A Downtown restaurant and lounge that successfully appealed to have its business license issued last month could have that ruling struck down tonight by the City Council following months of contentious back and forth between the city and the venue JP23.

The owner of JP23 claims the city’s Department of Financial Management, which issues business licenses, improperly took into account negative media coverage over sexual assault allegations connected to its Fullerton location when the permit was denied in March.

Jacob Poozikhala said he spent upward of $3 million renovating the long-shuttered Cohiba nightclub at Pine Avenue and Broadway, only to have his permit denied—even though, he says, he met all city requirements. He opened in September 2021, a month after the allegations surfaced.

“If the Fullerton thing would have never happened, none of this would be an issue right now,” Poozhikhala said.

The venue opened in September, and two months later Poozikhala was issued a retroactive temporary business license. The business is still operating with a temporary permit.

He appealed the business license denial, and last month an independent hearing officer ruled in his favor following a five-day hearing, during which emails and testimony showed city officials were in fact discussing the Fullerton allegations and sharing links to news coverage during their deliberations.

“Please provide an update as to whether this business has been cleared to open and operate legally. There are still concerns surrounding negative media related with the JP23 Fullerton location,” Rebecca Guzman Garner, a deputy city manager wrote in an October 2021 email.

Last month, after the hearing officer agreed Poozikhala’s business should have been issued a permit, the city sought a second legal opinion from a law firm it uses frequently.

The firm, Best Best & Krieger, said the hearing officer’s decision should be overturned because the city has the right to use discretion in issuing business licenses and JP23’s opening without a license and holding events event without an entertainment permit showed a likelihood that it would not comply with city laws in the future.

Kevin Lee, a spokesperson for the city, said the issues in Fullerton had nothing to do with the denial of the permit. The question before council tonight is whether the hearing officer’s decision will have a long-term effect on the way the Department of Financial Management treats “any and all businesses moving forward,” Lee said in an email.

Poozikhala and his lawyers, meanwhile, contend that city staff manufactured violations by failing to process his application in a timely manner and overstepped their authority by deciding to ultimately deny the request despite the location passing all other city inspections.

Jonathan Navarro, the hearing officer, ruled last month that the city’s Financial Management Director Kevin Riper did not have the authority to deny JP23’s business permit because his department serves a ministerial function in issuing licenses, not a discretionary one.

Navarro said the municipal code does not say that an applicant’s past violations of city law can be used against them when considering if an applicant will comply with city laws if they’re issued a business license.

But Best Best & Krieger said Navarro’s interpretation of the municipal code was too narrow.

If the license is allowed to stand, “The city would then be forced to ignore the applicant’s prior choice to open a business without first obtaining a business license when determining if the applicant ‘will comply’ with applicable laws and regulations on a going-forward basis,” the firm wrote, adding this would lead to “absurd results.”

While JP23 was eventually granted a retroactive temporary business license in November 2021, it was never granted any kind of entertainment permit, something Poozikhala said he needs to make the business make financial sense.

However, the city alleges that the location continued to host events despite not having a permit to do so. Some of those events were advertised by JP23 on its social media including a three-day Super Bowl weekend event, despite warnings by the city that it would be a violation.

Poozikhala would not comment on the alleged violations after being advised by his attorney that the misdemeanor charges for those were still pending.

A March 2022 memo to Long Beach Police Chief Wally Hebeish recommended the location have its entertainment permit application denied, listing 13 instances when reports were filed or JP23 was cited for operating without permits. It also listed 28 calls for service at the venue.

The issues included nine calls for music disturbance, along with calls for fights or public intoxication. One complaint logged in January 2022 was for copulation of an intoxicated female, who the memo said was assaulted by several male suspects including the establishment’s security staff.

Poozikhala said he recalled the report but challenged the accuracy of it and said JP23 fully cooperated with the investigation.

With the council set to vote on the fate of his business license Tuesday night, Poozikhala said he’s not out of options yet. He’s contemplating selling the location, similar to what he’s doing with the Fullerton location, but also is not ruling out suing the city if he’s unable to open. The loss he expects to incur from a potential sale could be made up through a civil suit, he said.

“At some point, you have to cut your losses,” he said. “I’m just here to run a business, not fight with the city day in and day out.”

Fate of JP23 nightclub in Downtown Long Beach goes to hearing officer