Angry Words Dominate CB3 Meeting on Bar Policies

CB3 held hearings on liquor licensing policy last summer and fall.
CB3's David McWater was at the center of this week's contentious meeting.

if there’s one thing you can say about members of Community Board 3, they’re passionate about the Lower East Side. So its not very surprising when, from time to time, discussions about various issues become a little heated. But earlier this week, a meeting to finish hashing out new policies for evaluating liquor licenses became unusually contentious. The back and forth among board members turned highly personal, tense and ugly — before the proposals were finally approved, unanimously.

For the past several months, CB3 has been trying to figure out how to address a perception that the recommendations of the “SLA Committee” are often inconsistent and arbitrary — and that marathon meetings frequently stretching well past midnight are counter-productive and overly burdensome on everyone involved.

The proposals, detailed in a document prepared by Paul Costa (an urban planning associate), include: creating uniform criteria to evaluate applicants, standardizing operating agreements between the community board and applicants and coming up with an objective way of deciding which blocks in the community district are truly overwhelmed with bars and clubs.

Most of these ideas enjoy wide support on the board. But one recommendation — dealing with CB3’s unofficial practice of automatically approving “transfer licenses” (in which one operator sells a business to a new operator) – has been hugely controversial. The draft report suggested the following:

…CB3’s SLA Committee must start to carefully and gradually change the current defacto policy of not reviewing transfers as new applications.  Instead CB3’s SLA Committee must move towards a policy of reviewing each transfer as a new applicant.  It is our recommendation that the committee develops a “grandfathered” policy whereas for any business that has been established before this time, the transfer to the new applicant will be allowed as long as they maintain the current stipulations and operations… By doing this it will allow for a gradual change of the current SLA Committee’s transfer policy, and prevent any existing business experiencing any hardships due to the policy change…

For the past few years, CB3 member David McWater has insisted that bar owners have a right to transfer their licenses and that the community board should not stand in the way, so long as the operator has run a responsible business. Other board members, however, strongly disagree, arguing that rejecting some transfers is an effective way of reclaiming a neighborhood overburdened with nightlife establishments.

(It should be pointed out community board opinions on restaurant/bar liquor license applications are not binding; the State Liquor Authority decides whether to grant licenses; state licenses cannot be bought and/or sold by any private entity; community board input is one of many factors the SLA considers in making licensing decisions. )

Some CB3 members contend that McWater, a bar owner, has single-handedly created a right that did not previously exist and does not exist in any other community district. On more than one occasion in the past year, he has angrily confronted other board members and community activists, excoriating them for suggesting transfers should be treated just like new licenses.

Nice Guy Eddies
Nice Guy Eddie's is one of several LES bars owned by David McWater. Photo by Vivienne Gucwa.

Here’s the crux of McWater’s argument. Suppose an operator opened a bar 20 years ago, long before the Lower East Side, was a nightlife hot spot. All of these years, he’s assumed he’d be able to sell the business one day and, in retirement, tap into the proceeds from that sale. But now, in an effort to reclaim the neighborhood, the community board wants to impose restrictions on new owners (examples: requiring them to close at a specific time or to shut their windows at 10pm).

In McWater’s view, these restrictions reduce the value of the business, meaning the longtime bar owner is punished through no fault of his own. He told other board members changing the rules on transfers was “unacceptable” and that CB3 was obligated to maintain transfer licenses (without imposing restrictions) for the life of a business, even through multiple ownership changes.  Following what amounted to an ultimatum, McWater and CB3 Chair Dominic Pisciotta went back and forth, in a tense exchange:

Pisciotta: I can only see one alternative. I figured this was a good compromise, grandfathering, respecting those businesses that had been in the community for a long time… I understand what you’re saying. There is a risk, potentially, to the value of the business. But the only other alternative is to treat these transfers as new licenses.”

McWater: I guess in a brinkmanship kind of way you’re right but it’s not going to work that way.

Pisciotta: Why not?

McWater: “Because we (bar owners) have voices, too. If you want to build consensus and build compromise, fine. Let’s work on it. If you want to… threaten us with some abject nonsense… (interrupted).

CB3 held hearings on liquor licensing policy last summer and fall.

Speaking of previous public hearings on the proposed SLA policy changes, McWater added:

I went to the first meeting and was never coming back. People were calling me names, insulting me, cutting me off, interrupting me and it was all allowed to go on.

But other board members were prepared to challenge both McWater’s arguments, as well as his aggressive personal style.  CB3’s David Crane:

Crane: We have to reclaim our right and our responsibility to provide input to 500 foot hearings and I think this is a way of doing it. I don’t think anything in here says we are declaring open war on businesses. I really don’t think so.

McWater: You’re saying that the guy who owned his business should now be prejudiced because other businesses opened around him. Does that sound fair to you? Tell me the truth. We’ve known each other a long time. Does that sound fair?

Crane– There’s one board member, one David,  who goes ballistic at board meetings and it’s not me.

Later in the evening, Crane suggested McWater had a potential conflict of interest because he is a bar owner.   McWater was furious. He rose to his feet and began shouting at Crane:

That is the most bullshit thing you could ever fucking say. You want to see ballistic? This is ballistic. Let me tell you something. We just did Seward Park (McWater chairs the redevelopment task force). Every goddamn person on there was for low income housing. Every person on this board was a low income housing advocate (and/or a non-profit housing developer) the whole time we gave away a thousand HUD properties. Did you say conflict of interest? … You take that and shove it up your ass.

Pisciotta spent a good portion of the evening admonishing board members in general (and McWater in particular) to be respectful of their colleagues. In this instance, however, he defended McWater’s right to serve on the SLA Committee.

In another tense confrontation, SLA Committee Chair Alexandra Militano challenged  McWater to prove bar owners possess a legal right to sell their licenses:

Militano: Would you please cite the law (that establishes the right of transfer)?… Show me where it is?

McWater: Look it up, you’re the lawyer (Militano is a criminal attorney).

Militano: I want to be edified by you, David, who’s making this argument. You came prepared with all your ammunition. This law you keep talking about – you know what it is – especially since you have transferred businesses… Please tell me where it is.”

McWater: When I go to do a bulk asset sale I have a right – a right – to put my license in safe keeping and to reinstate it if (an) applicant (seeking to buy the business) is turned down for any reason.”

As the debate continued, McWater picked up important support from another board member, Meghan Joye. The owner of two Lower East Side bars, she agreed with him that imposing restrictions on licenses that did not originally exist could harm good operators.

In the end, McWater got his way. Pisciotta proposed amending the new policy to protect “grandfathered” establishments indefinitely by linking transfer licenses to specific locations rather than individuals.  The resolution spelling out all of the proposed policy changes will not be available until the full board meets next week. But an updated version of the report on CB3’s web site states:

The committee should establish a “grandfathered” transfer policy attached to the business location not the licensee for businesses that have been established before a certain time period.  These grandfathered businesses will be able to transfer their license with the existing stipulations.

The proposals, including the amendment making automatic transfer licenses official CB3 policy, won the committee’s support. It remains to be seen how the full board will react when it votes on the changes this coming Tuesday.

Several other topics came up during the meeting, including the 7th Precinct’s recent raids on Lower East Side bars. We’ll take a look at these issues next week.

One other note. While lots of residents show up on a regular basis to protest specific liquor license applications, hardly any community members or bar owners have been present at these policy meetings, in which the specific changes were being discussed. One community activist, a longtime East Village resident (and blogger), was in attendance this week and has some interesting things to say about what transpired.

UPDATE 2/19: see comment below for one explanation as to why some community activists have stayed away from the most recent SLA policy meetings.