Four local establishments are appealing the city of Brookhaven’s decision to deny renewing their alcohol licenses after an ordinance approved late last year raised liquor license fees from approximately $5,000 to $100,000.

Rush Lounge, Medusa Restaurant & Lounge, XS Ultra Lounge and Josephine Lounge, all located on Buford Highway, were told in January their liquor licenses would not be renewed for 2018.

City Attorney Chris Balch, left, and Alan Begner, attorney representing Rush Lounge, make their case to the city’s Alcohol Board at a Jan. 22 hearing. (Dyana Bagby)

The reason? Under the revised alcohol ordinance, the four now are classified as “entertainment venues” and are now required to pay a $50,000 liquor license fee to sell distilled spirits for consumption on premises and $50,000 to sell beer and wine for consumption on premises.

Before, when they were classified as restaurants, their liquor license fees only cost about $5,000. Under the code, entertainment venues are venues that have a disc jockey, a dance floor or a stage, or all three.

“I have been practicing more than 20 years, and I have never heard of a $100,000 alcohol license fee,” Cary Wiggins, attorney for Medusa Restaurant & Lounge, XS Ultra Lounge and Josephine Lounge, said in closing arguments at the Brookhaven Alcohol Board’s Jan. 30 meeting.

The city’s Alcohol Board listened to appeals by the Rush Lounge on Jan. 22 and by Medusa Restaurant & Lounge on Jan. 30. Appeals by XS Ultra Lounge and Josephine Lounge will be set for a date yet to be determined. A timeline for when a decision of the board to either uphold or reject the city’s denials has not been established.

The city contends it has the right to charge the $100,000 liquor license fees to these venues — the only venues of the more than 100 businesses with liquor licenses in the city to receive such a significant rate hike — because of numerous police calls and police resources spent at the establishments.

The high fees will be used to offset city resources spent on police officers to respond to the calls, according to Assistant City Manager and Finance Director Steve Chapman.

“The residents are currently subsidizing these businesses,” he said.

Wiggins also questioned how the city came up with the $100,000 figure. Chapman said he and City Attorney Chris Balch derived the figure by using the city’s current business model with the Pink Pony, a sexually oriented business with nude dancing and alcohol.

In 2014, the Pink Pony agreed to a legal settlement to pay the police department $225,000 a year for six years to cover public safety costs, to reimburse the city for its legal fees, to donate land along Peachtree Creek for a city park and to contribute up to $75,000 for that park. The settlement followed a lengthy legal battle with the city as it tried to close the strip club down shortly after incorporation. The Pink Pony is also slated to close in Brookhaven in 2020 as part of the settlement.

Chapman also explained that the police department last June presented to the City Council a list of its “top 10” establishments with the highest number of calls and incident reports between midnight and 6 a.m. over a 15-month period in 2016 and 2017. The four venues whose license fees were raised were on the list, with dozens of calls to each place, Chapman said.

According to police, between Jan. 1, 2016, and May 15, 2017, there were 291 incidents reported at 10 late-night venues, nine of which are located on Buford Highway and in Northeast Plaza. The other is the Pink Pony on Corporate Boulevard, visible from Buford Highway. Medusa Restaurant & Lounge, XS Ultra Lounge and Josephine Lounge are located in Northeast Plaza, a strip mall; Rush Lounge is located about a mile south of Northeast Plaza.

“We used the Pink Pony as a model … but did not want to impose the entire $225,000 amount because if they all came into compliance [by paying the $100,000] we would be able to pay for enough officers to monitor the area,” Chapman said.

“Was there any independent analysis or audit on this magic number of $100,000?” Wiggins asked.

“No,” Chapman answered.

Alan Begner, who represented Rush Lounge at the Jan. 22 hearing, argued that state law limits the fees that cities can charge for alcohol licenses to $5,000. Balch said the $5,000 only regulates fees for package sales, not for businesses selling alcohol to drink on premises.

The “entertainment venue” classification citing any venue with a DJ, dance floor or stage, or all three, is the “most arbitrary rule,” Begner said.

“It is meant to be a death penalty. Nobody can pay $100,000 and survive … this ruins jobs for hundreds of employees,” Begner said.

In his closing arguments at the Jan. 30 hearing, Balch said these venues are trying to play “fast and loose with the rules, like they always do.”

“All the rest is smoke and mirrors,” he said. He asked the Alcohol Board to tell these businesses “if they want to play in Brookhaven, then play by the rules. If they don’t want to play by the rules, they can go somewhere else.”

This story has been updated to note that Rush Lounge is not located in Northeast Plaza.