City Council questioned lease that says former owners would “operate” the business

After a sometimes contentious and emotional public hearing for Alibi Drinkery’s liquor license during the July 6 Lakeville City Council meeting, the new owner of the Lakeville bar and restaurant rescinded his application after the council made a motion to deny it.

Jose Colon II, who signed a lease agreement in June with building landlord Fairfield Crossing LLC/Metro Equity Management to take over Alibi Drinkery, rescinded the application after it was apparent the council was unanimous in voting to deny the liquor license.

Lakeville city staff recommended denial due to what its report said that some of Colon’s statements and application information were false, inconsistent or misleading based on the provisions of the lease that required former owners Lisa Zarza and Ricardo Baldazo to “operate” the business and contemplated the future ability of Zarza to become a 50%-plus owner without landlord consent.

Zarza and Baldazo are the subject of two different lawsuits based on their decision to defy a state order and keep Alibi Drinkery open to indoor food and drink service during the December 2020 height of the COVID-19 pandemic locally. An administrative law judge also revoked in March the liquor license of Lionheart LLC, dba as Alibi Drinkery.

Alibi Drinkery has been closed since the end of May after Zarza said she would be selling the business, along with Froggy Bottoms at Alibi in Northfield.

The Lakeville city report stated that the misleading and inconsistent statements by Colon raises concerns about his trustworthiness. It said his deceptive explanation of the roles of himself, Zarza and Baldazo suggests Colon is not the real person in interest for purposes of operating Alibi, but it merely a means to obtain a liquor license for Zarza and Baldazo, who are not eligible for the license.

Colon was asked on the license application to provide the names of anyone who had a financial interest in the business or management responsibilities. There is no reference to Zarza or Baldazo on the application.

In the lease obtained by the city just before the June 21 meeting, it stated that Colon would designate Zarza and Baldazo to operate the business and retain them as full-time employees.

The city said that Colon’s failure to fully disclose Zarza and Baldazo’s involvement evidences a lack of the honesty and moral character needed to operate an establishment that sells alcoholic beverages.

Colon said Metro Equity Management was not willing to change wording in the lease referring to the role of Zarza and Baldazo from “operate” to “consult.”

Colon said it was Metro Equity’s decision to keep Zarza and Baldazo on the lease.

Metro Equity owner Mark Hotzler said in an interview on Tuesday that the lease contains exactly what Colon, Zarza and Baldazo wanted.

He said attorneys for both sides worked on the lease, and revisions to the lease are up to them. Hotzler said it is their responsibility to obtain the proper licensing for the business.

Hotzler said he’s hoping for the best.

Several members of the public spoke in defense of Colon and Alibi Drinkery. One Alibi employee said keeping the restaurant open for indoor service allowed her to pay for food to feed her family.

As Zarza has said in previous hearings and statements with regard to state action, she told the council during the July 8 meeting that she felt the state orders were unconstitutional, that she wanted to remain open to allow her people to work and that no one ever contracted COVID-19 while at either of her restaurants.

“I don’t want to be in this town, and I don’t want to be in the restaurant business anymore,” Zarza said during the meeting. “Let me sell my business and move on with my life.”

Other people who spoke at the meeting echoed the same sentiments.

While the council deliberated on the matter, several times people shouted from the audience, as Mayor Doug Anderson asked for people to stop talking out of turn and for order in the council chambers.

Council Member Luke Hellier said he would be voting for denial based on Baldazo being charged in September 2020 with two counts of first-degree attempted murder and two counts of first-degree assault after shooting at Burnsville police officers.

“A person on the lease apparently had a moment of crisis,” Hellier said. “I’m not comfortable with that person operating a business in the community.”

“We have this ongoing court case that needs to be solved before we move on,” Hellier said.

He said the way the lease is written does impact the liquor license, since it says Baldazo will operate the business.

Council Member Michelle Volk said she questioned the legality of whether or not Alibi could be open with the proposed business structure.

She said didn’t feel Colon was being honest with the council during the June 21 meeting.

“Two weeks ago I felt like you were doing an end around on the process,” she said.

“I’m not here to trick you guys,” Colon said. “This is my business. This is what I want to do.”

Council Member John Bermel said this is about the veracity of the liquor license application.

“There are too many holes in this liquor license for me to approve it,” Council Member Joshua Lee said.

Anderson said Colon could always reapply and make some adjustments.

Volk said she was willing to work with Colon to resolve the issues.

Baldazo and Zarza, also owners of Froggy Bottoms at Alibi in Northfield, had their liquor license renewal denied by that City Council’s split vote in April. The decision meant the business could not legally serve alcohol. Council action came after Northfield Police Chief Mark Elliott recommended not renewing the license based on her noncompliance with the governor’s order and because of the preliminary suspension of her Lakeville liquor license.

“Zarza is not an eligible person to receive a liquor license under applicable law since she is not a person of good moral character and repute,” Elliott wrote in the report. “Further, this investigation has revealed that it is not in the public interest to issue the requested liquor license to a person who has willfully and intentionally violated state and local liquor licensing regulations, state executive orders and district court orders, and was not truthful in a sworn affidavit submitted to a reviewing court.”

A court trial in the state lawsuit against Alibi was scheduled to begin July 12.

Zarza and Baldazo opened Alibi Drinkery in Lakeville on Dec. 31, 2017, in the former Heavy Metal Grill space. Alibi Drinkery received its first liquor license in January 2018 under the name Lionheart LLC. The city of Lakeville last approved Alibi’s liquor license in June 2020, with an expiration date of June 30, 2021.

Tad Johnson can be reached at tad.johnson@apgecm.com.

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