Top 12 Audit Q & A's for Lower Greenville Scumbars

Within just a few hours of the City's announcement of plans to audit scumbars on Lower Greenville to figure out who was legitimate and who was bogus, the rumors (and fears) were flying all over the street. BD fielded dozens of calls from bar owners who previously would not even acknowledge having his phone number, let alone that he was finally right.

BD had to stifle the urge to yell I FRIGGING TOLD YOU SO to any bar owner or City official he spoke to this week. BD has been preaching the Gospel of Bar Audits for nearly five years. It would be nice to get just a little credit for the idea from our esteemed City Council representative or anyone else at City Hall. Don't even go there with me.

A few of the bar owners were also snitching out their competitors as places for the City to audit. Nice going, guys.

In order to provide a one-stop source of information, BD has put together his own Top 12 Audit Questions & Answers for Lower Greenville Scumbars.

What is the 75/25 Rule and why is it so important??

Under Dallas City Code (link), the owner of any business serving alcoholic beverages signs an affidavit agreeing to report sales on a quarterly basis, specifically showing the ratio between alcoholic beverages and non-alcoholic beverages. If a business has sales of non-alcoholic beverages of 25% or higher, it is considered a restaurant (even under TABC code).

But if a business shows 76% or more of their sales in alcoholic beverages, then they are operating as a bar.

Has any business been audited before??

The code has been on the books for years. The law was amended - at the request of Council Member Mitchell Rasansky - to require quarterly instead of annual reports.

Even then-Assistant City Manager Mary Suhm conceded in an internal memo the City had no idea how to process these requests or the information on a citywide basis.

As far back as five years ago, the City did not even bother to ask for any reports from any business in Dallas until BD forced the City to get this information from selected Lower Greenville scumbars. Only a gave up their records to the City. The others simply refused to accept letters sent by certified mail or delivered by a City Marshall.

The City threw their hands in the air and walked away from the problem. This time the City Attorney promises to come down on recalcitrant scumbars like a ton of bricks, or $2,000 in fines, whichever comes first.

So why even bother doing audits now??

Simple. The problems on Lower Greenville hit a high or low point, depending on your point of view, this summer - a stabbing here, a murder there, too much noise in the hood, and parking issues beyond control.

The City Council and City Attorney realized they had to prioritize the issue now, after nearly ten years of ignoring the problems, or Lower Greenville was going to become Deep Ellum, Version 2.

Who is being audited, and how are they being selected?

The City surveyed all the businesses on Lower Greenville to determine what Certificate of Occupancy they have on file. They looked inside the doors, at police reports, and at neighborhood complaints to determine which ones were probably out of compliance with their CO.

Issues such as whether they have an operating kitchen, what (if any) food they serve, how they advertise and promote themselves, and the type of complaints (noise, drunks, etc) were probably included. BD's list has 12 names, but the City's list has ten names. And neither one of us will show our list (though the City list will be public in about three weeks).

Here is a list of selected businesses on Lower Greenville and their current CO (based on BD's review of documents in the City's database last year). It's easy to figure out who the bad guys are.

  • BARROCCO RESTAURANT / Restaurant Without Drive-In Service
  • BILLIARD BAR / Commercial Amusement
  • BLARNEY STONE*THE / Restaurant Without Drive-In Service
  • CREM / Restaurant Without Drive-In Service
  • ECCO LOUNGE / Commercial Amusement
  • EIGHT LOUNGE / Restaurant Without Drive-In Service
  • FIREHOUSE RESTAURANT/STOUT/WHISKY BAR / Restaurant Without Drive-In Service
  • GREENVILLE AVENUE PUBLIC HOUSE / Restaurant Without Drive-In Service
  • SERVICE BAR*THE / Alcoholic Beverage Establishment
  • SOFRANOS / Restaurant Without Drive-In Service
  • SUEDE BAR & GRILL / Restaurant Without Drive-In Service
  • SUGAR SHACK / Alcoholic Beverage Establishment
  • TIGER ROOM / Alcoholic Beverage Establishment
  • TORCH / Restaurant Without Drive-In Service
  • WHAT ? BAR / Restaurant Without Drive-In Service
  • ZEPHYRS / Restaurant Without Drive-In Service
  • ZU BAR / Restaurant Without Drive-In Service

So what happens next?

The final list of targeted bars will be drawn up by City Attorneys this week. Each bar will be sent a letter by both certified and regular mail, asking for a copy of their sales reports for a specific timeframe, probably July, August and September 2006. If the letters are refused, the City could use City Marshalls to make the deliveries.

If that fails, the City could - in theory - issue a citation for failure to produce the records and ask a judge to force the owner to show cause in a hearing as to why he should not give up his records.

In the worse case, any scumbar that fights the City's request can probably get about six months of delay.

What kind of records does the City want?

The code requires a report to show all sales, broken down into two categories - alcohol and non-alcoholic. What makes up alcoholic beverage sales is a no-brainer.

But what is included in non-alcoholic sales is up for debate. The following are definitely included: t-shirts, cover charges, ATM fees, non-alcohol bevs (Cokes, for example) and of course, food.

Up for debate: Valet parking, membership fees, other charges not normally associated with bars (cigars, for example).

Another issue under discussion is how detailed the sales reports should be. Whisky Bar once submitted its state sales tax report, which has no detail. Again, according to media reports, the City wants detailed reports of sales in all categories.

And once the reports have been submitted, they become public records and subject to Open Record Requests. BD will file requests on all the reports as they are submitted.

What will the City do with the reports?

City auditors will review each report with a fine-tooth comb to make sure items are in the right categories and reported properly. They will also compare their reports with TABC and TX State Comptroller Sales Tax Reports to see if the numbers changed.

(You can download nearly six years of Sales Tax reports from the Comptroller by clicking here).

In the end, the final report will be just one set of numbers - the ratio between alcoholic and non-alcoholic products. That number will be used to determine which businesses are really restaurants operating as bars, and which ones are really and truly restaurants.

Can the City just close down a business for being out of compliance with their CO?

One source told BD that City Attorneys were wussing out when it came to decisive action.

For example, in many suburbs, a business operating out of compliance with its CO will one day find its electric meter missing. City Attorneys have already made it clear that will never happen in Dallas.

How will the City force the true scumbars to either go away or become legitimate? If you throw in a few lawsuits along the way, it could take nearly two years to settle this mess.

The targeted businesses will have a few choices: Come into compliance by including food service and kitchen equipment to increase their ratios, take the City to court and fight the whole process, or close their doors altogether.

They could also file for a Specific Use Permit as the first step to become a legally operating bar. But an SUP requires the approval of the immediate neighborhood around them, a clean record, and a City review (at the Plan Commission and City Council). Not likely to happen.

Is this the end of the process to bring Lower Greenville under control???

Nope. The next steps will be a review of parking spaces and noise issues.

A complete survey of all parking agreements is already under way. Sources at City Hall are telling BD the numbers are worse than we imagined: At least five scumbars have parking spaces on paper only, not on the street. And there is plenty of double- and triple-dipping too, two or more businesses claiming the same parking places.

BD has filed an Open Records Request for this report, and we hope to have something posted before the holidays. In order to get a Dance Hall permit, the business will need a Specific Use Permit first. Again, not very likely to happen, especially if the business got busted for operating as a bar illegally.

BD is suggesting a few more steps to separate the boys from their booze.

  • Kitchen checks - If you are listed as a restaurant, you better have a menu, kitchen, cooking equipment, grease trap and someone certified by the City to handle food properly.
  • Self-Parking Facilities - In 2003, the City forced many businesses to stop using their parking lots after hours for bar parking since it was an illegal mixed-use of the property. Three businesses operate today, under permits (we are told) that allow them to continue - Whole Foods, Dan's Pawnshop, and Pietro's. It's time to take another look at the legality of those parking lots.
  • Valet Parking - Each business is supposed to have a certain number of spaces for free customer parking. You just pay for the zit-faced valet driver to park your car 15 feet away, and don't you dare ask to park the car yourself. That's why many patrons park in the residential neighborhoods. We need to put an end to it.

How can we stop this from happening again?

The City (we hope) is going to review each new CO application in better detail. Instead of rubber stamping each application, an inspector will go out and make sure things are legit.

This has been happening for the past few years, following complaints from residents that many "restaurants" morphed into bars just a few months after opening.

Almost all the scumbars on BD's list opened while one specific Building Inspector was running the show down here and doing whatever the bar owners asked him. We are not holding our breath on the current inspections, however.

Today, one business is claiming they are doing less than $1,000 worth of renovations. They are completely changing their food category, installing new cabinets and walls, a stage, new kitchen equipment and wiring.

If you can do that for less than $1,000, then BD has a few rooms in the Dog Pound you can renovate for us.

Why is this audit and crackdown so important??

For years, area residents have told anyone who would listen we had too many scumbars in an area zoned Community Retail, which does not allow bars. There are very few daytime retail businesses in the area, and we can't depend on antique stores or tattoo shops to improve our quality of life. We need retail, we need food vendors, we need bookstores, we need clothing stores. We don't need illegal bars.

If the property owners get the hint that no more bars will be allowed, they will figure out how to attract daytime retail business to the area. This brings up a new fight, however. When CityVille Lower Greenville was developed, the luddites leading LGNA and LGWNA forced extremely unreasonable zoning conditions on the property.

The biggest one - No business can operate after 4 pm. And you can just imagine how many business will jump to Lower Greenville with that hanging over their head.

The fools in LGWNA like to push their non-inclusive association on anyone they can harass when it comes to the future of Lower Greenville as they see it in their warped vision (imagine a deserted wasteland of empty buildings and you get the idea).

They even rejected an ice cream parlor in CityVille. Something about too many bicycyles upsetting the traffic flow in the area?

That kind of backwards thinking will come out and make it harder for any future development at the Arcadia from being successful.

Is this audit and enforcement going to kill Lower Greenville??

In the DMN story, one property owner decried the City's heavy-handed attitude –

Marc Andres, whose real estate company manages restaurants and bar [properties] along the strip, said it never ceases to amaze him how city officials give handouts to downtown and Deep Ellum but repeatedly handcuff Lower Greenville. "There is an economic driver and a strong tax base here, " Mr. Andres said. "I just can't understand it."

The only handcuffs you will see here are on the scumbar owners who do not provide the numbers required by a City ordinance on the books (and for which they signed an affidavit) for years. The law has been there for years, but the City fell down on its responsibilities and the scumbars had no problem taking advantage of the mess.

Those so-called handouts in Deep Ellum are financed by property taxes paid into a Tax Increment Fund managed by property owners working together in a positive manner to save their properties, by parking meter fees, and by deep contributions by the business owners into various programs they created to save themselves after so many years of bad business.

Most of the business on Lower Greenville are not interested in organizing a real (and legal) association or a TIF, operating legally, or caring about the impact they are having on the residential area. All they want is the money without any legal problems.

Unlike Deep Ellum, with nearly fifty different property owners, Lower Greenville is controlled by just two big property owners and five or six minor players. They rejected long-term zoning changes proposed by the Lower Greenville Land Use Study more than five years ago, which would have been the first step to solving many of the problems we are still talking about today. These businesses are not driving the economy and creating a tax base by any measurement, unless you count all the money collected (we hope) in parking fees and drunk tank bookings.

Despite what the scumbar owners claim, their sales tax payments are not helping the City. Only 1 cent of the 14 cents collected comes back to the City from the State Comptroller. That one cent is used to pay for all the City Services provided in the form of DPD officers, code enforcement, utilities, inspections and more.

Do the math, and you figure the City is losing money protecting businesses that should not even be here, for the pleasure of people who do not even live in Dallas, and to the detriment of the residential areas surrounding this so-called entertainment district (a fallacy created by the bars to justify their own existence).

By Avi S. Adelman under Public safety , Dallas City Hall