On the House is Eater's semi-regular column that goes behind the scenes of the restaurant business, written by the owners, operators, chefs and others who make our favorite establishments tick. Today, an op-ed from Adam Cohn, the owner of the recently shuttered Butcher Bay.
As a component of New York City’s twenty-year Charter Revision Commission Mayor Bloomberg has announced his intent to reform the City’s community board system. It needs it. Community boards have the unchecked power to play favorites in dispensing liquor licenses within their communities. Unchecked power, no matter how petty, always leads to abuse of authority. That was my experience in pursuit of a liquor license for my little oyster bar in Alphabet City, a tale I shall attempt to relate without ranting like Lenny Bruce towards his end.
A community board’s power to influence the grant or transfer of liquor licenses derives from its advisory role under state statute. In New York a restaurateur must advise the community board of his intent to file an application for a liquor license thirty days prior to doing so. The community board then opines whether the license would “serve the public benefit and interest” and recommends to the SLA either denial or approval of the application. The community boards’ opinions are meant to be based on certain specific statutory criteria.
The community boards’ opinions have a significant material effect on the licensing process because of their power to delay and complicate the application process. Delay may be fatal because the statutes create an economy of scarcity with liquor licenses, similar to taxi medallions, and, all applicants being equal, the race goes largely to the swift. If the restaurateur gets the thumbs-up, he has a head start toward being granted this lucrative and increasingly scarce privilege. He can self-certify as to the facts in his application and begin trading on a temporary basis almost immediately. If he gets a thumbs-down he is foreclosed from self-certification and is burdened by double the number of hearings before the SLA before a decision can be made. The delay occasioned by a community board’s denial is certainly costly and, as we shall see, potentially fatal.
This is the way the law intends the system to work: The community board advises the remote state bureaucrats about what’s good for the neighborhood, and based upon that initial response, the state subjects the applicant to the appropriate level of scrutiny. But the system fails if the community board merely conducts a popularity contest, or uses its power to pursue another agenda.
My first appearance before my own community board, Community Board Three—they’re the ones with the torches and pitchforks—was to transfer an existing beer and wine license for the bistro I had bought in the East Village. Attending Community Board Three meetings you quickly learn of their hostility to the restaurant and bar trade. There are two reasons and one motive for this policy. The first reason is to retard the increase of noise and traffic. The second reason is to prevent gentrification of the neighborhood. Whatever you may think about these policy goals, it’s fair to question this board’s authority and efficacy (why not adopt a policy to prevent the world from rotating on its axis?). The motive is their belief that their only constituency is rent stabilized tenants whose leases date from the Johnson administration. Attending their meetings, it’s easy to get the impression that the board is poorly mannered, as well. So my first encounter with my community board didn’t go that well.
After discussing details about how we intended to operate—hours of operation, menu, absence of live music—we were presented with a list of demands in exchange for their approval. They were called stipulations but it was really an ultimatum: either sign or be denied. One of the objectionable demands required that I would agree to never apply for a sidewalk café permit. That didn’t make sense to me. Others were more reasonable but I, stiff-necked, decided to stand on my rights. When the meeting was over, stipulations unsigned, I left in equal parts offended at their contempt for members of my trade, shocked at their parochialism towards applicants they deemed outsiders, and relieved I hadn’t been sent out to the countryside for cultural reeducation.
So, two years later, at a subsequent meeting, when CB3 denied my application for an upgrade to full liquor, I wasn’t surprised. How could I have been? At that meeting the board told me flatly that on no grounds whatsoever would they find public benefit in my application. However their official reasons for recommending denial, in their letter to the SLA, were (1) my restaurant’s location on 5th street between Avenues A and B, which they described as a cul-de-sac and an unusually residential street; and (2) my restaurant’s proximity to a school located on Avenue B between 4th and 6th. Therefore I was surprised when, two months after denying my application, they voted to approve the application for the exact same class of upgrade to a restaurant on the same block as mine but 280 feet closer to the same school. That’s when I filed the Article 78 proceeding.
But this ordinary remedy for abuse of administrative authority is unavailable against community boards. The community boards know this. In New York, when an administrative agency acts arbitrarily, the normal judicial remedy is an Article 78 proceeding. In this kind of action the petitioner asks a judge to review the agency’s determination and nullify it if the judge decides the determination is arbitrary and capricious. But before the court gets a chance to rule on the merits of the case the agency can move to have the case dismissed by showing either (a) that the petitioner has an opportunity to be re-heard by the agency (this is known as the doctrine of administrative finality) or (b) that the determination is not final, which is defined to mean that the petitioner has not suffered actual harm. Article 78 proceedings have mostly been dismissed because petitioners cannot satisfy the doctrine of administrative finality. Since the community boards merely render advisory opinions, all of their determinations are re-heard (de jure if not de facto, if you’ll pardon my Latin). The essential elements of the case – whether the citizen has been treated unfairly and whether she has been harmed by it – are treated as collateral and never addressed.
Our case went about as well as you may now expect. My Article 78 proceeding was dismissed as untimely. No decision on the merits. No harm, no foul.
Meanwhile, my partners and I persevered with our application. We waited patiently, five, six, seven months for an audience with the SLA. But while we waited the restaurant’s vitality began to fade. The economy, the lack of a license, and our own many mistakes began to take their toll. In late November we closed temporarily, for renovations, but in our hearts we knew the truth: without a liquor license we likely couldn’t reopen. Hedging our bets, we listed the property with a broker while we still prayed for a Christmas miracle from the SLA.
In February we finally did get a hearing before the full board of the SLA. A representative of the CB3 appeared in opposition. We had 550 signatures of area residents in support—of which 150 were from our block—the community board had one in opposition. We had two years of complaint and violation free trading. The new Chairman of the SLA—a lawyer, and who by reputation intends to make the SLA adhere more closely to the law—asked the CB3 representative on what bases the community board makes its determinations. None in particular, she answered, more of a case-by-case thing.
Our bitter epilogue came when the Chairman told us that if we had been still open and not up for sale, or even if we managed to reopen, he’d likely grant us the license, despite the community board. He said, in effect, if only you could have got here months earlier?
I realize this story appears to be small potatoes, relatively speaking. “Local Agency Unfair, Area Man Loses Restaurant”: a real dog-bites-man story. But there are not only principles of equity and accountability at stake. There are many empty storefronts in the East Village and many landlords who say that, but for the community board, they could fill them with tenants. Meanwhile, the City’s unemployment rate stands at 10.1%, higher than the national average.
There are three potential solutions. The borough president appoints community board members so Scott Stringer could fix this by himself. Or the Article 78 statute could be amended to account for community board abuse. And electing rather than appointing community board members may make them more responsive to the community. But whether elected or appointed, community boards ought to be bound to act consistently with their own precedent and in concert with the facts. Their current immunity just encourages their mischief.
I’m sure that the community boards play many valuable roles. On my own community board, I know of several members who selflessly devote hours to civic improvement when they could rather be pursuing lucrative careers hunting for truffles. The system of having neighborhood activists advise dispassionate state bureaucrats about the local effects of their policies sounds like a good idea. But we know from our history it’s often the local government that folks need protecting from.
— Adam Cohn is a partner at the Manhattan law firm of Bowles Cohn & Crow LLP, a restaurateur and a resident of the East Village.