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HomeMy WebLinkAboutFury Rok & Rol Use Permit Nos. RevocationCITY OF NEWPORT BEACH PLANNING COMMISSION STAFF REPORT February 21, 2008 Meeting Agenda Item No. 4 SUBJECT: Revocation of Use Permit Nos. 3162 and 2005 -018 (PA2005 -087) Fury Rok & Rol Sushi Lounge 4221 Dolphin Striker Way APPLICANT: City of Newport Beach CONTACT: Aaron Harp, Assistant City Attorney (949) 644 -3131, aharp @city.newport- beach.ca.us PROJECT SUMMARY On Thursday, January 17, 2008, the Planning Commission ( "Commission ") voted 4 to 3 to set a revocation hearing ( "Hearing ") for Use Permit Nos. 3162 and 2005 -018 ( "Use Permit') for February 21, 2008. Staff recommends that the Planning Commission adopt Resolution No. to revoke Use Permit No. 3162 and Use Permit No. 2005 -018. (Exhibit 30). Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 2 VICINITY MAP �H�•Y. �Tai t F.. 1 U , 7 • 5u6ject l �� Property r, r, den wnr ' i a 3 h GENERAL PLAN ZONING `frZ� - ,• �` Al Brad uro - -'l. "• -: h 5? .n<e'J! - �;:% x nn%.`.a•. Lei:: `\t { �'i _-' .�.•�" { �\ ZONING CURRENT USE LOCATION GENERAL PLAN ON -SITE Mixed Use Horizontal 2 Newport Place Planned Barinightclub MU -H2 Community Pc -11 NORTH MU -H2 PC -11 Restaurant/ pool hall SOUTH MU -H2 PC -11 Offices EAST MU -H2 Koll Center Planned Offices Communit PC -15 WEST MU -H2 71 PC -11 Offices Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 3 INTRODUCTION On Thursday, January 17, 2008, the Planning Commission ( "Commission ") voted 4 to 3 to set a revocation hearing ( "Hearing ") for Use Permit Nos. 3162 and 2005 -018 ( "Use Permit ") for February 21, 2008. At that time, the Commission expressed their concerns that the activities noted in the January 17, 2008 staff report caused the Commission great concern and justified an expedited Hearing. Since January 17, 2008, additional evidence has been obtained causing the Planning Department additional concerns in regards to: the overall sale of alcohol compared to food sales; violation of occupancy standards; the use of the premises as a night club; and additional arrests of patrons of Fury. New legal counsel for Fury, Bruce Evans, of the Law Offices of Solomon, Saltsman & Jamieson, informed the City that the operators of Fury intend to sell the business. Mr. Evans intends to ask the Commission for either a continuance of the Hearing, based on the fact that he was not retained by Fury until February 7, 2008 and does not believe he has had adequate time to prepare for this Hearing. In the alternative, Mr. Evans intends to ask that the Commission impose temporary conditions on Fury until the business is sold. On February 7, 2008, the City Attorney's Office was informed that Fury had retained new legal counsel. In response to this information, the City Attorneys Office forwarded a copy of the January 17, 2008 staff report to Mr. Evans. On February 8, 2008, the Office of the City Attorney forwarded Mr. Evans all additional evidence that the City Attorney intends to rely on at this Hearing along with a list of witnesses. It is the opinion of the Office of the City Attorney that Mr. Evans has been provided with plenty of notice regarding this Hearing and sufficient time to prepare for the Hearing. Based thereon, staff believes that any due process concerns have been addressed and the Hearing can go forward at this time. In regards to the imposition of temporary conditions, until the operators attempt to sell the business, based on the history of the operation of Fury, staff is recommending revocation. If additional temporary conditions are imposed, staff believes that these conditions would need to be conditions that do not rely on the operator's management practices to ensure that the conditions are met. Background Additional Documents and Information Provided by Fury On January 4, 2008, the Assistant City Attorney, Aaron Harp, sent correspondence to Fury's former counsel, Michael Cho, requesting, among other things, a current employee list to determine whether all Fury employees attended Licenses Education on Alcohol and Drugs (LEAD's) training as well as the documents used to prepare the gross sales summaries. (Exhibit 28 of the January 17, 2008 Staff Report) On January 16, 2008, 5 Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 4 Michael Cho, who represented Fury until February 7, 2008, provided additional documents in response to the January 4, 2008 correspondence. Mr. Cho provided the following documents for review: 1. Staff Contacts (server staff) as of January 15, 2008; 2. Daily Consolidated System Sales Detail for the month of December 2007; 3. Sample Employee Parking Tag; 4. Kitchen Employee Payroll (non -server staff) records; 5. Food Purveyor Purchase and Cost from June 2007 through first week of January 2008; 6. October 2007 issue of Riviera Magazine Fury review; and 7. January 2008 944 Magazine advertisement. Mr. Cho requested that the documents produced for items 1, 2 and 4 remain confidential and not made a part of the public record due to the confidentiality and proprietary nature of the information provided. A copy of Mr. Cho's correspondence dated January 16, 2008 is attached hereto as Exhibit 31, a copy of the sample employee parking tag is attached hereto as Exhibit 32, a copy of the October 2007 article regarding Fury in the Riviera Magazine is attached hereto as Exhibit 33, and a copy of the January 2008 Fury advertisement in 944 Magazine is attached hereto as Exhibit 34. A copy of the food purveyor purchase and cost from June 2007 through first week of January 2008 is not included in the packet given the bulk of the exhibit; however, this exhibit is available for review at the Planning Department and will be made available at the meeting on February 21, 2008. 1. LEAD's Trainin A review of the LEAD's training attendance list in comparison to the provided "Staff Contacts list" and through additional confirmation with the California Department of Alcohol Beverage Control (ABC), City staff has confirmed that Fury's serving staff, owners and managers have all been trained by ABC in responsible methods and skills for selling alcoholic beverages. 2. Daily Consolidated Sales Detail The City has requested sales records so that it can accurately review the information contained in the gross sale summaries submitted by Fury regarding alcohol and food sales. Most recently, requests were made via written correspondence from the City Attorney's Office on January 4, 2008, by the Planning Department on January 18th and at a follow up meeting between the City and Fury on January 24, 2008. The January 18, 2008 correspondence is attached as Exhibit 35. Despite agreeing to produce the underlying documents upon, which the gross sales of food and alcohol are determined, as of February 11, 2008, these records have yet to be produced. Whether Fury is complying with Condition 29 for months that the Fury is I Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 5 reporting reduced alcohol sales cannot be ascertained until the actual records upon which the gross receipts are determined are reviewed by the City. Previously, Fury produced summary of gross receipt sales from June 2007 through September 2007. Supporting documentation for these figures was not provided. Pursuant to the gross receipts summary report for June through September, the combined gross sales of beer, wine and liquor for this time period was seventy percent (70 %) of their sales. Liquor alone accounted for forty-four percent (44 %) of their sales. On February 1, 2008, Fury provided the City with their Daily Consolidated System Sales Detail for the months of October 2007 through January 2008 (Exhibit 36). Supporting documentation for these figures was not provided. Pursuant to Fury's October Sales Detail report, the combined liquor, beer and wine sales were $223,020.87, while the total food sales were $68,077.26; thus Fury's total food and alcohol sales for the month of October were $291,098.13. Alcohol sales were approximately seventy-six percent (76.6 %) of the October sales while food sales were approximately twenty-three percent (23.4 %) of the October sales. Pursuant to Fury's November Sales Detail report, the combined liquor, beer and wine sales were $213,780.58, while the total food sales were $121,698.25; thus Fury's total food and alcohol sales for the month of November were $335,478.83. Alcohol sales were approximately sixty-three percent (63.7 %) of the November sales while food sales were approximately thirty-six percent (36.3 %) of the November sales. Pursuant to Fury's December Sales Detail report, the combined liquor, beer and wine sales were $229,468.54, while the total food sales were $177,436.77; thus, Fury's total food and alcohol sales for the month of December was $406,905.31. Alcohol sales were approximately fifty -six percent (56.4 %) of the December sales while food sales are approximately forty-four (43.6 %) of the December sales. Pursuant to Fury's January Sales Detail report, the combined liquor, beer and wine sales were $142,381.71 while the total food sales were $169,618.20; thus Fury's total food and alcohol sales for the month of January was $311,999.91. Alcohol sales were approximately forty -five percent (45.6 %) of the January sales while food sales were reportedly approximately fifty -four percent (54.4 %) of the January sales. As stated above, the accuracy of the Sales Detail reports and compliance with Condition 29 cannot be ascertained until the actual gross receipts are provided and reviewed by the City. 3. Kitchen Payroll According to the payroll records provided for the kitchen (non - server) staff, Fury had fifteen (15) kitchen employees on the payroll as of December 2007. The pay periods encompass FAII Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 6 two week time frames. For the time period between October 15th and 28th, 2007 there were a reported nine (9) kitchen employees. Between October 29th and December 9th, 2007 there were a reported eleven (11) kitchen employees. Three (3) of these employees are salary and only one (1) other employee appeared to work enough hours to qualify for full time, the remaining employees appear to work part-time. On a number of occasions, Fury operators have stated that they pay their Executive Chef, Seven Abdessian over $100,000. Pursuant to the payroll records provided by Fury, Seven's gross compensation is $53,736.28 per year. 4. Food Purveyor Purchase and Cost Fury produced a binder containing invoices from various food, beverage and restaurant supply companies. A review of the invoices indicates that all deliveries for food and restaurant supplies were sold to Fury Rok & Rol Sushi Lounge at 4221 Dolphin Striker Way, it is not clear if all of the items were for the use by the restaurant or for use by the catering portion of the business. Fury has an ABC license Type 47 (On -Sale General Eating Place) as well as an ABC license Type 58 (caterer permit). A Catering authorization allows a business to cater alcoholic beverages for consumption upon premises approved by ABC. Fury operators have stated on previous occasions that they conduct food and beverage catering for private jets out of John Wayne Airport. The catering menu and ABC license information is attached as Exhibit 37. 5. Print Advertisement The October 2007 issue of Riviera Magazine published a Food Drink Review about Fury "...O.C.'s newest ultra lounge..." The author states that "It wasn't until my third trip to Fury that I discovered its full Asian fusion menu." She also reports that "[Brian] Schillizzi was a consultant to Sutra, Tenatation and Kantina, the trio of ultra clubs/restaurants that have opened in Costa Mesa and Newport Beach over the past five years or so." The article goes on to mention "[flood is served from 6-10 p.m. Monday through Saturday the energy is higher on a club night, currently set for Tuesday, Friday and Sunday . At 10 p.m. there's an almost seamless transformation from restaurant to an ultra lounge as the servers switch from waiter -mode (black button down shirt and pants) to party mode (Amani -esque suit and tie)." The article is attached as Exhibit 33. The January 2008 issue of 944 Magazine includes a full page color advertisement for Fury Rok & Rol Sushi Lounge. The emphasis is on their Lunch Special, Special Events, and Dinner. The advertisement (Exhibit 34) indicates lunch is served Tuesday through Friday from 11:00 a.m. to 2:00 p.m. and dinner is served Tuesday thru Saturday from 5:00 p.m. to 1:00 a.m. O Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 7 City Investigations Code Enforcement Investigations On Wednesday, January 30, 2008, Code Enforcement conducted an inspection of Fury's parking lot to determine compliance with the off -site parking agreement. At approximately 1:45 p.m. the Code Enforcement Officer noted five (5) cars with Fury parking hang tags on the rear view mirrors parked in the Fury parking lot and one (1) car she recognized as an employee's car when the Code Enforcement Officer later observed the employee enter the establishment. Code Enforcement's Report is attached as Exhibit 38. On Thursday, January 31, 2008, Code Enforcement conducted another inspection and noted four (4) cars with Fury parking hang tags on the rear view mirror parked in the Fury parking lot at approximately 5:00 p.m. The Code Enforcement Officer noted that five (5) more vehicles arrived with employees who then entered through the rear door of the establishment. At approximately 6:00 p.m. the Code Enforcement Officer inspected the adjacent parking structure and did not observe any Fury hang tags in any vehicles parked on the first and second floors (Exhibit 38). Police Actions 1. Security Plan On January 23, 2008, the Police Department met with Mike Murray, Fury's security representative, to discuss improvements that need to be made to the security plan for Fury submitted on January 3, 2008. On January 23, 2008, an officer again met with Mike Murray to discuss additional changes that needed to be made to the security plan and requested he resubmit an updated security plan. Fury has not resubmitted a security plan implementing Police recommendations. 2. Police Investigations On Thursday, January 24, 2008, Rosalinh Ung, Associate Planner and Aaron C. Harp, Assistant City Attorney along with former Council member Tod Ridgeway, one of the subject property owners, met Fury's operators and attorneys to discuss their current operations and clarify any outstanding record requests. At the meeting, the Fury's operators informed staff that they understood the conditions of approval and would comply with said conditions. Despite the assurances of Fury's operators that they understood the conditions of approval and would abide thereby, the Police Department discovered multiple violations of the terms of the Use Permit the next day when they conducted an inspection of the property on the evening of January 25, 2008 and the morning of January 26, 2008. 0 Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 8 Specifically, on Friday, January 25, 2008, the Newport Beach Police Department conducted an additional undercover investigation to observe compliance with the Use Permit. After waiting in line to enter the establishment for over an hour and a half, and ultimately not making entry, the Officers reported on their observations while in line and from the parking lot. Officer's reports are attached hereto as Exhibit 39. Officers observed patrons in the parking lot adjacent to Fury drinking from red plastic cups containing alcoholic beverages and then throw the cups aside prior to entering Fury. Another Officer observed a group share a drink from a Styrofoam cup and discard it before entering the Fury; this cup also contained an alcoholic beverage. An Officer also observed several males huddle together and take turns leaning over an unknown object holding straws to their noses, indicating to the Officer that they were ingesting a narcotic substance. By 10:00 p.m., Officers could hear the music from Fury well beyond the establishment's parking lot and at nearby businesses. The Officers witnessed numerous patrons urinate in the parking lot throughout the evening. An Officer also noted that at approximately 10:40 p.m. a stretch limo parked in the parking lot causing a bottleneck for passing traffic. The Officer noted that security walked through the parking lot at this time, but did not request the driver of the limo to move, nor did the security officer act in any other manner as to deter any nuisances occurring in the parking lot. By 11:00 p.m. there were approximately thirty (30) patrons waiting in line to enter the establishment. An Officer recognized operator Brian Schillizzi observing the line. The Officer heard the man at the door tell the patrons there was a twenty dollar ($20) cover charge at which time he accepted cash from them. The Officer noted that security did not depress the counter in a consistent manner as patrons were entering the establishment. This led the Officer to believe that staff was not maintaining an accurate occupancy count. After waiting in line for over an hour and half, the Officers returned to their car where they observed more patrons urinate in the parking lot. Just before 1:00 a.m., uniformed Patrol Officers while conducting a routine bar check notified the owner that the establishment was grossly overcrowded after conducting independent visual counts. After notifying the owner of this suspected condition, the Officers informed the operators that they were going to perform a count out. After being notified that the Police Department were going to perform a count out, the undercover officers noted that approximately forty (40) patrons exited the establishment within a five minute time period. Undercover Officer Reports from January 25�h are attached as Exhibit 39, Patrol Officer Reports and Citation issued January 26th are attached as Exhibit 41. The Patrol Officers then proceeded to shut down the establishment and conduct a ,.count out" of all patrons and staff. Fury's posted maximum occupancy level is 297. Officers counted 518 patrons in their count out not including the approximately 40 lb Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 9 patrons that left immediately before the count out occurred. The operator was cited for this violation. The reports and citation are attached as Exhibit 41. On Thursday, January 31, 2008, the Newport Beach Police Department conducted an additional undercover investigation to observe compliance with the Use Permit. Two Officers made dinner reservations for 9:30 p.m. while two other Officers observed the parking lot. Officers' Reports are attached as Exhibit 40. The Officers in the parking lot reported more of the same conditions as have been previously observed such as vomiting, urinating and consuming alcoholic beverages in the parking lot. The Officers also noted that security staff did not monitor the parking lot or correct nuisances in the parking lot. The Officers that went inside the establishment noted that there were a large number of underage patrons. The Officers overheard the host tell the underage patrons that they had to leave by 10:00 p.m. The Officers were able to stay at their table after they finished dinner (instead of being told to leave due to VIP Bottle Service), there were only a few tables occupied with VIP bottle service. Before 10:00 p.m., Officers observed that the bar stools were removed from the bar area. Officers noted that this was not a busy night for Fury and that by 11:30 p.m. there were approximately 150 to 200 patrons inside the establishment. At 12:00 a.m., the Officers requested a food menu. There were given a much shorter menu to order from than they had order from at 9:30 p.m. The menu was limited, but did contain "hot" items such as filet mignon skewers. The Officers order the skewers and noted that they were served hot and appeared to have been recently grilled. January 31" reports are attached as Exhibit 40 and pictures from Upscale Access powered by myzot.com for the same date are attached as Exhibit 43. 3. Crime Statistics Fury is located in Police Reporting District (RD) number 34. RD 34 encompasses an area approximately three quarters (0.74) of a square mile in the north - eastern portion of the City. There were a total of eighty -seven (87) arrests in RD 34 in the time period between July 1, 2007 and November 30, 2007. Thirty -three (33) of these arrests were directly related to Fury patrons. This accounts for over thirty -seven percent (37.9 %) of the total arrests in this reporting district. Further, in this same four month time frame, the Police Department reported a total of thirty -six (36) drunk and disorderly arrests in RD 34, of those arrests, twenty -two (22) were directly related to Fury patrons. This accounts for over sixty percent (61.1 %) of the drunk and disorderly arrests for RD 34 during this time period. From December 1, 2007 to February 3, 2008, there have been nine (9) arrests associated with Fury patrons and four (4) citations have been issued. • 4 Arrests for drunk and disorderly; ■ 2 Arrests for driving under the influence; f� Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 10 ■ 2 Arrests for resisting an officer; and ■ 1 Arrest for lewd conduct (arrest occurred outside RD 34). ■ 1 Citation for overcrowded establishment; ■ 1 Citation for possession of marijuana; ■ 1 Citation for urinating in public; ■ 1 Citation for open container. From December 1, 2007 to February 3, 2008, there have been thirty-three (33) arrests in RD 34. Of these arrests, Fury patrons accounted for approximately 27% of the arrests. This is down slightly from the previous staff report to the Commission wherein 37.9% of the total arrests from July 1, 2007 to November 30, 2007 were attributed to Fury patrons. The crime statistics are attached as Exhibit 44 and the arrest reports are attached as Exhibit 42. Overall, from July 1, 2007 until February 3, 2008 Fury patrons account for forty-one (41) of the one hundred and twenty (120) arrests in RD 34 (i.e. 34% of all arrests in RD 34). 4. Information Obtained from the Internet A. MySpace A February 4, 2008 visit to Fury's MySpace.com web -page advertises "dancing nightly from 10 p.m." The days and hours of operation are slightly different than the January magazine advertisement. The page indicates lunch is served Tuesday's through Friday from 11:30 a.m. and they are open for dinner on Tuesday's from 5 p.m. to 10 p.m. as well as Wednesday's thru Saturday from 5 p.m. to 1 a.m. The nightly events section advertises that on Thursday thru Saturday the "Club opens at 10 p.m." and dinner is available from "6 p.m.- 1a.m." Fury's MySpace page printout and pictures from their page are attached as Exhibit 45. B. Upscale Access Fury's Thursday night events are advertised with UpscaleAccess.com. Upscale Access claims to "keep you informed on the hottest night clubs, upcoming promotion events and photos of the wildest party people in Southern California." This indicates that Upscale Access acts as a club promoter. This site is listed on Fury's Thursday night event flyers as "for more info on this weekly event, go to: www.uascaleaccess.com." The web advertisement as seen on Fury's MySpace page along with the Upscale Access website printout is attached as Exhibit 46. C. Sienna Entertainment Sienna Entertainment, "luxury concierge and personal VIP service," also advertises Fury. This site is also listed on Furys Thursday night event flyers as "for more info on this weekly event, go to: www .siennaentertainment.00mtfurv." The web advertisement is 1- Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 11 attached as Exhibit 47. Sienna Entertainment's advertisement page for Fury states there is a $20 cover charge. D. The Social Group Friday and Saturday nights are advertised with The Social Group, another club promoter. The flyers posted on Fury's MySpace webpage for Saturday nights indicate that to "get on the guest list or to make VIP reservations go to www.thesocialorp.com or call (949) 545- 2120." (Exhibit 48) The Social Group's webpage (www.thesocialgrp.com) promotes the nightclub side of Fury (versus dinner or lunch reservations), showing Fury opening at 10:00 p.m. on Friday and Saturday nights and closing at 2:00 a.m. (Exhibit 48). The Social Group promoted Fury's New Year's Eve party along with Mix Armada (a DJ service and promotional team). The flyer for the event (Exhibit 49) advertises "Free appetizer Menu and Champagne from 7 -9 pm." A recent Friday night event flyer posted on their website advertises, "Brian Schillizzi's 40th Birthday Celebration January 25 h, 2008, presented by The Social Group." (Exhibit 50). Additional flyers for Saturday nights promoted by "The Social Group" for "Every Saturday night with DJ Kris P. & Johnny Night" are also attached within Exhibit 48. The Social Group sells tickets for Fury through a variety of online ticketing agencies/ brokers. On February 5, 2008, "Tickets" to attend Fury on a Friday or Saturday from night from February 7th thru May 2008 are available on a number of websites including TicketTriangle.com, Ballparks.com and CoasttoCoastTickets.com, to name a few. Tickets are sold for $20 piece (Exhibit 51). Tickets for any other night of the week are not available through The Social Group's ticket listings. In an article featured in OC Weekly on May 5, 2005, "400 Dates, Confessions of a Club Promoter," author Valerie Howard describes the lives and operations of "The Social Group" promoters, including Dave Doyle and Matt Meddock. Ms. Howard quotes Mr. Doyle, the company's founder, on a phone call explaining to someone that he didn't receive his fair share for a Los Angeles party, "We brought in 1,000 people that night and got $24,000 for it. Management brought in 500 people and got $23,000 ..." Howard reveals that the promoters make anywhere from $9,000 to $25,000 per night promoting such local clubs as Sutra in Costa Mesa. The article and The Social Group's corporate information are attached as Exhibit 52. E. YouTube On "YouTube," a web -site that allows people to easily upload and share video clips on www.YouTube.com and across the Internet through websites, mobile devices, blogs, and email, features a video clip on Fury. The member who posted the video identified Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 12 as, " SoCal Club Review ", brings you `real life answers to all the questions your friends bug you with while you're trying to get ready to go out!" As of February 6, 2008, SoCal Club Review's Fury video boasts 930 views (Exhibit 53) " SoCal Club Review" also has a MySpace page that includes Fury's Friday and Saturday night flyers (Exhibit 54). The YouTube video premiered by SoCal Club Review features "Erin" and "Natalie" interviewing patrons, bar staff and an owner of Fury. The DVD is attached as Exhibit 54. The SoCal Club Review MySpace webpage printout is attached as Exhibit 55. The video clip starts with an interview with Fury operator, Brian Schillizzi. Erin asks Schillizzi, "What made you decide to buy the run down Hamburger joint and flip it into an awesome nightclub ?" Schillizzi answers, "Well one of the things here in town, in northern Orange County, (is) that there's only three dance permits in town and this is one of the grandfather clause dance permits... so I kinda got lucky ..... We cater to an upscale crowd .... we keep the riff raff out..." The video features, in part, scenes from the dance floor, an interview with Promoter Matt Meddock of "The Social Group," an interview with a Bartender as well as an interview with a VIP Host. The VIP Host gives us some insight into the prices of the "VIP Bottle Service" tables, stating that bottles range from $275 for a bottle of well vodka (Grey Goose) to $8,000 for their most expensive bottle of alcohol. A DVD of this video clip is enclosed as Exhibit 54. What is most apparent from this video is that dinner service does not appear to be the focus of the establishment. Not one patron inside the establishment is shown eating dinner, all patrons are shown drinking alcoholic beverages and/or dancing. F. Online Review Sites Yelp.com is a website dedicated to offering a review forum where the public can post reviews on "whats great and not so great in your area." Fury is classed under sushi and nightlife. A February 4, 2008 search on yelp.com for reviews about Fury revealed fifteen (15) posted reviews. A majority of the reviews posted were made by Orange County residents. Complete printouts of all reviews posted for Fury on this site are attached as Exhibit 56. "Eileen C." of Hacienda Heights notes on December 3, 2007 that "My bf and I got there very early in hopes of getting sushi and drinks at the bar. No such luck! By 9pm, there was already a stodgy fellow in a leather jacket and a dude in a suit with a clipboard at the door. At 9PM! AT A RESTAURANT! Apparently, feeding people is NOT on the agenda!" "Nathan J." of San Juan Capistrano notes on January 28, 2008 "Nice attempt to add a decent club to the Newport area..." ,a Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 13 The current Cafe Dance Permit issued for Fury allows for dancing as an accessory use limited to Thursday through Sunday from 9:00 p.m. to 2:00 a.m. The Live Entertainment Permit does not limit the days in which live entertainment may play. DISCUSSION 1. Are Fury's operations causing injury, or are they operating in a way that is detrimental to the health, safety, peace, morals, comfort, or general welfare of the community? Conditions 27 states in part that the "eating and drinking establishment shall take reasonable steps to discourage and correct objectionable conditions that constitute a nuisance in parking areas, sidewalks and areas surrounding the alcoholic beverage outlet and adjacent properties during business hours. If the operator fails to discourage or correct nuisances, the Planning Commission may review, modify or revoke this Use Permit." Condition 6 states in part that if operation which is the subject of the Use Permit causes injury, or is detrimental to the health, safety, peace, morals, comfort, or general welfare of the community, the Planning Commission may revoke the Use Permit. Fire Department On Fury's website, photo gallery pictures of numerous patrons are posted by event. A review of the photo's posted for the "St. Tropez Event" reveals the use of Pyrotechnics inside the establishment (Exhibit 57). Pursuant to an interview with a member of Fury's VIP Host staff, posted on the YouTube video, the Pyrotechnic display seen in the pictures posted on Fury's website is a usual event. The interviewer asks the VIP Host, 'What's the bottle it takes to make this place look like the Fourth of July ?" The Host answers, "We've done Fourth of July many of times, usually it's on the weekends.... bottle of Cristal is about $600, we have these special fire works that are called birthday candles, but they will light up the place with just one..." (Exhibit 54). Needless to say, the fireworks display is a dangerous practice except when the use is in accordance with local fire regulations. Further, the use of these devices is a violation of the California Fire Code, Section 105.6.32 "Open flames and Candles: an operational permit is required to use open flames or candles in connection with assembly areas, dining areas of restaurants or drinking establishments." On February 6, 2008, the Fire Department issued a letter ordering Fury to halt this practice until proper permits have been issued (Exhibit 58). �5 Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 14 Police Department Since Fury's opening, arrests directly relating to Fury patrons are excessive. A total of forty-two (42) arrests are directly related to Fury patrons between July 1, 2007 and February 3, 2008 in RD 34. In the same time period there have been one hundred and twenty (120) arrests in RD 34, resulting in arrests related to Fury patrons accounting for thirty-four percent (34.2 %) of the total arrests in RD 34 between July 1, 2007 and February 3, 2008. Since the Planning Commission's January 17, 2008 determination to set a Revocation Hearing, staff has not seen evidence that Fury's operations have improved or that Fury operators have abated the conditions that constitute a public nuisance that are detrimental to the public health and welfare in violation of Condition 6 and Condition 27 of the Use Permit. From December 1, 2007 to February 3, 2008, there have been nine (9) arrests associated with Fury patrons and four (4) citations have been issued. From December 1, 2007 to February 3, 2008, there have been thirty-three (33) arrests in RD 34. Of these arrests, Fury patrons accounted for approximately twenty -seven percent (27 %) of the arrests. This is down slightly from the previous staff report to the Commission wherein thirty-eight percent (37.9 %) of the total arrests from July 1, 2007 to November 30, 2007 were attributed to Fury patrons. Overall, the number of arrests is alarmingly high for one establishment and detrimental to the health, safety and public welfare of the community. On Thursday, January 24, 2008, Rosalinh Ung, Associate Planner and Aaron C. Harp, Assistant City Attorney along with Tod Ridgeway, one of the subject property owners, met with Fury's operators and attorneys to discuss their current operations and address safety concerns that should be immediately rectified, including public nuisance issues in the surrounding parking lots. At about 1:00 a.m., January 26, 2008, uniformed Patrol Officers conducting a routine bar check notified the owner that the establishment was grossly overcrowded after conducting independent visual counts. After notifying the owners of this suspected condition, the Officers proceeded to shut down the establishment and conduct a "count out' of all patrons and staff. Fury's posted maximum occupancy level is 297. Officers counted 518 subjects in their count out. The operator was cited for this violation. The reports and citation are attached as Exhibit 41. On the same night, undercover Officers conducted surveillance in the parking lots surrounding Fury. Officers observed numerous instances of patrons urinating, consuming alcoholic beverages and engaging in activity consistent with narcotic use in the parking lot. Officers noted that Fury security staff did not effectively patrol or monitor the parking lot, even after the count out started causing hundreds of patrons to exit the establishment (Exhibit 39). W Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 15 On January 31, 2008, undercover Officers observed the same activities occurring in the parking lot including public urination and consumption of alcoholic beverages. Officers noted again that they did not observe security staff monitor the parking lot (Exhibit 40). Based thereon, it is City staffs opinion that revocation is appropriate based on a violation of Condition Nos. 6 and 27. 2. Is full menu food service available for ordering at all times the establishment is open for business? Fury's advertised hours of operation on their website are Tuesday through Saturday 11 a.m.-2 p.m. and 5 p.m.— close. Undercover investigations consistently document that full menu food service is not available after 10:00 p.m. A limited menu is available after 10:00 p.m. In the Police Department's most recent undercover investigation conducted on January 31, 2008, Officers note that hot items are now available on the after 10:00 p.m. limited menu and the Officers confirm that the hot items they ordered did appear and taste like they were grilled. However, Fury's full menu food service is not available for ordering at all time the establishment is open for business in violation of Condition No. 16. 3. Has Fury submitted its gross receipts in accordance with Condition No. 29? Condition 29 requires Fury to maintain records that reflect separately the gross sale of food and the gross sale of alcoholic beverages of the business. In addition, Condition 29 provides that the quarterly gross sales of alcoholic beverages shall not exceed the gross sales of food during the same period. These records are to be kept no less frequently than on a quarterly basis and shall be made available to the City on demand. The summary of gross receipt sales report previously provided by Mr. Cho shows that Fury has had excessive alcohol sales for all months it has been open except for January 2008. The January 2008 information was provided in summary format and the Fury has refused to let the City review its books to determine the accuracy of the information contained in the summary. Fury has admitted that it violated the conditions of approval for all months that it has been open except January 2008. In regards to January 2008, compliance with Condition 29 cannot be ascertained until the records for the gross receipts are provided and reviewed by the City. 4. Has Fury submitted a security plan that has been approved by the City? Pursuant to Condition 36, Fury is required to submit a comprehensive security plan for the permitted uses for review and approval by the Newport Beach Police Department. 0 Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 16 The security plan is required to include any recommendations made by the Police Department. On November 8, 2007 Mike Murray of MPP Security and Bodyguards, contacted the Police Department with "Draft 1, The Basics," as Fury's Security Plan. The plan was not very comprehensive, but it did include a section stating that they were "exploring putting a uniformed Security guard in the parking lot." An Officer discussed the "draft" plan with Mr. Murray and explained that the security plan would need more detail and that Fury management needed to authorize submission of the plan and indicate they intended to implement the security plan. On January 3, 2008, after Fury received notice of the January 17, 2008 Planning Commission meeting, MPP Security and Fury submitted a binder "2007 Security Plan" to the Police Department's front desk. Most notably missing from this security plan was a plan for security coverage in the parking lot outside Fury. On October 18, 2007, the Police Department had requested that Fury monitor their parking lot in conjunction with their security plan to curb the repeated instances of nuisances that were occurring in the parking lot area. On January 23, 2008 an Officer again met with Mike Murray to discuss additional changes that needed to be implemented into their security plan and requested he resubmit an updated security plan. As of February 11, 2008, the Police Department has not received an updated security plan from MPP Security or Fury. In continual violation of Condition 36, the security plan as submitted by Fury does not incorporate the recommendations made by the Police Department. In particular, the security staff has not implemented an effective plan to monitor the parking lots in order to curb the nuisances occurring within the parking lots. On January 25, 2008, Officers conducted a count out of the establishment after concluding that Fury was grossly overcrowded. The Police conducted count out revealed Fury had 518 confirmed subjects in their establishment, well above the maximum occupancy load of 297. Officers reported that Fury security staff did not monitor the parking lot, even after the count out ensued and large crowds in excess of 500 people in the parking lot resulted from closing down the establishment to count out the patrons and staff. S. Is Fury in compliance with the offsite parking agreement? Use Permit Condition 4 requires that the current operators of the restaurant "[m]aintain the recorded covenant against the property comprising the approved off - street parking location, the form and content of which is acceptable to the City Attorney, binding the applicant and its successors in interest in perpetuity, to provide a minimum of 16 parking spaces for the subject restaurant." Condition 5 requires that the employees utilize the 16 off -site parking spaces. 6 Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 17 At the January 24, 2008 meeting between the City, Fury and the property owner, compliance with the off -site parking agreement was discussed. Mr. Ridgeway agreed to make contact with the property owners of the parking structure and discuss compliance with the recorded covenant. The Fury operators stated that they would have their employees hang employee parking tags in their cars so that employee cars could be easily identified. On January 30th and 31, 2008 Code Enforcement Officer Shannon Levin conducted surveillance of Fury's parking lot and the adjacent parking structure to determine compliance with the off -site parking agreement. Ms. Levin recorded the license plate numbers and the employee parking tag numbers of the vehicles parked in Fury's shared parking lot. She notes in her report attached as Exhibit 38 that no Fury employees parked in the adjacent parking structure. All employees parked in the shared parking lot. It is City staffs understanding that the operators are working on correcting this violation based on communications from Mr. Cho on February 7, 2008. However, to date this violation has not been corrected. 6. Is Fury operating as `Bona fide public eating place "? Undercover Police reports indicate that Fury is still operating as a restaurant until 10:00 p.m. and then converting to a "club" after 10:00 p.m. At approximately 10:00 p.m., the bar stools are removed from the bar, dining tables are converted to "VIP Bottle Service" tables, underage patrons are told to leave the establishment and the disc jockey remix music becomes so loud that conversations cannot be carried on. After 10:00 p.m. only a limited food service menu is available. Further, Fury's promoters advertise and sell tickets for the "club" that starts at 10:00 p.m. Bouncers are observed at the door checking identifications, reportedly as early as 9:00 p.m. Since Fury has opened its doors, and after subsequent meetings with City staff, arrest reports and undercover reports from Fury continue to identify overly intoxicated patrons, fights, and long lines of patrons waiting to enter the establishment; activities that are out of the ordinary for a "bona fide public eating place." On January 25, 2008, Patrol Officers conducted a count out of the establishment after concluding that Fury was grossly overcrowded. The Police conducted count out revealed Fury had 518 confirmed subjects in their establishment, well above the maximum occupancy load of 297 (Exhibit 41). One online review listed on yelp.com submitted by a Fury patron on December 3, 2007 reports that "[B]y 9pm, there was already a stodgy fellow in a leather jacket and a dude in a suit with a clipboard at the door. At 9PM! AT A RESTAURANT! Apparently, feeding people is NOT on the agenda!" (Exhibit 66). ll\ Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 18 In addition, the summary of gross receipt sales shows that the Fury has had excessive alcohol sales for all months it has been open except for January 2008. (Exhibit 36). The evidence indicates that Fury is not operating as a "bona fide public eating place," but, compliance with this condition cannot be fully ascertained until the actual gross receipts are provided to and reviewed by the City. 7. Is Fury operating as a bar, cocktail lounge, dance hall or nightclub? Condition 20 provides that "the approval of this Use Permit does not permit the premises to operate as a bar, tavern, cocktail lounge, nightclub or commercial recreation and entertainment use as defined in Section 20.05.050.1." Among the uses that are not permitted, Section 20.05.050.1.3 defines nightclubs as "establishments whose principal purpose are live entertainment and /or dancing occupying more than 20% of the net public area in conjunction with the serving of food and /or beverages." Another use identified within Section 20.05.050.1 is a dancehall as defined in Section 5.32.010. The term dance hall is defined as "a place open to the public upon payment of an admission fee where music is provided and people are allowed to dance." Fury is permitted for dancing pursuant to Condition 13 and their Cafe Dance permit issued July 2, 2007. Pursuant to Section 5.32.010, "the term 'cafe dance' shall mean any place that is open to the public without payment of an admission fee, which is conducted in a restaurant, cafe, nightclub, bar, coffee house, or other place where food or beverages are sold for consumption on the premises." (Emphasis added.) Undercover investigations and patron reviews before and after the January 17, 2008 Planning Commission hearing revealed that Fury collects a twenty dollar ($20) cover charge from patrons on Friday and Saturday nights for admission into their establishment. Fury operates as a dance hall, in violation of their Cafe Dance Permit, Section 5.32 of the Municipal Code and Condition 20 of the Use Permit. In addition to charging a cover charge upon entry, Tickets are sold on various ticket broker websites through one of Fury's promoters, "The Social Group." Tickets through "The Social Group" are available by ticket sales companies such as Ticket Triangle, Ballpark and Coast to Coast Tickets. Tickets are sold for twenty dollars ($20) per person as "pre -paid admission" for Friday or Saturday nights (Exhibit 51). Selling tickets in this method leads City staff to believe Fury is operating in violation of Condition 19. Condition 19 states "any event or activity staged by an outside promoter or entity, where the restaurant owner or his employees or representative share in any profits, or pay any percentage or commission to a promoter or any other person based upon money collected as a door charge, cover charge or any other form of admission charge, including minimum drink orders or sale of drinks is prohibited." A review of the "Daily Consolidated Sales Detail" reports provided by Fury for the months of October, November and December 2007 and January 2008, reveals the gross alcohol aD Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 19 sales and food sales. There is no indication of how much is collected for the cover charge or admission fees collected by Fury or their promoters. Again, without a review of Fury's gross receipts, a determination cannot be made as to the distribution of door charges, cover charges and/or admission fees. But, staff believes that non - disclosure of the charges collected for admission into Fury on the daily report constitutes reasonable suspicion that profit sharing, percentage paying or the like to a promoter or another person is occurring in violation of Condition 19. Further, in a 2005 article about "The Social Group," the Promoters reveal that they typically make anywhere from $9,000 to $25,000 per night promoting local clubs (Exhibit 52). 8. Is Fury Violating the Law? Condition No. 18 provides that the applicant shall comply with all federal, state, and local laws. Material violation of any of those laws in connection with the use will be cause for revocation of this permit. As set forth in detail above, there are multiple violations of the Use Permit occurring at this Property, each of which is a violation of the Municipal Code. Fury has also been issued three (3) citations for violations of the Municipal Code and these citations were not appealed and two are now final. CONCLUSION A use permit is a discretionary permit and may be revoked. Fury continues to operate in such a way as to constitute a nuisance to the community that is detrimental to the health, safety, morals, comfort and general welfare of the community. The Terms of the Use Permit are continuously violated. Pursuant to Municipal Section 20.96.040, the Planning Commission may revoke a use permit upon making the applicable findings as set forth in Section 20.96.040 that: (1) the use permit was issued on the basis of erroneous or misleading information or misrepresentation; or (2) the terms or conditions of approval of the use permit have been violated or that other laws or regulations have been violated. Fury's operators and attorney are aware of the conditions of the Use Permit and have been noticed over the course of five (5) months about the concerns the City has due to violations of the Use Permit, the high number of alcohol related arrests and calls for service generated directly from Fury patrons. Fury has elected not to comply with the City's requests for documentation and has continually failed to comply with staff direction in pursuing reasonable steps to control nuisances. Staff, therefore, recommends that the Planning Commission revoke Use Permit Nos. 3162 and 2005- 018. Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 20 Environmental Review The proposed project has been reviewed and it has been determined that it is categorically exempt from the requirements of the California Environmental Quality Act under Class 21 (Enforcement Actions by Regulatory Agencies). This exemption applies to actions by regulatory agencies to enforce or revoke a lease, permit, license, certificate, or other entitlement for use issued, adopted, or prescribed by the regulatory agency or enforcement of a law, general rule, standard, or objective, administered or adopted by the regulatory agency. Public Notice Notice of this hearing was published in the Daily Pilot, mailed to property owners within 300 feet of the property (excluding roads and waterways) and posted at the site a minimum of 10 days in advance of this hearing consistent with the Municipal Code (Exhibit 59). Notice of this hearing was also mailed to the property owner and the last known operator. The environmental assessment process has also been noticed in a similar manner and all mandatory notices per the California Environmental Quality Act have been given. Finally, the item appeared upon the agenda for this meeting, which was posted at City Hall and on the city website. Submitted by David Lepo, Plapffng Director EXHIBITS (Please refer to the January 17 Planning Commission Staff Report for Exhibit Nos. 1 -28) 30. Draft Resolution No. 2008- 31. M. Cho's Correspondence dated January 16, 2008 32. Sample Employee Park Tag 33. October 2007 Fury Article in Riviera Magazine 34. January 2008 Fury advertisement in 944 Magazine 35. Staffs January 18, 2008 Correspondence 36. Fury's Daily Consolidated System Sales Detail (10/07 thru 01/08) 37. Fury Catering Menu, Fury ABC License Information 38. January 30 and 31, 2008 Code Enforcement Report 39. January 25, 2008 Police Department Undercover Reports; Additional November 9, 2007 Undercover Reports 40. January 31, 2008 Police Department Undercover Reports 41. January 25-26 Police Department Count Out Reports and Citation IN Revocation of Use Permit Nos. 3162 and 2005 -018 February 21, 2008 Page 21 42. December 1, 2007 to February 3, 2008 Arrest and Incident Reports 43. January 31, 2008 Pictures from UpscaleAccess.com 44. RD 34 Crime Statistics 45. Fury's MySpace webpage and Pictures as viewed February 13, 2008 46. Upscale Access webpage as viewed February 4, 2008 47. Sienna Entertainment webpage as viewed February 4, 2008 48. The Social Group webpage and event flyers as viewed February 4, 2008 49. Fury's New Year's Eve Party Advertisement 50. Brian Schilizzi's 40th Birthday Celebration Flyer as advertised by The Social Group 51. Web Ticket Sales Advertisements 52. May 5, 2005, OC Weekly Article: "400 Dates, Confessions of a Club Promoter" 53. YouTube webpage printout, SoCal Club Review video clip site 54. DVD: SoCal Club Review of Fury Rok & Rol Sushi Lounge Video as posted on YouTube January 2008 55. SoCal Club Review MySpace webpage printout— Friday and Saturday night event flyers 56. www.Yelp.com Fury Rok & Rol Sushi Lounge Reviews as viewed February 4, 2008 57. "St. Tropez Event" Pictures posted on www.furvoo.com as viewed February 6, 2008 58. February 6, 2008 letter to Fury from Fire Department re: Halt use of Pyrotechnic Devices 59. Planning Commission Public Notices 60. Use Permit No. 3162, staff report and October 24, 1985 meeting minutes F:IUSERSIPLNISharedlPA's1PAs - 20051PA2005- 087lRecocadon12008 -02 -21PC P, 9-