Medusa nightclub is located in Northeast Plaza on Buford Highway. The city of Brookhaven said it is not renewing the club’s alcohol license for 2020 due to alcohol code violations. (Special)

Two Brookhaven nightclubs face losing their alcohol licenses by the end of the year due to a “pattern of misconduct” and failure to pay excise taxes, according to the city.

The city on Nov. 20 notified XS Restaurant & Lounge and Medusa, located in Northeast Plaza on Buford Highway, that their alcohol licenses were not being renewed in 2020. This marks the latest chapter in the city’s years-long battle with its nightlife as officials say they want to clear Buford Highway of higher crime rates they attribute to the late-night entertainment venues along the corridor.

Operators of some of the nightclubs have argued the city is discriminating against them by putting up costly obstacles and restrictive rules. At one time the city tried to charge certain venues $100,000 a year for an alcohol license. A federal lawsuit filed by XS Restaurant & Lounge, Medusa and another venue forced the city to back off the exorbitant fee.

The letters to XS Restaurant & Lounge and Medusa said the city is not renewing their alcohol licenses “based on a pattern of misconduct and repeated failure to timely file and pay excise tax returns as required…” The letter to Medusa also said the nightclub’s failure to cooperate with police in two separate violent incidents in the parking lot outside the club contributed to the decision.

Representatives from Medusa and XS Restaurant & Lounge could not be immediately reached for comment.

Both venues can appeal the decision by notifying the city within two weeks that they want to do so. A hearing would then be held Dec. 11 at City Hall with a ruling to be handed down before the end of the year.

Last year, the city hired an accounting firm to audit its 77 establishments licensed for on-premises alcohol consumption between January 2016 and March 2018 as part of its crackdown on nightlife. Of those, 13 were initially found to have underpaid their taxes, including XS Restaurant & Lounge and Medusa.

XS Restaurant & Lounge paid off more than $18,000 in back taxes in July after its alcohol license was suspended for almost two weeks due to that audit. But the club failed to pay its excise taxes between December 2018 and October, according to the city, resulting in the city’s decision to not renew its alcohol license.

The city briefly suspended Medusa’s alcohol license in April pending payment of $32,240.29 in back taxes. The suspension was lifted after Medusa entered into a settlement agreement with the city to pay the money off. Part of that agreement included Medusa producing an audit of food and alcohol sales for the previous six months, according to the city.

The audit Medusa provided to the city said it did not sell any booze between February and July, according to the city. However, distributors reported to the city that Medusa did sell alcohol during that time, the city said. That false information violates the alcohol code, according to the Nov. 20 letter announcing the city was not renewing Medusa’s alcohol license.

The city also alleges that Medusa’s management refused to voluntarily provide police with video surveillance during investigations of incidents in the parking lot outside the venue in October 2018 and on Nov. 18, also a violation of the city’s alcohol code.

The City Council approved a rewrite of the alcohol code in 2017 that created a new category of nightlife, “entertainment venue.” A club with a dance floor, stage or DJ booth was considered an entertainment venue and subject to a new $100,000 fee to obtain an alcohol license.

The new code also prohibited entertainment venues from selling booze on Sundays and rolled back alcohol hours from 3 a.m. to 2 a.m.

Numerous venues, including small restaurants and bars mostly along Buford Highway, were forced to appeal the $100,000 fee in a series of hearings before the city’s alcohol board.

XS Restaurant & Lounge, Medusa and Josephine, another nightclub in Northeast Plaza, sued the city in federal court over the fee and hours, alleging discrimination.

That fee was scrapped and the lawsuit was dismissed.

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