Neighbours restaurant? In addition to the tax man, Capitol Hill clubs face permit problems

A wild ride at Neighbours (Image: DBS/Neighbours Facebook)

Those worried about an over developed, overly sanitized version of Capitol Hill can probably imagine some Bizarro version of the universe where even Neighbours dance club has become a restaurant. Here’s the deal. It already is one. And has been for more than 20 years. And isn’t the only Pike/Pine club masquerading as a restaurant.


According to court documents obtained by CHS, Neighbours has more on its hands than a fight with the tax man. The club’s lawyers spent the summer in a legal battle with the City of Seattle over the business conducted at the Broadway club. According to the documents, Neighbours has operated as a restaurant since it opened in 1983. But a fire department inspection last spring of emergency exits and the fire sprinkler system — routine, the City tells us — revealed the discrepancy. Neighbours is not permitted as a nightclub even though people have been dancing there for decades.

“Our code enforcement is complaint-based, so while the nightclub has been operating for some time, the Department of Planning and Development (DPD) was only recently informed of the issue,” spokesperson Bryan Stevens tells CHS. 

The permit issue is more than a formality. Requirements for crowded nightclubs call for important structural elements that aren’t necessarily needed for lower occupancy restaurants. Paramount — and potentially most expensive for a building that needs to change to comply — are more stringent requirements for exiting.

Representatives for Neighbours or MDK Law Associates, the law firm representing the club in the dispute with DPD, have not yet responded to CHS’s inquiries on the situation.

After an agreement to drop the case, the dispute with DPD has moved out of the courts and back into City Hall. This week is the deadline for Neighbours to show the City of Seattle that it is making “substantial” progress on becoming compliant so that it can continue to operate and either work with DPD on a new permit for the dance club — or, unlikely we assume, start getting serious about being a restaurant. In the meantime, an application for a $13,000 construction project to overhaul the club’s basement is on hold. A $20,000 project to overhaul the front of the club — listed as “Alter Storefront to existing Restaurant per plan” in DPD’s notes on the permit application — was completed this summer.

It turns out, Neighbours is not alone. The city has also set its sights on the HG Lodge as that club has also operated with a restaurant permit since its days as the War Room, according to DPD. Issues with hosting the BadWill flea market this summer brought the permit issues to the city’s attention as a fire inspection revealed the club’s sprinklers were not “operable” and the club lacked the official drinking establishment permit necessary to operate a club, according to DPD’s Stevens. Stevens says HG Lodge has already begun the process of working with DPD to bring the space into compliance and obtain the correct permit for the business.

HG owner Marcus Lalario did not respond to our requests for more information.

The permitting issues have come to light as Capitol Hill clubs also face scrutiny from state auditors over the so-called “dance tax” issue reported by the Stranger earlier this summer. A spokesperson for the Washington State Department of Revenue tells us there is no connection between the City of Seattle’s violation notices and the revelation that some clubs have not been paying taxes the state says they owe on cover charges — and that audits, not DPD inspections, triggered the findings regarding back taxes the state says Neighbours owes.

In addition to the costs of obtaining the permits and bringing the buildings into compliance, a city change of use process could also expose clubs like Neighbours and HG Lodge to additional business pressures. The club could find itself in a situation similar to that of the Volunteer Park Cafe as the restaurant continued operating for a year as it secured its change of use after agreeing to a set of conditions. Some living or doing business near the club/restaurant might be already licking their chops

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    27 thoughts on “Neighbours restaurant? In addition to the tax man, Capitol Hill clubs face permit problems

    1. “Our code enforcement is complaint-based, so while the nightclub has been operating for some time, the Department of Planning and Development (DPD) was only recently informed of the issue,”

      I got a hundred bucks says the complainant was one of those East Side suburbanites who’ve recently moved into those “conservative-yuppies only” condos across the street.

    2. “East Side suburbanites”

      Right, there is a veritable stampede of Republican Eastsiders leaving behind their 4000 square foot houses, huge yards, two-car garages, and good public schools so they can move to the Pine/Pike corridor and shut down all the nightclubs.

    3. Typical knee-jerk reaction, Typical. I’m unsure which condo’s your speaking of? The shell station, the frame shop, QFC, or SCCC. All of those business are empty at night.

      The “yuppies” I know that live in the area are generally working class techies that have lived in the city most, if not all of their lives.

    4. “Our code enforcement is complaint-based, so while the nightclub has been operating for some time, the Department of Planning and Development (DPD) was only recently informed of the issue,”

      What this means is inspectors receive money under the table to overlook discrepancies (apparently for decades) until a citizen makes a complaint.

    5. When it comes to safety, yes, bring on the city to enforce these regulations. Cheap ass venues trying to evade providing adequate safety to their patrons need to be prosecuted.

      A fire in a nightclub without sprinklers or adequate exits is a death trap ready to happen.

    6. It is inconceiveable to me that a business owner and/or their lawyer would not ALWAYS know what kind of a permit they have, and if they learn that it’s a permit for something other than what’s appropriate then they would immediately get it changed, even though that would involve some costs and paperwork. If the owner really is unaware, or chooses not to change to the proper permit, then he/she only has himself to blame when something like this comes to light…..it’s just incompetence, pure and simple.

      In this case, it’s a very serious issue because the owner has put his customers at risk for injury or even death. Deplorable!

    7. “The permit issue is more than a formality.”

      Justin, does this apply city-wide, or only in cases where you do not have a dog in the fight? You did not take this approach in your coverage of VPC’s illegal expansion and the deep rift the owners’ mistake caused in my neighborhood. You continued to support the story that the neighbors had caught VPC in a zoning technicality. The truth is that a permit issue IS more than a formality. VPC was operating in a full-blown, multi-faceted, zoning violation.

      When Ericka Burke and Heather Earnhardt opened Volunteer Park Cafe, they did not take the time to learn if they had the zoning or the land-use for a restaurant. It had neither. The neighborhood zoning was residential, and the land-use was for a grocery store. Justin showed great favoritism in reporting primarily that the neighbors objected to this popular place, without delving into why the neighbors objected, which was because the illegal restaurant wanted to expand in a way that was also illegal.

      Justin never clarified with his primary source, Ericka Burke, why she was expanding when she had not yet obtained the land-use for the original venture. He never clarified why, immediately after being found in violation, Ericka went widely public with the statement that she was in compliance and that the issue was that the neighbors wanted to shut her down.

      At the helm of CHS, Justin played a large part in ensuring that his dog (VPC) was presented as the victim of unreasonable and NIMBY neighbors who used a technicality to go after a pair of sweet, hard-working women and their homey business venture because ….

      That is where Justin’s argument never solidified. There never was a because. There never was a right side to VPC’s story. In this case, with Neighbors, Justin is playing a more even hand. Unfortunately, his more reasonable approach comes too late for my neighborhood.

    8. I’d love to know what dog you are talking about but before anybody puts focus on comparing adequate fire exits and sprinklers with delicious, buttery scones, I want to state that I 100% disagree with your characterization of our coverage. I brought the same scrutiny to our extensive, thorough and complete coverage of the Volunteer Park Cafe as I have to our first coverage of this important neighborhood issue with Capitol Hill’s clubs. We’re not here to help or hurt a business. This has nothing to do with your dog. This is about our best attempt, every day, of documenting what has happened and coming as close to the truth as possible.

    9. Sorry, MAS, but the problem WAS caused by a bunch of NIMBY neighbors who saw a vulnerability and pounced on it. Such is life. If somebody goes into business, ideally the business will thrive. The minute it does, the neighbors get their panties in a knot and try and shut it down. Wah. Anybody who goes into business without that in mind and doesn’t take steps early to cover their tails, they deserve big legal bills.

    10. Nice try. Clubs are now required to have sprinklers.

      It’s no secret that SOMEBODY has had their eye on that spot on Broadway for YEARS and would do anything to put Neighbour’s out of business. If this little restaurant/dance club thing is yet another way to try that, so be it.

    11. MAS:

      Please start your own blog and provide whatever evenhanded coverage you see fit to write.

      We’ll all be here, reading j’s.

      Or just go back to enjoying your beloved neighborhood and stop stirring pots that have boiled over long ago. Life’s short.

    12. While I am usually one of the first to point out discrepancies in city policies, my instinctual reaction to this is that it has a lot less to do with gay or condos, and much, much more to do with the city being flat-ass broke.
      City employees inspect private businesses all the time (not to mention frequent them as customers); my store is inspected twice a year to make sure it is up to fire code, and that’s just one example. At any time, Seattle could have called out Neighbor’s on it’s various (seemingly innocuous) violations over the years (and, I would guess dozens of other businesses across the city). Why didn’t they, I don’t know. But, now the city is broke-ass-broke. Symptoms of this are the pay parking being extended by two hours, and I’m seeing boots on cars everywhere around this city. Several condos & apartment buildings in the ‘hood have been fined by the city for having shrubs & trees that block the side walk – in years past, this would have been a stern note and a warning about being fined. Funding is being cut every time you turn around. My store just received a fine from the city for not having a working intercom running from the elevator to the lobby: we neither have an intercom in our elevator, nor do we have a lobby.
      I am all about no more condos, clearly I don’t want to die in a fire, and everyone knows that people from Bellevue eat babies, but I think the real problem is that the city is freaking out and looking for ANYTHING that will lead to revenue.
      So: businesses of Cap Hill, take note; if there is something less than legal on your property, and the city has either not noticed, or let it slide in the past, that may be changing in the future. Be proactive, and address the problems now, even if you know it’s just stupid red tape. How can it hurt?

    13. MAS – You’re probably not going to win over anyone by hijacking a comment thread to bitch about the author and your irritation at VPC.

      “VPC was operating in a full-blown, multi-faceted, zoning violation”. Really? Really? You make it sound like they were dealing crack instead of delicious locavore food. Won’t somebody please think of the children??

      Also, you would have us believe that you (and apparently others) are so in-tune with city zoning laws that the act of violating them is so repugnant that the business must go? Your “zoning sense” warned you the instant they sold their first cookie? How do you feel about people who remove tags from pillows?

      “…his more reasonable approach comes too late for my neighborhood”? That makes it sound like the whole neighborhood has fallen into ruin and been condemned. I live 3 blocks away and I’m pretty sure that the neighborhood is still there and hasn’t been overrun by gangs, thieves, or junkies.

      Just be an adult and admit it – the success of VPC made your life a bit more inconvenient and you found what you thought was a way to shut them down – the absolute embodiment of NIMBY.

    14. Bravo. Perfectly well said. It’s about the money, stupid. A lot of departments are not only working harder, they’re trying to substantiate their worth. Things overlooked before are getting closer inspection now. It’s not persecution, it’s business.

    15. I remember the days when they had the Nieghbours buffet which was thier solution to meet the liquor boards rules on providing food in order to serve hard alcohol. The chilli mac wasn’t bad if you were wasted already!

    16. Ha, that place had to put sprinklers in about a year ago. I’m guessing that’s not what the dispute is about. If it’s so “cheap ass” then take your business elsewhere.

    17. You’re probably right that the City is looking for ways to increase revenue, but I see this as a good thing…not only because this is a plain necessity to maintain important City services in a time of austerity, but because irresponsible individuals and businesses are finally being held accountable..

      The booting of traffic-ticket scofflaws is catching those who repeatedly choose to avoid payment. Regarding the issue of property owners who never prune their shrubs/trees, and allow them to take over the sidewalk, DPD first does an inspection (usually after a complaint is received) and issues a warning that the problem needs to be taken care of by a certain date…it’s only when a property owner ignores this warning that a fine is assessed. And surely you cannot complain about the City investigating a nightclub (Neighbor’s) whose owner(s) have chosen to not get an appropriate permit and make the changes necessary to ensure the safety of their customers?

      It’s too bad that some people are so irresponsible/unethical…but that’s life…and they need to suffer the consequences.

    18. I think that Justin is a very responsible and objective journalist, and that he is excellent at reporting on both sides of an issue. We on Capitol Hill are very lucky to have his blog!

    19. It’s been a rough year.

      -Ericka assaulted me;
      -one of her cooks kicked at the air near my head;
      -Heather laughed as someone in her car flipped me The Bird. This took place in full view of a sidewalk full of al fresco customers.

      Most painfully, a VPC supporter instigated a social isolation campaign against my child. My child was 7 years old. Her child did not try to isolate my child. The parent did.

      I have said before but it bears repeating; Ericka and Heather are not responsible for their customers’ actions. However, they established the environment in which these behaviors flourish. They lead the charge. So while homes still stand and drug lords don’t rule the street, there has been a great deal of damage – to our neighborhood and to our children.

      Back to Justin’s coverage:

      CHS went whole hog for the NIMBY story line. When VPC was found in the wrong about their zoning, Justin switched the narrative to “neighbors who oppose VPC’s expansion.” He ran a single article outlining our POV, but never links to it. Instead, he links to articles that favor his bias.

      A recent comment pointed out that Justin never writes .. “oppose VPC”s illegal expansion.” This comment appeared under the article headlined: “VPC can stay.”

      As if VPC going were ever the issue.

    20. That we have not appealed the DPD decision should lay to rest the false concept that the neighbors were trying to shut down VPC.

      CHS recently linked this case to the B&O development issue. B&O is appealing the decision. We are not.

      We got what we wanted; a restaurant confined to the indoors of the first floor for the next 40 years. Who could be upset with a ruling like that?

      VPC got what it applied for: legalization of the restaurant they had already ben running for four years, with no apparent fine for their missteps.

      Ericka and have stated publicly that VPC be profitable without patio service. All of us are moving on. It would help if the still-angry VPC supporters let go of the confusing concept that NIMBYs leaped on some imaginary chance to shut VPC. Can you please try to be more civil?

    21. It is interesting to re-read, in context of:

      -VPC agreed to the covenant, and NOT going out of business, as was feared by its fans;
      -the neighbors did not appeal the City decision; nor are they fighting one to drive VPC out of business -also feared at the onset by VPC fans.

      As one of the neighbors opposed to VPC’s backyard expansion but always in favor of a small restaurant operating legally within the indoors of the first floor, I am completely satisfied with the outcome.

      Our street is returning to the way it was when VPC first opened:

      -neighbors going in and out of the cafe;
      -the background sounds of pleasant conversation emanating forth.
      -Customers seem to be taking more care to not smoke in front of my house, and not to litter.
      -The staff is more respectful.
      -Compost and garbage bins are usually closed.

      Delivery truck parking is still problematic, but no one’s fears have come to pass: that VPC would close up shop, or expand to such a point that the adjacent neighbors could not longer enjoy their own back yards, front yards, or leave their windows open. And we can look forward to things staying this way for 40 years: quiet enough while remaining profitable enough.

      Win-win, all the way around.