located at 14131 Red Hill Avenue has had a significant impact on City resources
which has now cost the City and the general tax payer several thousand dollars over the
past decade.
ENVIRONMENTAL STATUS:
Statutory exemption pursuant to the California Environmental Quality Act (CEQA) Section
15270(b) for projects which are disapproved.
BACKGROUND:
Location
The property is located on Red Hill Avenue just- south of the I-5 Freeway. The tri-level
building is approximately 5,000 square feet and is located within the commercial center
on the southwest corner of Red Hill Avenue and Nisson Road. The site is zoned C-1
Retail Commercial District and the General Plan Land Use Designation is Community
Commercial (Reference Location Map below and in Attachment A).
Surrounding Properties
The building is afree-standing pad located within the Stater Bros. shopping center.
Parking is shared in common with other patrons of the center. Surrounding uses include
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 3
a Stater Bros. grocery store surrounded by a variety of service and retail uses and
restaurants. The surrounding neighborhood includes two apartment complexes directly
northwest of the commercial center and one directly southeast of the commercial
center, across Red Hill Avenue.
Site History
• 1970 -The building was originally built in 1970 and housed restaurants including a
Chuck's Steak House until 1998
• April of 1999 - Mr. Larry Smith of Red Hill Restaurant, Inc. doing business as
Bourbon Street obtained a Conditional Use Permit for the restaurant and a Type 47
On-Sale General Eating Place license issued by the Alcoholic Beverage Control
(ABC)
• June of 2003 -Bourbon Street was purchased by Gregory Mark Fitzgerald
• June of 2004 - Mr. Fitzgerald Incorporated as Fitz's Pub and Lounge and renamed
the business Fitz's Pub and Lounge
• July of 2006 - Mr. Fitzgerald transferred the ABC license and CUP 98-029 to
Matthew Roderick Huston for Roderick's
• September of 2006 Roderick's opened for business
Public Meetings/Hearings
When the application was originally considered in 1999, multiple public meetings and
hearings were held on the application for Conditional Use Permit 98-029 (CUP 98-029).
The application was filed by the property owner, Larry Smith, of Red Hill Restaurant,
Inc., in 1998 to allow on-site sale and consumption of beer, wine, and distilled spirits
(ABC License Type 47) and live entertainment in conjunction with a restaurant called
Bourbon Street located at 14131 Red Hill Avenue. The following meetings were held:
Planning Commission Meetings
- February 8, 1999 (continued to February 22, 1999)
- February 22, 1999 (continued to March 8, 1999)
- March 8, 1999 (Planning Commission approved Resolution No. 3655 for CUP
98-029)
City Council Meetings
- March 15, 1999 (City Council appealed Planning Commission approval)
- April 5, 1999 (continued to April 19, 1999)
- April 19, 1999 (City Council approved Resolution 99-29 for CUP 98-029)
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 4
(Reference Attachment B - Minutes for Planning Commission and City Council
hearings).
In summary, the Planning Commission and City Council's extensive deliberations
focused upon concerns regarding the City's desire that the facility should operate as a
restaurant use and not as a bar or nightclub which would create compatibility issues
with the surrounding area. The Planning Commission and the City Council hearings
included extensive discussions about the proposed restaurant's operating practices
including: compatibility with the surrounding uses, hours of operation, food sales,
alcoholic beverage sales, parking, video games and pool tables, bar seating, and
potential law enforcement issues. During the hearings, a number of revisions were
made to the conditions of approval based on input from the applicant and his attorney,
City staff, the Planning Commission, and the City Council.
Alcoholic Beverages Sales Establishment Guidelines
The City Council and Planning Commission have adopted Alcoholic Beverages Sales
Establishment Guidelines (see Attachment D) which provide specific findings for any
alcoholic beverage sales establishments to ensure compatibility with surrounding uses;
provide definitions of the minimum operational standards for alcoholic sales (i.e.
percentages of seating designed and used for meals, minimum gross receipts for food
sales, etc.); and reiterate the Zoning Code's distancing requirements, although
minimum distancing requirements do not apply to restaurant establishments.
Neither the Tustin City Code nor the Alcoholic Beverages Guidelines provide specific
guidance or limitations on the hours of operation for an alcoholic beverage sales
establishment. Consequently, alcoholic beverage sales establishment hours of
operation have been set on a case-by-case basis through the conditional use permit
process depending upon a variety of considerations (i.e. the owner/operator's requests,
site and surrounding land uses, land use compatibility, etc.).
The City of Tustin regulates most on- and off-site alcoholic beverage sales
establishments (restaurants, bars, liquor stores, etc.) by requiring that new businesses
obtain a conditional use permit (CUP). Typically the use is one that, because of special
requirements or characteristics, may be allowed in a particular zoning district only after
review by the Planning Commission and granting of a conditional use permit which
imposes such conditions as necessary to make the use compatible with other uses
permitted in the same zone or vicinity. As described above, the Planning Commission
and the City Council had included multiple conditions of approval as part of the approval
of CUP 98-029 to ensure compatibility with the surrounding residential and retail uses.
For example, conditions for CUP 98-029 limited hours of operation for the restaurant
use at 14131 Red Hill Avenue until 11:00 p.m. Sunday through Thursday and 12:00
a.m. Friday and Saturday which is similar to the hours of operation for most bona fide
eating establishments (Reference Attachment C -Resolution 99-29).
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 5
Conditional use permits are issued for uses of land and may be transferable from one
owner of land to another as long as the business meets the conditions of the CUP
(including any limitations on the hours of business operation). This allowed CUP 98-
029 to be transferred from the original business owner, Mr. Smith of Bourbon Street, to
Mr. Fitzgerald of-Bourbon Street and Fitz's Pub and Lounge and then to the most recent
business owner, Mr. Huston of Roderick's. However, entertainment permits are non-
transferrable per the Tustin City Code. Therefore, a new entertainment permit was
required for each new owner and a separate application was required with ABC to allow
transfer of the on-site sale of alcohol (ABC License Type 47) license (Reference Exhibit
35 for Entertainment Permits of Attachment I, Exhibit A of Resolution No. 08-80, and
Attachment E for ABC licensing).
Timeline of Violation of Conditions
Since the 1999 approval of Conditional Use Permit 98-029 authorizing the on-site sale and
consumption of beer, wine, and distilled spirits and Live Entertainment at 14131 Red Hill
Avenue, the use at this location has had an extensive history of violations, planning and
code enforcement concerns, and police calls for service. Significant issues have been
documented to occur at the site, including: prostitution, public drinking, underage drinking,
drug use, loitering, littering, patrons fighting, etc., and there have been numerous
violations of the conditions of approval associated with CUP 98-029. Although City staff
have corresponded with and met with the restaurant owners, the property owner and their
attorneys on several occasions, the business proprietors and property owner have been
unsuccessful in eliminating the recurrence of these issues. Below, is an abbreviated
timeline and includes a history of the violations of conditions for CUP 98-029:
June of 2003 -Bourbon Street was purchased by Gregory Fitzgerald.
June of 2004 - A year later, Mr. Fitzgerald renamed the business Fitz's Pub and Lounge.
May -June of 2005 Violation of Condition No. 2.9
The number of complaints and calls for service at 14131 Red Hill Avenue, where Fitz's
Pub and Lounge was located, began to increase substantially. The Tustin Police
Department Special Investigations Team began undercover investigations of the
business to determine whether they were in compliance with their CUP or if they were
operating as a bar/nightclub. The use of the site as a bar or nightclub was not permitted
at this location and the owner, Mr. Fitzgerald and a potential "all ages dance club"
promoter, Mr. Leotti were notified as such in writing. The letter also informed Mr. Leotti
indicating that if a dance club were to operate at that location without approval, the CUP
and Live Entertainment Permit would be jeopardized and revocations proceedings could
be initiated. A second letter was also written to Mr. Fitzgerald informing him that he was
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 6
in violation of his Live Entertainment Permit because he had not maintained his City
business license (Exhibits 1-2 of Attachment I, Exhibit A of Resolution No. 08-80).
September of 2005 Violation of California Penal Code -Disturbing the Peace,
Violations of Conditions 2.3, 2.4, 2.14
As evidenced in the Investigative Report (Exhibits 3 - 4 of Attachment I, Exhibit A of
Resolution No. 08-80), the use was not being conducted in accordance with what was
authorized by CUP 98-029. Upon further inspection, undercover officers with the Tustin
Police Department Special Investigations Unit noted several violations including:
• A "rowdy, gangster type" crowd congregating "invited by a promoter." Police were
called to deter a fight from happening that evening
• Approximately two drunk driving arrests
• A request for the back door to be closed due to loud music
• A subject arrested who was trying to fight
• A subject arrested on a warrant
• Drinking in the parking lot
• A subject arrested who was challenging other patrons to fight
• Vehicles screeching their tires and racing around the parking lot
• Ahit-and-run
• Loitering in the parking lot
February 2006 -November 2006 Violation of Conditions 1.8, 2.3, 2.4, 2.9, 2.14, 2.15,
and 2.16
Mr. Fitzgerald was notified in writing and several attempts were made by City staff to
resolve the problems at the business. However, after nine months of meetings and
written correspondence from City staff, Mr. Fitzgerald failed to resolve the violations and
staff began to initiate revocation of the conditional use permit (Exhibits 5-16 of
Attachment I, Exhibit A of Resolution No. 08-80).
July 21, 2006 -Meeting held with property and business owners to discuss violations
A meeting was held to discuss the CUP violations at Fitz's and inform a prospective
new business owner, Mr. Matthew Roderick Huston, of the requirements of the
conditions of approval for a restaurant use at that location. The meeting included the
Director of Community Development, Elizabeth Binsack; two Tustin Police Officers;
Code Enforcement Officer, Brad Steen; property owner, Larry Smith; his attorney, Mr.
Floyd Farano; and Mr. Huston. A letter was also sent that day informing Mr. Huston that
a live entertainment permit is required, referenced the active CUP, and provided the
conditions of approval thereof. The letter also outlined several of the noteworthy
conditions of approval (Exhibit 14 of Attachment I, Exhibit A of Resolution No. 08-80).
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 7
July of 2006 Violation of Conditions 1.8, 2.3, 2.4, 2.9, 2.12, 2.14, 2.15
Mr. Fitzgerald transferred the ABC license and CUP 98-029 to Matthew Huston for
Roderick's (which opened in September of 2006). Two separate letters were sent by
City staff to Mr. Smith and Mr. Fitzgerald outlining the violations of CUP 98-029 and,
pursuant to condition 1.10, required reimbursement of all code enforcement costs
totaling $8,346.09 (Exhibit 15 of Attachment I, Exhibit A of Resolution No. 08-80).
November 1, 2006 City Sends Notice of Intent to Revoke
City staff notified Mr. Fitzgerald and Mr. Smith of the intent to revoke the CUP. The
business was operating at the time as Roderick's. Mr. Huston and Mr. Farano were also
notified in this letter (Exhibit 16 of Attachment I, Exhibit A of Resolution No. 08-80).
November 20, 2006 Letter from owner's attorney assuring no further violations
Four months after the meeting with Mr. Smith, Mr. Farano, and Mr. Huston, staff
received a letter (dated November 20, 2006) (Exhibit 17 of Attachment I, Exhibit A of
Resolution No. 08-80) from attorney, Floyd Farano, stating that he no longer represented
Mr. Fitzgerald, but still represented the property owner, Mr. Larry Smith. In his letter, he
indicated that Mr. Matthew Huston, the new owner of the business, planned to renovate
the building for operation of a "full sit down restaurant". Mr. Farano further indicated that
the problems were "with Mr. Fitzgerald and NOT Mr. Huston".
November of 2006 Settlement with Mr. Smith and assurance that no further violations
will occur
Mr. Fitzgerald wrote a letter (received November 27, 2006) to the mayor requesting that
the CUP not be revoked (Exhibit 18 of Attachment I, Exhibit A of Resolution No. 08-80).
He indicated that he was "unaware of any violations" and, although there had been a
year and a half of written correspondence and personal meetings with staff informing
him of violations (Exhibits 1- 16 of Attachment I, Exhibit A of Resolution No. 08-80), he
indicated that he "had not been notified of any City concerns". However, in February,
2007, a settlement was made with the property owner, Mr. Smith, in the amount of
$4,200.00 for code enforcement costs associated with Fitz's Pub and Lounge CUP
violations. The code enforcement case was subsequently closed.
May 3, 2007 Violation of Condition 2.16
Eight months after the opening of Roderick's the City received complaints regarding the
operations. In response, several Tustin Police Officers with the Special Investigations
Unit drove through the parking lot at a 2:15 a.m. in the morning and observed
approximately 15 to 20 people hanging out in the parking lot, playing extremely loud
music with trash strewn around the parking lot (Exhibit 20 of Attachment I, Exhibit A of
Resolution No. 08-80).
Further investigation showed that Roderick's was promoting a club named "Levels
Lounge" every Friday night from 9 p.m. until 2:00 a.m. by 1 Mo Drank Productions.
Flyers referencing other club promotions and referencing Roderick's as the location of
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 8
the events were also discovered (Exhibit 21 of Attachment I, Exhibit A of Resolution No.
08-80).
April of 2008 Violation of Conditions 2.1, 2.3, 2.4, 2.14
The Special Investigations Unit began undercover investigations of Roderick's to
determine whether they were operating within their conditions of approval. Separate
undercover investigations (Exhibit 22 and 23 of Attachment I, Exhibit A of Resolution No.
08-80) were conducted at Roderick's where a copious number of conditional use
violations and violations of the California State Penal Code were witnessed at the site,
including some of the following violations (A detailed report is provided in Exhibit A):
• Marijuana use
• Drunk Driving
• The "restaurant" was not serving food, only alcohol (violation of Condition 2.3,
2.5, 2.14)
• Closing time exceeded allowable hours of operation and patrons were continually
served alcohol after hours (violation of Condition 2.4)
• Off-site consumption of alcohol (violation of Condition 2.1)
• Police calls for service significantly exceeded those in other areas
May 14, 2008 Violation of Condition 1.8
A letter (Exhibit 24 of Attachment I, Exhibit A of Resolution No. 08-80) was sent to Mr.
Huston (and hand delivered on-site) reminding him of the July 21, 2006, meeting where
he was made aware of the conditional use permit conditions of approval. The letter
further requested audited financial statements with a schedule separately identifying
gross sales of food and alcohol from January 1, 2008 through May 1, 2008 (per
condition 1.8). On the due date, Mr. Huston requested and was granted three additional
days to comply. When the single-paragraph response was received from Mr. Huston, it
did not accurately provide for the appropriate time period, nor did it provide an "audited
financial statement and schedule" in that there was no schedule attached to support the
information. A second letter was sent by City staff (Exhibit 26 of Attachment I, Exhibit A
of Resolution No. 08-80) to Mr. Huston indicating that the submitted document was
insufficient and again requesting the submittal of audited financial statements and
schedules separately identifying gross sales of food and gross sales of alcohol for
January 1, 2008, through May 1, 2008. Fifteen days later, Mr. Huston submitted a one
paragraph letter indicating that food sales were 50.75 percent, alcohol, beer and wine
sales were 49.25 percent; however, no schedules were provided as support of the
document (Exhibit 27 of Attachment I, Exhibit A of Resolution No. 08-80).
August 8, 2008 Violation of Conditions 2.1, 2.4, 2.14
Additional investigations were conducted at Roderick's where numerous conditional use
permit violations were observed. The violations included those noted on-site at
Roderick's observed by undercover police officers and additional information collected
by code enforcement officers including promotions at Roderick's for "Seduction
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 9
Saturdays", "Dance Wars", and "The Summer Fling". Roderick's was noted in these
promotions as "The Newest Club in Orange County" and some showed hours of
operation until 2:00 a.m. on Friday and Saturday night (Exhibits 28 - 33 of Attachment I,
Exhibit A of Resolution No. 08-80).
Alcoholic Beverage Control Investigation
Based on records submitted in October to the Tustin Police Department Special
Investigations Unit, the Department of Alcoholic Beverage Control (ABC) performed two
separate undercover investigations on Saturday, May 10, 2008, and Saturday, May 17,
2008. During these investigations, ABC investigators noted several violations of the
ABC conditional license issued to Mr. Matthew Huston of Roderick's. The violations
included:
• Violation of the hours of operation
• Off-site consumption of alcohol
• Serving alcohol after permitted hours
The records indicate that Mr. Huston signed a settlement agreement with the ABC
where he acknowledged receipt of the accusation and agreed to pay a $3,000.00 fine in
lieu of serving the 15 day suspension (Attachment E).
After receipt of the ABC investigative records, staff contacted the ABC District
Administrator, Daniel D. Hart, and Supervising Investigator, Trung H. Vo, who
conducted the investigations and report. Investigator Vo confirmed that, as shown in the
records, Mr. Huston had settled by paying the maximum fine of $3,000.00. He also
indicated that the ABC conditional license has been surrendered and is inactive at this
time. During the conversation with Mr. Hart and Investigator Vo, City staff was also
advised that there is a transfer pending for the ABC conditional license. City staff
informed ABC staff of the revocation hearing, making it clear that, at this time, there is a
valid conditional use permit.
City staff also informed Mr. Hart and Investigator Vo that the floor plan submitted by the
new applicant for a karaoke restaurant use with 18 separate rooms was unlike the
restaurant use for the original conditional use permit and would be subject to a new
conditional use permit (Attachment H). Mr. Hart indicated that they had not been made
aware of the proposed modification to the floor plan.
Planning Commission Meeting of October 28, 2008
A revocation of an existing Conditional Use Permit requires the matter to be considered
by the Planning Commission prior to City Council consideration. At the Planning
Commission meeting of October 28, 2008, staff provided a PowerPoint presentation
which included an overview of the history of uses at 14131 Red Hill Avenue and that
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 10
outlined the violations of required conditions that have occurred since May 2005, when
the investigative history began (Attachment I, Exhibit B of Resolution No. 08-80).
A full record of the Planning Commission record, including the minutes, is attached for
the City Council's consideration in Attachment G. In summary, matters discussed at the
Planning Commission meeting included:
• Assessed fines in the settlement for code enforcement violations with Fitz's;
• Requested clarification on ABC's regulatory role;
• Noted that the business owner had every opportunity to comply with the law; and
• Expressed that this is a quality-of-life issue and has citywide impacts.
The attorney, representing the property owner, Mr. Charles Farano; the property owner,
Mr. Larry Smith; the current business owners, Matthew and Teresa Huston, spoke in
opposition to the proposed revocation recommendation and, in summary, noted the
following issues and responses:
Mr. Farano requested that any references to events prior to Mr. Huston's
ownership should be eliminated. He indicated that it is important to know what
percentage of the violations involved Mr. Huston's restaurant
Mr. Huston stated that staff had not provided him with any feedback related to
the inadequacy of his audit report
Violation of Condition 1.8 when the business was operating as Roderick's
At the conclusion of the public hearing, the Planning Commission approved Resolution
4103 recommending that the City Council revoke Conditional Use Permit 98-029.
However, at the advice of the Assistant City Attorney, the Planning Commission action
included the elimination of a finding noting violation of condition 1.8 as a basis of
revocation based upon an assumption that sufficient evidence of this violation was not
made apparent during the hearing. At that time, the Assistant City Attorney indicated
that staff may bring additional information to the City Council's attention that supports a
violation of condition 1.8.
ANALYSIS
The Planning Commission and staff are recommending that the City Council revoke
Conditional Use Permit 98-029 based upon the extensive record of violations of the
conditions of approval. In response to the Planning Commission and owner's concerns,
staff has provided the following analysis of the issues that were presented to and
discussed by the Planning Commission at the hearing on October 28, 2008.
A conditional use permit runs with the land and is issued for a use or occupancy of a
structure or land subject to specific limitations and conditions. The conditional use
permit imposes conditions necessary to ensure the use is compatible with other uses
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 11
permitted in the same zone or vicinity. Since conditional use permits are issued for uses
of land, they are transferable from one owner of land to another as long as the business
meets the conditions of the CUP.
Staff has provided an updated table showing the conditions, dates of violation, exhibits
of reference documentation (of Attachment I, Exhibit A of Resolution No. 08-80), and a
brief summary of the violations. As shown in Table 1, below, violations shown with an
"F" indicate violations that involved Fitz's Pub and Lounge; violations shown with an "R"
indicate violations that involved Roderick's; violations shown with an "S" indicate
violations that Mr. Smith was notified of in writing; and violations noted with an "FF"
indicate violations that Mr. Floyd Farano was notified of in writing.
TABLE 1
7.8 Audited financial statements F .2/17/06 Exhibit 5 Multiple letters were sent from City staff to
and schedules separately F 3/30/06 Exhibit 8 the owners Larry Smith and Gregory
identifying gross sales of food F,S 9/18/06 Exhibit 15 Fitzgerald regarding the requirement of
and gross sales of alcohol F, S, FF 11/1/06 Exhibit 16 Condition 1.8 for an audited financial
must be submitted to the F, S 11/18/06 Exhibit 16 statement and schedule prepared by a
Community Development R 5/14/08 Exhibit 24, 25 certified public accountant. The owners
Department for annual review. R 6/9/08 Exhibit 26, 27 repeatedly ignored the requirement and
The gross receipts of food were unwilling to comply with conditions of
sales must exceed the gross approval. Staff subsequently initiated
receipts of alcohol sales. If revocation proceedings until the new owner
gross receipts of alcohol took over.
exceed food sales, the When Mr. Huston was informed of the
Community Development
conditions of approval prior to taking over
Director shall initiate the business (meeting held on July 21,
proceedings to revoke the 2006, and in letter from staff on July 21,
Conditional Use Permit. 2006), he was informed of all conditions
including 1.8. A letter dated December 4,
2006, was submitted with the appropriate
gross sales and schedule; however, every
instance thereafter, the appropriate
documentation was not submitted. Staff
notified Mr. Huston on May 14, 2008, and
again on June 9, 2008, of the requirement
to submit gross sales statements and
schedules which were overdue and
incomplete.
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 12
2.1 No off-site sale or F 10/14/05 Exhibit 4 Numerous violations were noted by Special
consumption of alcohol is R 4/11/08 Exhibit 22 Investigations Unit violating the requirement
authorized, except partially R 8/8/08 Exhibit 28 that no alcohol was to be consumed off-site.
consumed bottles of wine as Specifically, undercover officers walked
authorized in Business and outside the front door holding beer bottles
Professions Code Section and spoke with the bouncer. The bouncer
23396.5. never asked them to step inside. An ABC
undercover officer also consumed alcohol
outside on the patio in front of the bouncer
and only after approximately two minutes
was asked to bring the drink inside.
Undercover officers also observed what
appeared to be alcohol being consumed
outside, near the front door, and in the
parking lot on several separate instances.
An additional violation of this condition was
observed by ABC investigators, of which Mr.
Huston signed a settlement for the
maximum penalty.
2.3 Hours of sales of alcoholic F 9/27/05 On numerous occasions, violations were
beverages shall be limited to F 10/14/05 Exhibit 4 noted by Special Investigations undercover
the hours when food is F 2/17/06 Exhibit 5 officers. Specifically, 80 percent of the
available. Service of food R 4/11/08 Exhibit 22 premises were not set up for serving meals
menu items shall be during all R 4/25/08 Exhibit 23 to the public. On multiple occasions,
business hours. R 8/8/08 Exhibit 28 undercover officers were told that the
kitchen was closed. Furthermore, no
utensils or condiments were provided on the
tables during several sting operations.
2.4 Operating hours shall be F 9/27/05 In a number of separate instances, Code
consistent with other F 9/28/05 Enforcement officers inspected the site and
businesses within the F 9/29/05 Exhibit 3 noted a poster and online advertisements
commercial center. The F 10/14/05 Exhibit 4 indicating that the facility was open "Friday
closing hours shall be 11:00 R 4/11/08 Exhibit 22 9pm - 2am." Furthermore, when officers
p.m. Sunday through Thursday R 4/25/08 Exhibit 23 phoned on several separate occasions and
and 12:00 a.m. Friday and R 8/8/08 Exhibit 28 asked what time they close on Fridays, they
Saturday. No new patrons R 8/27/08 Exhibits 29-33 received a response of "2:00 a.m."
shall be admitted after the
closing hours and patrons
shall vacate the premises
within thirty (30) minutes after
closing time.
2.5 The menu of the restaurant F 9/27/05 During several separate investigations,
shall consist of foods that are F 10/14/05 Exhibit 4 undercover officers were told that the
prepared on the premises. R 4/11/08 Exhibit 22 kitchen was closed and no food was being
R 4/25/08 Exhibit 23 prepared on the premises.
R 8/8/08 Exhibit 28
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 13
2.9 Authorization for the on-site F 5/31/05 Exhibit 1 City staff provided written correspondence
sales of beer, wine, and F 6/9/05 Exhibit 2 on multiple occasions to the owner
distilled spirits (ABC license F 10/14/05 Exhibit 4 informing him that operation of an all age
Type 47) is contingent upon R 4/11/08 Exhibit 22 dance club is not authorized by Conditional
the use of the subject R 4/25/08 Exhibit 23 Use Permit 98-029 or the Entertainment
premises remaining a R 8/8/08 Exhibit 28 permit. Multiple violations of ABC license
restaurant. Should this use were also observed by undercover officers
change or be discontinued, and the business was fined in-lieu of
authorization for this use suspension after ABC investigators
permit is null and void. discovered violations of the license. During
several separate investigations, the
restaurant did not offer food service nor did
they provide eating utensils for food
consumption.
Undercover officers noted during several
investigations that promotions for a
nightclub at Roderick's were occurring.
Some of the promotions included "Club
714," "Shots On Us," and "Every Friday/9:00
p.m. - 2:00 a.m." This violated the CUP and
ABC license.
2.10 (in part] Shall not exceed 12 F 10/14/05 Exhibit 4 During several separate undercover
"bar seats" within the lounge F 3/30/06 Exhibit 8 investigations, it was noted that the facility
area and four "bar seats" R 4/25/08 Exhibit 23 supplied in excess of 12 bar seats in the
within the main level dining lounge and in excess of four bar seats at
room. the main level.
2.11 The applicant shall obtain a F, R "The entertainment permit conditioned that
Public Dancing Permit and an R 4/11/08 Exhibit 22 the permit was subject to the conditions of
Entertainment Permit from the approval in Resolution No. 99-29 approving
Community Development CUP 98-029. Therefore, every time there
Director prior to offering public was a violation of conditions for CUP 98-
dancing and live entertainment 029 it was a violation of the entertainment
on the premises. permit. Additional violations were observed
by officers that included entertainment
being provided that was not consistent with
the approved entertainment permit.
2.12 Any bar located within the R 4/25/08 Exhibit 23 Undercover officers were told on several
facility shall function as a R 8/8/08 Exhibit 28 separate occasions that the kitchen was
food/beverage service bar. closed and food was not available.
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 14
2.14 The entire facility, which F 9/27/05 During several separate investigations,
includes all three (3) levels, F 10/14/05 Exhibit 4 undercover officers were told that the
shall operate exclusively as a R 4/11/08 Exhibit 22 kitchen was closed. Furthermore, during
restaurant. During business R 4/25/08 Exhibit 23 separate instances, minimal or no place
hours, at least 80 percent of R 8/8/08 Exhibit 28 settings and utensils were observed. Tables
the premises shall be and chairs were also observed being
designed and used for and removed by Mr. Huston to make room for
must possess the necessary dancing.
utensils, table service, and
condiment dispensers with
which to serve meals to the
public.
2.15 "No Loitering" signs shall be F 10/14/05 Exhibit 4 During multiple inspections, both code
posted at the entrance of the F 2/17/06 Exhibit 5 enforcement and undercover officers noted
business. R 12/5/06 that no such signs could be observed.
R 1 /8/07
2.16 All litter shall be removed from F 2/17/06 Exhibit 5 On several separate occasions, Special
the exterior area around the R 5/3/07 Exhibit 20 Investigations officers observed trash
premises including adjacent strewn around the parking lot.
public sidewalk areas and
parking area no less frequently
than once each day that the
business is open.
Based on the number of instances that a violation was observed and/or noted to the
business owner, more than half were for Roderick's. Therefore, Mr. Farano's request to
have Roderick's judged on their own merits will show that Roderick's had numerous
violations (as noted in Table 1).
Furthermore, the appropriate notification had been given to Mr. Huston, the property
owner, Mr. Smith, and his attorney, Mr. Farano prior to the transfer of the business
license and ABC license. When the City received complaints and the Police Department
noticed an increase in the number of calls for service at Roderick's, staff began multiple
surveillance operations to determine whether or not Roderick's was operating within the
conditions of approval. This was the specific topic and issues that the Police
Department, City staff, Mr. Smith, and Mr. Huston had spent several hours and several
meetings discussing.
As noted by a representative of the Police Department at the Planning Commission
hearing on October 28, 2008, the business owner would not be privy to the overall
tactics or goals of the Police Department's undercover operations. The Police
Department and code enforcement officers were building information as part of an
investigative report to determine compliance. Those investigations and substantial
evidence of the violations are shown for reference in the investigative report of
Attachment I, Exhibit A of Resolution No. 08-80. If there were no complaints received nor
violations observed (i.e. loitering and drinking alcohol in the parking lot after 2:00 a.m.,
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 15
loud music outside the facility, and trash strewn about the site), there would not have
been reason to pursue investigations. However, this was not the case with Roderick's
operation.
Violation of Condition 1.8
As indicated above and noted in Table 1 for Condition 1.8, there were multiple
correspondence letters and personal meetings .with the property owner and each
business owner, including Mr. Fitzgerald and Mr. Huston, regarding the necessity to
provide audited financial statements and schedules for gross sales of food and alcohol
for annual review. However, Mr. Fitzgerald never submitted such documentation and
Mr. Huston only submitted the statement with the appropriate schedule on one occasion
(Exhibit 19 of Attachment I, Exhibit A of Resolution No. 08-80) and this was only for
approximately a one month period. During this time, the business may have been
operating as a legitimate restaurant. However, problems began to arise at the business
in May 2007 (Exhibits 20-23 of Attachment I, Exhibit A of Resolution No. 08-80). A letter
of violation (V08-0298) was written to Mr. Huston reminding him of the conditions of
approval that were discussed in a meeting with him on July 21, 2006, and required him
to submit audited financial statements and schedules pursuant to the conditions of
approval (Exhibit 24 of Attachment I, Exhibit A of Resolution No. 08-80). As described
above, Mr. Huston submitted a one paragraph document which was not consistent with
the condition of approval (Exhibit 25 of Attachment I, Exhibit A of Resolution No. 08-80).
Staff sent a second notice of violation on June 9, 2008, clarifying that the document
submitted was not sufficient (Exhibit 26 of Attachment I, Exhibit A of Resolution No. 08-
80). When the single paragraph document was submitted late, it did not include the
appropriate audited statement and schedule (Exhibit 27 of Attachment I, Exhibit A of
Resolution No. 08-80). Furthermore, it only showed a 0.5 percent difference between
gross food sales and gross alcohol sales.
Based on the records shown in the Investigative Report (as shown in Exhibit A of
Resolution 08-80), Mr. Huston was notified of the requirement to submit the appropriate
audited documentation. However, he did not comply with the violation letters issued to
him on multiple instances. There is sufficient evidence that the business has operated in
violation of Condition 1.8; therefore staff is recommending that the City Council approve
Resolution 08-80 noting this violation as a basis for revocation of CUP 98-029.
Resolution No. 08-80 (Attachment I) has been prepared in substantially the same format
as Resolution No. 4103 approved by the Planning Commission; however, Resolution
No. 08-80 includes the violation of Condition 1.8.
Burden on City Resources
This use has required a substantially larger commitment of City resources from City
personnel, code enforcement, and police than any other similar use within the City of
Tustin. These calls include patrol checks, suspicious vehicles, loud party music, petty
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 16
theft, rowdy "gangster type" crowds, and other disturbances of the peace. In fact, when
the calls for service for police response were compared with the average calls of similar
stand-alone restaurant uses, Roderick's exceeded the level of calls by almost 40
percent.
A records search was prepared by the Tustin Police Department to compare similar
restaurant uses located within astand-alone building that serve alcohol as part of their
restaurant use. The "calls for service" which are the records of calls the police received
and responded to were compiled for these businesses and include: Zito's located at
17320 17th Street (previously -Fire Dance); EI Torito located at 17420 17th Street
(business open since 1978 at the same location); and Oggi's located at 13612 Newport
Avenue (Previously -Tony's Sea Landing). Some of these businesses have changed
name and ownership over the past three years, equivalent to the change of business
name and ownership for Fitz's and Roderick's. Therefore, the comparison can be
accurately utilized to evaluate calls for a use that is substantially the same.
The following graph represents the number of calls for service in Tustin that occurred at
Fitz's and Roderick's from 2005 until 2008 when compared with similar restaurant uses.
_.~a ~s f~r___~eruice _ __ _ _ ____.
90 -
80 -
70 --
60 -
50 -
40 -
30 -
20 -"
10 -_
0 -r,-
Fitz/Roderick's EI Torito Oggi's/Tony's Zito's/Firedance
Sea landing
Reporting Period: May 1, 2005 -October 1; 2008
As indicated in the graph, there were substantially greater calls for service over the past
three years for the Tustin Police Department related to Fitz's and Roderick's when
compared with similar uses. The police calls for service and use of staff time cost the
City considerably more than any other restaurant use in the City. Based on police
records, over the past two and a half years the police department has spent about 70
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 17
percent more in City resources at Fitz's and Roderick's when compared to EI Torito and
80 percent more time and money when compared to Zito's and Oggi's.
In addition to these statistics, the restaurant use located at 14131 Red Hill Avenue has
had a significant impact on other City resources which has now cost the City and the
general taxpayer several thousand dollars over the past decade. The statistics in the
calls for service (as shown in the graph) do not take into account time and resources
spent by City staff including code enforcement officers, planning and building division
staff, the City Attorney's office, and special investigations officers for the time spent in
investigating the reoccurring problems caused at this site. This overwhelming drain on
City resources costs the City of Tustin substantially more money to provide the required
level of service to this one business location.
Revocation Process
Section 9293.c of the Tustin City Code (TCC) addresses revocation of permits. The
code states that any use permit granted may be revoked by the City Council if any of
the conditions or terms of the permit are violated or if the following finding is made:
In connection with use permits: The continuance of the use would be detrimental to the
health, safety, morals, comfort and general welfare of the persons residing or working in
the neighborhood of such use, or would be injurious or detrimental to property -and
improvements in the neighborhood or to the general welfare of the City.
According to the TCC, before the City Council considers revocation of any permit, the
Planning Commission must hold a hearing on the revocation after giving written notice
of the hearing to the permittee. Subsequent to the Planning Commission hearing, a
report of its findings and its recommendations on the revocation must be provided to the
City Council.
Subsequent Applications
If CUP 98-029 is revoked, no application for the same (or substantially similar)
discretionary permit for the site at 14131 Red Hill Avenue can be filed for a period of
one year following revocation of the discretionary land use permit. This would limit any
new applications for a restaurant use with on-site sale and consumption of beer, wine,
and distilled spirits and live entertainment at this location for aone-year period.
At the Planning Commission hearing of October 28, 2008, the Commission requested
that, should the City Council revoke the conditional use permit at 14131 Red Hill
Avenue, the Council consider a reduced timeline to allow a bona fide restaurant use.
City Council Agenda Report
Revocation of CUP 98-029
November, 18, 2008
Page 18
Amy Thomas
Senior Planner
~~ ~ ~ ~ ~~
Elizabeth A. Binsack
Community Development Director
Attachments: A. Site Information
B. Minutes of Planning Commission and City Council Meetings
(February 1999 -April 1999)
C. Resolution No. 99-29 approved by City Council on April 19, 1999
D. Alcoholic Beverage Sales Establishment Guidelines
E. Department of Alcoholic Beverage Control (ABC) Letter and Query
F. Planning Commission Staff Report and documentation from
October 28, 2008
Exhibit is Resolution 4103
Exhibit ii: Planning Commission PowerPoint Presentation
G. Planning Commission Minutes of October 28, 2008
H. Proposed Karaoke Use Floor Plan
I. Resolution No. 08-80
Exhibit A: Investigative Report with Exhibits
PowerPoint Presentation to be provided at the meeting
S:\Cdd\CCREPORT1Revocation CUP98-029 Rodericks CCAgendaReport.doc
THE ATTACHMENT FOR
THIS ITEM IS
AVAILABLE IN THE
CITY CLERK'S OFFICE