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Mean Spirits

All Alex Pappas wanted was a liquor store. All his neighbors wanted was for him to sell his booze somewhere else.

Out of that fundamental disagreement, enormous consequences have sprung.
After more than a year of gathering petitions and sitting through rounds of hearings, frustrated Congress Park residents are talking about a system that doesn't work. The costly, increasingly acrimonious battle over the proposed Alex's House of Spirits has managed to entangle a host of interested parties, from community leaders and city council members to Mayor Wellington Webb, state legislators and the U.S. ambassador to Austria. The case has also cast a cold light on weaknesses in Colorado's liquor laws and the clear-as-mud policies of Denver's Department of Excise and Licenses, which is currently considering Pappas's third application in eighteen months for a liquor store in the same building.

In the fall of 1994, Pappas, whose family operates Chef Zorba's restaurant on East 12th Avenue, first proposed to open a package liquor store in an adjacent building that he owns between Elizabeth and Clayton. Opponents defeated that application with a strong turnout at the licensing hearing ("Bottled Rage," April 5). By law, a liquor-license applicant is not allowed to reapply at the same location for two years after an official finding that the neighborhood doesn't want a new licensee. But by exploiting what appears to be official confusion about the meaning of "location," Pappas has reapplied twice, using different addresses in the same collection of storefronts.

Neighbors say Pappas and his lawyers are making a mockery of the liquor laws and that bureaucratic dithering at Excise and Licenses has made matters worse. After first agreeing to an interview and then canceling it, Pappas declined to talk to Westword about the situation, referring all questions to his attorney, Darrell Nulan, who hasn't responded to repeated requests for comment. But in other interviews and meetings with neighborhood groups, Pappas has complained of discrimination, charged that the strident opposition to his store has been orchestrated by a competitor and vowed to keep reapplying until he gets what he wants.

"It's kind of the Douglas Bruce approach--wear them down until they give up," says Mary Ferrell, a Congress Park resident who attended one meeting with Pappas. "Alex has said he's going to do this if it kills him."

Much of the opponents' anger about the proposed store seems to be directed not at Pappas but at city administrators. Mayor Webb has taken an unusual interest in the case--apparently because Pappas, a 57-year-old Greek immigrant, enjoys strong support among leaders of the Greek community, many of whom have been staunch backers of Webb and hefty donors to his 1995 mayoral campaign. DeAnne Minner, president of Congress Park Neighbors, criticizes the "anti-neighborhood posture" of Excise and Licenses and sees the case as a litmus test of the Webb administration's commitment to neighborhood planning.

"Everyone is concerned about what this could mean," Minner says. "Not that this specific situation will happen again, but whether the administration is just saying it supports the neighborhood--or really means it. The mayor has backed us on other issues before, but that's when he was facing re-election."

Andrew Hudson, spokesman for the mayor's office, characterizes Webb's involvement in the case as minimal. However, a review of documents related to the case indicates that the neighborhood dispute has picked up considerable political freight with each new application. It has become a textbook example of how the liquor-licensing system works, or doesn't work, in Denver. Here is an insider's guide to working the angles--call it 13 Steps to a Neighborhood Impasse:

1. Test the waters. The one-block commercial strip on East 12th where Pappas wants to open his liquor store hosts a hardware store, a laundromat, a used-furniture store, a hair salon, a grocery, a card shop and Pappas's own restaurant, which obtained a license to serve alcohol a few years ago. Pappas thought it would be a dandy location for a liquor store, too, a business that would be less physically demanding than the bustling Chef Zorba's and would complement the eatery's takeout business.

But Pappas's neighbors had other ideas. Some months before Pappas filed his application, Capitol Heights Pharmacy & Liquors had moved from the corner of the block to a new location eight blocks east, and few people mourned its departure. Since the move, says Minner, "we don't have people panhandling, pissing in the alley or dumping liquor bottles in our yards. People felt the quality of life improved dramatically after [Capitol Heights] left."

There are currently 34 liquor licensees, including bars and restaurants, within the designated district of Pappas's application--an area Excise and Licenses calculates by drawing a diamond with a nine-block radius around the site. Neighbors say Pappas didn't bother to contact the neighborhood association before filing his request for the 35th.

 

2. When you lose, blame the competition. In October 1994 Pappas's application for a liquor store at 2602 East 12th Avenue went down in flames; hearing officer Terry Tomsick characterized the number of opponents who showed up to oppose the store as "overwhelming." But Pappas and his attorney, Glen Anstine, insisted that the massive campaign against the store was actually a pre-emptive strike by Capitol Heights owner Alvin Eisenberg, who'd helped pay the opponents' legal expenses and clearly had an economic interest in defeating the application. The "taint" of Capitol Heights's involvement might have provided grounds for Pappas to appeal Tomsick's decision to Denver District Court, but he didn't do that. Instead, he chose another approach--one that further cemented opposition from the neighborhood.

3. Apply again, using a different address. Three months after his defeat, Pappas applied for a license at 2600 East 12th, a storefront separated from his first site by about fifteen inches. Despite the statutory limitation on reapplying within a two-year period, Excise and Licenses treated the request as a new application at a new location. Attorneys familiar with the system say that shopping centers sometimes "try on" different addresses for liquor applications and that state and local authorities tend to treat separate addresses in the same building as distinct locations, provided the spaces don't overlap.

"The statute is not crystal-clear," says Excise and Licenses director Beth McCann. "We have traditionally regarded 'location' as any kind of separate area, but it's really a legal question. There are no cases directly on point."

Mary Sylvester, a former director of Excise and Licenses who became embroiled in the Pappas case in various ways (see numbers 5 and 11, below), argues that the statutory criteria for denying reapplications have less to do with the particular location than with the "locality"--the diamond-shaped district surrounding the proposed site. "If Excise and Licenses had read [the statute] carefully, they should never have taken his money for the second application," she says. "The way I read it, if you deny a liquor store license because the neighborhood's requirements are already being met, then you can't allow them to apply for another one anywhere in the locality for two years--unless another license expires."

City councilman Ed Thomas, who testified against Pappas's first two applications, views the address-switching as an "unheralded" loophole in the law--but a loophole just the same. "There aren't many people who have five addresses in the same block to choose from," he notes.

Pappas's strategy touched off such an uproar in Congress Park--and among other neighborhood groups--that state senator Pat Pascoe has since introduced legislation that would explicitly prohibit reapplying within 500 feet of a previous site within two years.

"'Location' all along should have meant the same building," says Pascoe, whose bill is awaiting action in the Colorado House. "It only makes sense."

4. Woo the neighbors. Shortly before the second license hearing last spring, four Congress Park residents met with Pappas and Anstine in an effort to persuade them that the neighborhood simply didn't want the liquor store. They pointed out that the opponents were no longer accepting financial help from Capitol Heights's Eisenberg and had embarked on an all-volunteer campaign, and they suggested various other businesses Pappas might open that would be welcomed by locals, including a bakery or a flower shop.

Pappas, though, wanted his liquor store. "He basically said he'd given a lot to the neighborhood and how dare we tell him how to run his business," recalls Mary Ferrell. "I think it's a matter of pride at this point--and ideology. He believes, you know, this is America, and he can do whatever he wants."

As the meeting wore on, Ferrell says, Pappas "got pretty red-faced and was screaming and pounding the table." Neighbor Paul Jackson says Pappas "puffed all up" at the suggestion that if he persisted in his application, some residents might picket his restaurant.

"He said, 'Bring them down. I'll get my shotgun and shoot them,'" Jackson says. "Then his lawyer said he was just posturing. It was a nonproductive meeting."

Turnout for the second hearing was even heavier than for the first. Although Pappas had his supporters, 141 opponents attended the meeting to present a total of 1,430 signatures on petitions--"clearly an overwhelming statement by the community," as one hearing officer would later describe it. Once again, the license was denied.

5. Get the mayor involved. Last summer Mayor Webb asked Mary Sylvester, an attorney and former Webb speechwriter, to review the denial of Pappas's second application. "The election was just over, and the mayor said, 'Mary, read this and tell me'--to tell him if it was valid, basically," Sylvester says. "I think he called me to see if I could think of any way around it. I said, 'All they can do is appeal it.'"

 

Webb's interest in the case, disclosed in a letter Sylvester sent to Excise and Licenses a few weeks ago, played into opponents' worst fears about the liquor store battle. What was the mayor doing inserting himself into the dispute? The fact that he had chosen to consult Sylvester--who'd headed Excise and Licenses from 1991 to 1993 and had recently advised the opponents' attorney, Lawrence Schoenwald, on the Pappas case--also raised concerns about whether Webb was seeking to influence the licensing authority's handling of the matter in Pappas's favor.

Mayoral spokesman Hudson says Webb's interest in the case was motivated by "concerns raised by several people from the community" and went no further than his conversations with Sylvester. "If there was any involvement, that was it," Hudson says.

Sylvester describes Webb's request as "a harmless attempt" to obtain "an independent reading" of the decision. In fact, Sylvester claims Webb consulted her precisely because he didn't want to put pressure on Excise and Licenses.

"I was the person who taught Wellington that he had no control over the office of Excise and Licenses," Sylvester says. When she ran the department, she adds, "I had beaten him badly enough about reviewing the decisions of the director of Excise and Licenses that he was afraid to go there."

Still, it's doubtful that just any defeated liquor-license applicant could interest Webb in reviewing his situation. According to city election records, Pappas and Chef Zorba's contributed more than $2,200 to Webb's re-election campaign last year. Pappas's supporters among the Greek restaurateurs of East Colfax, including Takis "Pete" Dadiotis (see number 12, below), contributed thousands more.

6. Apply a third time, using an address that doesn't exist. Last fall a hand-lettered sign reading "2622" appeared on one of the doors of Pappas's building on East 12th Avenue. The U.S. Postal Service didn't recognize the address, particularly since the door it indicated, currently the entrance to a laundromat, was located between 2604 and 2620. Yet the phantom address was the designated location for Pappas's third application, filed November 3; within a few days it was altered to reflect the address Pappas eventually registered with the city engineer: 2612 East 12th.

Neighbors say they're amazed at Pappas's persistence. "His whole argument on the second application was that he believed the first one was turned down because of a big conspiracy," says Kathy Fay, who lives a block away from the future site of Alex's House of Spirits. "And after a resounding 'no' on the second, he still doesn't get it."

Opponents of the application are now engaged in a third round of fliers, petitions, meetings and canvassing. "Most people don't appreciate how time-consuming and energy-consuming a liquor-license battle is," sighs Mike Henry, an attorney representing Capitol Hill United Neighborhoods--which, like Congress Park Neighbors, opposes the liquor store. "All of these folks have jobs. All are volunteering their time--including the lawyers involved."

In addition to Ed Thomas, city council at-large members Cathy Reynolds and Susan Barnes-Gelt have gone on record in opposition to Pappas's application. So has one of Denver's wealthiest and most influential Democrats: Swanee Hunt, the American ambassador to Austria--who, when not in Vienna, happens to live in the Congress Park neighborhood.

7. Hire a well-connected attorney. For his third license bid, Pappas retained attorney Darrell Nulan, whose law firm, Trimble & Nulan, enjoys close ties with the Webb administration. Nulan's partner, King Trimble, is a former Denver city councilman, ex-state legislator and longtime Webb associate; his House seat was filled by Wilma Webb when he stepped down to run for city council. His firm reaped more than $800,000 in fees for legal work related to the sale of bonds for Denver International Airport. More recently, Trimble headed the transition team that oversaw the reshuffling of city agency appointments following Webb's re-election, including the appointment of Beth McCann as director of Excise and Licenses.

8. Keep the press guessing. Days after filing the third application, Pappas told Westword that he had no further plans for a liquor store in his building. Quote: "Why would I try for a liquor license again when obviously this area does not want that?" (Mouthing Off, November 21). Pappas has since denied making the statement; a few days after that article appeared, he told a television reporter that if he was turned down on his third attempt, he would apply a fourth time.

9. Try to blend in with existing businesses. Mary Ferrell, who chaired the group of locals that drafted Congress Park's neighborhood plan, describes the current commercial mix on East 12th Avenue as "pedestrian- and neighborhood-oriented," giving the area a "town square" feeling. That's the way the neighborhood wants to keep it. "We don't want a lot of traffic; we don't want to become South Gaylord," she says.

 

And that, in her view, is another problem with Alex's House of Spirits: "Our analysis says that for a liquor store to be viable there, it will have to attract people from outside the area."

From the outset some of Pappas's critics have questioned whether his liquor store would eventually encompass all the storefronts in his building; early in the battle an anonymous, alarmist flier claimed that the neighborhood was facing the prospect of "a liquor store the size of an Argonaut," complete with the accompanying traffic and squalor. Pappas has denied any such intentions, and any future expansion of his store beyond the modest space now designated would have to face additional public hearings and official scrutiny. Yet the speculation continues, if for no other reason than that neighbors can't comprehend why Pappas is fighting so determinedly for a relatively small retail operation.

"He could run that shop I don't know how many years, and it wouldn't begin to pay back what he's spent [on the applications]," says Paul Jackson. "But if he can get one license, I understand it's relatively easy to expand it. Do we have any evidence that's what he plans to do? No."

10. Seek professional help. One of the ways that Excise and Licenses determines if a liquor licensee is needed or desired in a particular area is strictly quantitative--the number of signatures each side gathers on petitions and the number of warm bodies that show up at the public hearing to testify. The process would seem to favor a well-organized neighborhood group, but Congress Park Neighbors president Minner says that Pappas has embarked on a more aggressive campaign this time around, hiring a professional canvassing firm.

"He's very committed to getting what he wants, and he's willing to pay whatever it takes to get the required number of signatures," Minner says. "We're at a distinct disadvantage because we can't afford to hire petitioners. We're using volunteers."

11. Hire the former director of Excise and Licenses. Late last year Pappas retained Mary Sylvester, who had previously been an unpaid consultant in the case, first on behalf of the liquor store opponents and then as a favor to Mayor Webb (see number 5 above). Opponents' attorney Lawrence Schoenwald was sufficiently distressed to learn of Sylvester's defection to suggest that she had a conflict of interest. In early January Sylvester returned Pappas's check and bowed out of the case, but not before writing a letter to all parties involved detailing her peculiar three-sided contact with the dispute.

Schoenwald declines to discuss Sylvester's role, saying that her letter "speaks for itself." Sylvester says she saw no conflict in joining Pappas's legal team until Schoenwald raised the issue. "I am a lawyer with two hands, and I can argue either side of the issue," she says. "I didn't think I had a problem when I agreed to represent Mr. Pappas. Larry Schoenwald did. And if he thinks I've got a problem, I've got a problem."

In her letter, Sylvester wished Pappas success and expressed "my frustration that there is more law to this case than is being addressed."

12. Play the ethnic card. Two weeks ago Pappas met with representatives of the Capitol Hill and Congress Park neighborhood groups to discuss his latest application. Also present was Taki "Pete" Dadiotis, co-owner of the Golden Bell Diner on East Colfax and a prominent member of the Greek Chamber of Commerce.

According to attendees DeAnne Minner and Kathy Fay, Dadiotis explained that he had been invited to attend because of concerns in the Greek community that Pappas hadn't been treated fairly in his prior applications because he was Greek. A man identified as Pappas's "investigator" described the dispute as a "tong war" and claimed that opponents had ridiculed Pappas's accent at the first license hearing.

Fay says the neighborhood representatives took pains to assure Pappas that they were opposed to any liquor store on the block, regardless of who the applicant was. "They want to make this into some kind of ethnic thing," she says. "That's something they've inserted into the debate. Nobody cares about his ethnicity."

Like Pappas, Dadiotis declines to comment on the meeting, citing concerns about the upcoming licensing hearing. "I don't think it's fair to talk about it now," he says.

13. When all else fails, hope for a bureaucratic flip-flop. Last month hearing officer Joyce Seelen recommended that Pappas's latest application be thrown out, agreeing with motions filed by Mike Henry and Schoenwald arguing that the "location" of Alex's House of Spirits was essentially identical to that of the prior applications--the same building, the same impact on the neighborhood. Seelen noted the history of opposition to the enterprise and concluded that all three addresses are the same location. "To reach any other result would allow for absurd consequences," she wrote.

 

On January 4, Excise and Licenses director McCann accepted Seelen's recommendation, pending the filing of objections. Five days later, before the opponents could begin to celebrate--and before any objections to the decision had been filed--McCann reversed herself. Citing a lack of case law on the matter, McCann ordered the attorneys to present oral arguments on the location issue. She subsequently issued a decision allowing Pappas's application to proceed to a public hearing on March 7.

"If one can simply continue to apply by moving down the street a few feet every time an application is denied," McCann wrote, "the intent of the statute seems to be thwarted." Yet because Pappas's various addresses involved no "overlap of square footage," she considered the locations to be separate.

Opponents of the liquor store have branded McCann's decision a "cop-out" and worse, but McCann says it's not her job to rewrite the statute. "I don't think it's the place of someone like myself, an appointed official, to make these calls when the legislation is not clear," she says.

DeAnne Minner thinks McCann ducked "an opportunity to stand behind the neighborhood...It's absurd to think our 'needs and desires' changed because he moved fifty feet down the block," she fumes. "It's the same neighborhood--the only thing that's changed is the amount of money that's going to be spent on this."

Seelen won't be overseeing the license hearing next month. McCann decided to replace her with "someone completely new, who hasn't had any involvement in the case," in order to avoid any appearance of bias or impropriety. Whatever the fourth hearing officer decides, McCann suspects the case may end up being resolved in court--which, as far as Excise and Licenses is concerned, might be a good thing.

"We're running out of hearing officers," McCann says.


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