The Spencer City Council denied Southside Grill’s liquor license renewal Monday due to allegations from officials that it has served alcohol to minors and intoxicated individuals and that its dancers often expose their nipples, a state code violation.
Both City Attorney Don Hemphill and Southside Grill owner Chris Burg acknowledged that there is an active investigation involving the business.
“We have not been charged with anything,” Burg said of his business, which has a 2018 liquor license that expires Sunday and a 2019 renewal now stalled until further state action. “We have not been indicted with anything under these alleged crimes.”
Southside Grill, 325 11th Street SW, markets itself as a gentlemen’s steakhouse. It has a limited menu, bar and female dancers who, under Iowa code, can’t expose their “genitals or female breast nipple.”
Burg reopened Southside Grill under its current model last fall after having struggled as a restaurant.
Burg can appeal the council’s denial to the Iowa Alcoholic Beverages Division. Until that process is complete, his establishment can continue to serve alcohol.
Hemphill and Spencer Police Chief Mark Warburton recommended the council deny Southside Grill’s liquor license renewal, according to an agenda memo.
Ward 4 Councilwoman Leann Jacobsen made the motion to deny the renewal of the permit for “evidence that the licensee has repeatedly served alcoholic beverages to persons under the legal age, evidence that the licensee has served alcoholic beverages to an intoxicated person and evidence that female entertainers at the Southside Grill regularly violate Section 728.5 of the Iowa Code.
Ward 3 Councilman Steve Bomgaars seconded Jacobsen’s motion.
The council voted 5-0 to deny the renewal. Ward 1 Councilman Tom Nelson and Councilman at Large Rich Prentice were absent.
Burg was not given a chance to speak before the council voted. That was something Robinson said he had spoken to Burg about prior to the meeting.
“Because it’s not a hearing at this point in time, this is not the appropriate time for Chris to take the mic,” Robinson said. “If he wants to take the mic, we’ll do it at the end of the meeting under “Other Opportunity to Address the Council” (agenda item). So we appreciate his cooperation with that, as well.”
Ward 5 Councilman Ron Hanson said, to his knowledge, the council has never denied renewal of a liquor license while he’s been on the council. He was first appointed in 2006.
Hanson asked Hemphill if he could provide context of any similar actions taken by past councils.
Hemphill said that, like Hanson, he does not recall the council ever having denied a renewal under similar circumstances.
He explained the appeal process that Burg can now enter.
“The state will provide a hearing at which all the evidence will be presented and the state will make a decision,” he said.
A difference of opinion about exposure
Aside from the alleged alcohol violations, the other issue involves a section of Iowa Code that deals with public indecent exposure in some businesses.
Iowa Code Section 728.5 in part states that owners, managers or people with direct control of a business that is required to have a sales tax permit are guilty of a serious misdemeanor under various circumstances, including:
“If such person allows or permits the exposure of the genitals or female breast nipple of any person who acts as an entertainer, whether or not the owner of the place of business in which the activity is performed employs or pays any compensation to such person to perform such activity.”
Burg asked Hemphill what the public indecent exposure allegation was in reference to.
“As was cited, it’s a violation of Section 728.5 of the Iowa Code,” Hemphill said.
“And what’s that?” Burg asked.
“It’s available to you,” Hemphill replied. “You can read it if–”
“OK, um, you and I, when we talked about this, we discussed as long as the women have nail polish or pasties or any other covers of their areola or the nipple, the dancers are legally covered,” Burg said. “So, therefore I am not in violation.”
After the meeting, Hemphill said there is evidence of “routinely exposed breasts.” He pushed back on Burg’s understanding of what can be used to cover nipples.
“He’s always maintained that nail polish makes it legal,” Hemphill said. “We disagree.”
Burg puts Liberty Lanes on the line
In addition to Southside Grill, Burg is also the owner of Liberty Lanes, Spencer’s bowling alley, and several other businesses.
Burg said that in the four years he’s owned Liberty Lanes he hasn’t had any prior violations related to alcohol. In two weeks, that business’s liquor license will come before the council for renewal.
Burg said he believes his liquor license for Liberty Lanes will be denied when it expires later this month because it is under the same LLC, Burg Endeavors, as Southside Grill.
“I just want to let you guys know that if, in the future, the liquor license gets revoked for Liberty Lanes, Spencer probably will not have a bowling alley,” Burg said. “And I will keep it closed for the citizens of Spencer because you cannot have a bowling alley and a league without alcohol. Just like a golf course. You can’t have a golf course without alcohol sales.”
Burg continued that he does not think the town “can afford to lose another business, let alone an entertainment business.”
He said he works with the community and law enforcement.
“We’ve done good things there,” Burg said. We’ve tried remodeling. I’ve done free bowling for the community. We let the high school come in there and do bowling and charge them only a dollar a game at a discounted rate. You know, I work with the community. I work with the cops. They will tell you. I have called when I see drugs at my places or alleged drugs. Or I’ve called in a drunk driver before.”
Alcohol violation allegations at Southside
Like Liberty Lanes, Southside Grill “has not been charged with anything to date,” Burg said.
He argued the punishment of denying his liquor license renewal does not fit the alleged violations or crimes.
“Even if I was charged, a first offense (of sale of alcohol to a minor) is $500 to the bartender and/or a 14-day suspension of a liquor license,” Burg said. “It does not say to deny a liquor license.”
Burg said there is a “big investigation with the Iowa State Patrol” concerning Southside Grill.
“I have remained in contact with them,” Burg said. “I have remained in contact with the Iowa Alcoholic Division. So we will appeal it all the way up.”
He said an IABD representative said it could take 9 months to a year for the process to finish.
“I just want to say we do follow the laws,” Burg said. “We do have a bouncer on scene at the doors. People do slip in time-to-time. We have not been – we have never served an underaged person knowingly in our bar. Have they slipped in or shown us a fake ID? Probably. We have made aware our bartenders at all our places. They’re I-PACT-certified [Iowa Program for Alcohol Compliance Training], so they know what to look for. We do have black lights to look at fake IDs. And then also, we do have the cameras so we can watch it.”
Following the meeting, Hemphill said there is evidence of the violations.
“We believe that there is strong evidence of sale to minors,” he said. “Not just one, but several.”
He claimed there is also evidence of intoxicated individuals having been served.
Council members were given a memo from Hemphill regarding the situation but City Clerk Theresa Reardon said that is not a public record, citing the pending investigation and that the document is an attorney’s work related to an investigation.
In his last remarks to Burg, Robinson reiterated that the council’s actions Monday night were “not a trial” or a hearing.
“They don’t assume innocence; they don’t assume guilt,” Robinson continued. “From our perspective as a council, based on legal advice, with the proceedings that are currently going on related to your business, at this time, the council is not comfortable renewing your liquor license.”
As long as Burg files his appeal, the state will have the final word.