The city of Brookhaven does not intend to renew the alcohol licenses for two local nightclubs, officials announced this week, a decision likely to extend the government’s clash with its nightlife establishments.
Brookhaven denied the 2020 alcohol license applications for XS Restaurant and Lounge and Medusa Restaurant and Lounge, claiming the clubs have failed to pay excise taxes for alcohol sales. XS and Medusa are both located in Northeast Plaza, a sprawling complex along Buford Highway in the southern portion of the DeKalb County city.
Brookhaven Finance Director Aleksandar Dimov wrote letters to both clubs Wednesday informing them the city denied their license renewal for next year. Both letters stated the decision was based on a “pattern of misconduct” and the establishments’ failure to pay their excise tax returns “as required.” Representatives or attorneys for the businesses could not be reached for comment Friday.
For years, the city has sparred with its bars and clubs — and the well-known Pink Pony strip club — prompting counter-suits and claims that Brookhaven is unfairly discriminating against the businesses.
The Brookhaven City Council overhauled the alcohol code in 2017 after reviewing crime data focused on 10 late-night venues that serve alcohol and were responsible for the most calls to police, as well as citywide DUI statistics, City Council members said at the time. As part of that overhaul, "entertainment venues" — spots with either a DJ, stage or dance floor — were asked to pay a steep $100,000 for a liquor license, and weren't allowed to serve alcohol on Sundays. But businesses classified as restaurants had to pay less than $6,000 for their permits.
In August 2018, Brookhaven removed the high fees after a judge ruled it was likely discriminatory in requiring some to pay $100,000 for permits. The city also no longer prohibited the venues from selling liquor on Sundays.
Excise taxes are taxes paid to a government based on the purchase or sale of a specific good — in this case, alcohol. In Brookhaven, a business must pay excise taxes worth 3% of its total liquor sales, though that number can rise if the payment is late.
Credit: City of Brookhaven
Credit: City of Brookhaven
Last December, the city told 13 businesses, including XS and Medusa, that a city audit found they sold more liquor than they had reported on their taxes in 2018. The establishments disputed what Brookhaven claimed, but all of them eventually agreed to pay back excise taxes to the city, officials said.
This year, XS did not pay any excise taxes, according to the letter sent by the city.
Brookhaven said Medusa reported no alcohol sales for several months this year. But alcohol distributors reported selling to the club during that time period, the city claimed. The business also did not cooperate with Brookhaven police in providing video surveillance footage of two potentially criminal incidents that happened in the parking lot outside Medusa, the city said.
The clubs are able to appeal Brookhaven’s decision to deny the licenses, and could have a hearing in early December.
Drama surrounding alcohol licenses has come up elsewhere in DeKalb County this year, when the city of Chamblee filed a lawsuit against five bars and clubs on the Buford Highway corridor, claiming they were continuing to serve alcohol after the city declined to renew their licenses. The suit renewed claims that the city was unfairly targeting minority businesses.
Wouldn’t you like to support our strong journalism? Your subscription helps us cover your communities in a way that no one else can. Visit https://subscribe.ajc.com/hyperlocal or call 404-526-7988 to begin or renew your subscription.
