City Heights residents are never happy about alcohol permits being approved in their neighborhood, but one has sparked a whole new level of pushback.

In September, the city said a proposed 7-11 on University Avenue could buy an existing license from a liquor store down the street, and it slapped so many restrictions on the permit that a city official called them unprecedented.

And because the permit is being transferred – as opposed to a new one being issued – it wouldn’t increase the number of liquor licenses in the area.

Yet the move has nonetheless sparked a massive backlash. Both the outgoing and incoming City Council members representing City Heights oppose it. Hundreds of residents spoke out against it at a public meeting. And a local store owner poured thousands of dollars into appealing the city’s decision.

The ordeal sheds light on the blurry line between community concerns and business interests in battles over alcohol permits.

After at least two attempts to overturn the permit approval, the opposition is trying one more time with the city’s planning commission, which will hear the matter on Dec. 1. City staff has recommended that the appeal be denied.


We Stand Up For You. Will You Stand Up For Us?

“All we’re really doing is transferring the license less than 400 feet,” said Jack Campagna of Cypress Development, the developer of the property. “They’re fighting us tooth and nail on it, and I’m not sure why.”

Campagna’s property was an oil change station and auto repair shop. He has proposed putting in a building with two tenants, including the 7-11.

The Department of Alcoholic Beverage Control has said that the census tract where the 7-11 would be located should only have two licenses. The area currently has four. The permit transfer would not increase that number.

Yet because the area is already oversaturated with permits, and because it’s close to schools, the transfer requires special permission. The new restrictions on the permit were intended to mitigate those concerns; yet local schools, residences and local business owners still believe the transfer shouldn’t happen.

The City Heights Area Planning Committee voted to approve the transfer of the license in December 2015.

In a letter to the city, the committee chair wrote, “The Committee welcomes the opportunity to put conditions on a license that currently has none, and does not consider a two-block move to be any more detrimental than the current location.”

Campagna said he’s paying upward of $200,000 to buy the permit from a rundown liquor store across the street.

“I don’t understand how what we’re doing is not right by the community,” Campagna said.

Community vs. Competition

City Heights residents and the business owner who has been spearheading the opposition, Mark Kassab, say that the project is simply in the wrong place. It’s too close to the freeway ramp, schools and residences, and the existing license was barely being used, so selling it to the 7-11 would increase alcohol sales in the neighborhood even though the number of permits wouldn’t change, they argue.

“The location is just not a viable location for the community,” said Robert Zakar, who has been representing Kassab and others in opposing the permit. Zakar’s extended family, including Kassab, own and operate markets, liquor stores and gas stations throughout the county and he often represents family members on permitting issues. Earlier this year, he helped fight another alcohol permit in National City, right across the street from another relative’s liquor store – prompting charges their opposition was simply a move to curb competition.

Indeed, Arkan Hamana, the current owner of the permit who plans to sell it to the 7-11, says Kassab’s opposition isn’t nearly as community-centric as he claims. Kassab owns a Chevron station down the street that sells beer, wine, hard alcohol and craft beer. Kassab and other nearby storeowners are worried about competition, Hamana said – something that Kassab adamantly denies.

Photo by Maya Srikrishnan
Photo by Maya Srikrishnan
Mark Kassab owns a Chevron station that sells alcohol near the site of a 7-11, whose alcohol permit he opposes.

“The bottom line is this isn’t about the community,” said Hamana. “They couldn’t give two shits. All they care about is their bottom-line dollar.”

In 2002, Kassab got a beer and wine permit for the Chevron. That was upgraded to a hard liquor license in 2015.

“Here they were two years ago, saying it’s not affecting the community, it’s not affecting the school and yadda yadda,” Hamana said of Kassab’s liquor license. “And here he is two years later saying, ‘No, no, no. 7-11 is a bad idea.’ 7-11 is across the street from them. Did something change from two years ago?”

Kassab and Zakar both deny that competition is the reason behind the opposition.

“There’s no fear of competition,” said Zakar. “The Kassab family and myself, we’ve been in City Heights for 30-plus years. Not only do we have businesses, but we’re actually a part of it.”

Kassab said he doesn’t run a liquor store. His gas stations and supermarkets wouldn’t compete with the 7-11.

“I know there is a rumor that I am rejecting because of my City Heights Chevron across the street,” Kassab said. “It’s not the truth. It’s absolutely lies.”

Whatever their motivation, Kassab and Zakar have done as much as possible to stop the permit transfer from moving forward.

Alcohol permits are generally exempt from environmental review. Zakar appealed that, claiming that the permit should require one.

The San Diego City Council unanimously denied the appeal.

The Planning Commission’s decision will be final, though the opposition could potentially find another way to block the project through lawsuits, community protests, etc.

Kassab, Zakar and other community members tried to get the City Heights planning group to re-hear the matter. That effort failed.

In August and September, large numbers of people showed up to oppose the permit at public hearings where a city official would decide whether to approve the permit.

The hearing officer approved the permit and added a number of restrictions to address the opposition’s concerns. For example, the 7-11 would have to lock the two coolers of beer and wine for a half hour before and after school hours to address the community’s concerns about its proximity to schools.

The hearing officer, Chris Larson, told Kassab and Zakar – to whom he has granted alcohol permits before – that even they know that the laundry list of conditions placed on the permit is exceptional.

“You do have the right to appeal this decision to the Planning Commission,” Larson said at the hearing. “As you do that, I want you to think about whether it is better to have a license at a location without any conditions or have a license at this location with the most restrictive conditional use permit I have ever come across. … I have done several in this area, including for Mr. Kassab and Mr. Zakar, so I’m sure you know how restrictive these are.”

Zakar filed the appeal, which will be heard by the Planning Commission on Thursday. He and Kassab hired a prominent attorney, Leslie Devaney, to lobby City Council members, planning staff, the police and even the mayor’s office.

Other Concerns

Kassab and Zakar are not the only ones who oppose the permit.

Incoming Councilwoman Georgette Gomez, who as a member of the City Heights Area Planning Committee voted against the transfer, said that even though the conditions on the permit are better than the existing one, she thinks the community is reaching a breaking point when it comes to liquor licenses.

“I definitely see there is a stronger, more active organized effort,” she said. “I don’t think it’s because of the fear of Mark Kassab. There is a sense of folks wanting something different for the community.”

Gomez will fill the seat of outgoing City Councilwoman Marti Emerald, who’s also been outspoken against the transfer, and even attended a permit hearing on the matter.

“My issue is with the chronic oversaturation of liquor licenses in City Heights,” Emerald said at the hearing. “We need to bring down the number, under the allowable level and not keep making cases for continued over saturation.”

Zakar and Kassab both donated to Emerald’s campaign in 2007, when she was first elected. Kassab gave her $540 and Zakar gave her $200.

Kassab gave $800 to Gomez and $1,050 to her opponent Ricardo Flores, Emerald’s chief of staff.

Maria Cortez, a community activist and organizer with the City Heights Community Development Corporation, said the community’s opposition has nothing to do with Kassab. In fact, Cortez said, she protested Kassab’s alcohol license bid back in 2002.

“We’ve got a lot of establishments that already have liquor and this is one more liquor establishment being added to it,” Cortez said. “We just don’t want to be the stomping grounds anymore. It’s not anything to do with competition from anything I see. I’ve known Mr. Kassab for many years, he’s always been there for the community and doesn’t expect anything in return.”

Kassab said he got involved because local schools asked him to help. He’s long been active in the community, sitting on various boards for schools and on the area planning committee and funding causes and donating materials for events.

Nearby Cherokee Point Elementary School has vehemently opposed the permit. The school has an auditorium named after Kassab, who funded its construction.

Godwin Higa, the principal of Cherokee Point Elementary School, said when Kassab brought the 7-11 to his attention, he immediately agreed that the permit transfer would be detrimental to his students.

The store where the license is currently is smaller and less problematic, Higa said.

“It was a corner store, lots of candy and stuff, liquor in there,” he said. “It’s not a big 7-11.”

Kassab, Higa said, is in a Catch-22, advocating against the permit on behalf of the community and owning his own business that might be affected by it.

“When he came and said there was opposition, I said, ‘Yeah, we don’t need another liquor store,’” Higa said. “The competition issue crossed my mind, but knowing him as a person and how he cares about the community, I doubt it.”

‘I’m Not Even Going to Sell Groceries’

Hamana’s liquor store has been struggling for years. He said it’s one of several businesses he owns and he had left it to some of his relatives to manage. They hadn’t been doing a good job.

But Hamana said he isn’t struggling financially; he owns restaurants and other markets that are doing well.

Hamana said what irritates him about Kassab, Zakar and other local storeowners opposing the 7-11 permit transfer is that “when I was struggling, they would pass by and laugh and thought I would close and would just give them my license for pennies on the dollar. So not only did they lose out on their opportunity for my permit, but I’m bringing in a big dog.”

At a public hearing, Hamana even alluded to the fact that the opposition had tried to buy the very same permit that they’re now opposing.

“There are people here who have denied offering me price for the license, which isn’t true,” Hamana told the hearing officer. “They’ve offered me several times.”

Hamana specified later that the offer did not come directly from Kassab, but another storeowner on the block who also opposes the transfer.

If 7-11 can purchase his liquor license, Hamana said he’s going to turn the liquor store into a deli. If the transfer isn’t approved, he said he plans to utilize the license to the max – selling craft beer and wine from 6 a.m. to 2 a.m., the hours his license currently allows.

“I’m not even going to sell groceries,” he said. “I’m perfectly able to do that because my license has no limits.”

    This article relates to: City Heights, Government, Land Use, Must Reads, Permits

    Written by Maya Srikrishnan

    Maya Srikrishnan is a reporter for Voice of San Diego. She can be reached at maya.srikrishnan@voiceofsandiego.org.

    5 comments
    Robert Hall
    Robert Hall subscriber

    To answer Chris' question, the ABC does not have the power to revoke a license.  It's your personal property when purchased. Even when you find a license that's listed as 'Revoked' on the ABC website, that means the ABC suspended the license and gave the owner time to find a buyer.  Why do census tracts remain overconcentrated?  Because when the laws passed that set limits, there were already many areas that had too many licenses. The ABC's policy is to take that number...in this case, there were probably four existing licenses when the law passed.  The ABC will continue to grant new licenses as long as the total number doesn't go up.  They do NOT deny license applications with a goal of reaching the actual legal limit.  Regardless of the law, the policy is that if there were four licenses when the limit went into effect, they won't deny licenses as long as the number stays at four.  And of course there are always loopholes.

    Chris Brewster
    Chris Brewster subscribermember

    If the Department of Alcoholic Beverage Control has said that the census tract where the 7-11 would be located should only have two licenses, then why does it have four? If the answer is that they are constrained in some way from revoking permits, then why would it not make sense for the community to oppose a transfer to a larger liquor store that will presumably. be selling more liquor? To me, the obvious conflict of interest of the competitors is a sideshow, but one the community could use to their advantage, if they wish.

    It would be really interesting to see some investigative reporting about the difference between target numbers of liquor stores per census tract and variations that are permitted (same problem in PB). Why are these variances permitted and who at the ABC makes the decision?

    Robert Hall
    Robert Hall subscriber

    @Chris Brewster , the limits on alcohol licenses within a certain area (census tract) were established in the 1990s.  The ABC's position is to, in effect, grandfather in the number of licenses, rather than actually abide by the statutory limit on licenses.  If there were 4 licenses in an area when the law went into effect, the ABC will allow 4 to remain, even if the law says only 2 should exist. The ABC will not deny a license or a license transfer in order to reduce the number of licenses to the level proscribed by law.  That's not my opinion; it's what we've been told by the ABC.

    However, a city or county can use its land use powers to place conditions on an alcohol license; the problem is that instead of putting conditions on the Conditional Use Permit, those conditions are placed on the ABC license.  That defeats the purpose of the CUP, and the conditions can be removed after 12 months by petitioning the ABC (and paying a $100 fee). 

    That's why community residents often fight to prevent a license from being issued in the first place.  Once it's there, it's there virtually forever, with no workable way to control an irresponsible operator, should the license change hands again.


    Derek Hofmann
    Derek Hofmann subscribermember

    If San Diego required all of its neighborhoods to be self-sufficient in tax revenue versus city spending, would the residents of City Heights fight so hard to keep taxpaying businesses out, or would they want their potholes fixed?

    Robert Hall
    Robert Hall subscriber

    @Derek Hofmann  , interesting concept.  If the city required communities to be self-sufficient, no more licenses would be issued in most areas.  That's because the communities with an abundance of alcohol outlets also have an abundance of crime (generally).  So the police department spends an undue amount of resources in those communities.  But if all the bars in PB were spinning out so much revenue for the city, what's the problem?  The bars in PB are NOT spinning out diddly squat.  We've asked the city clerk to verify how much tax money from PB ends up in city coffers, and they didn't understand the question.  When pressed, they came up with $40,000.  The PD spends more than that on a busy holiday weekend in PB, much less all year long.

    The Community Planners Committee voted unanimously to ask the city to examine this issue, and specifically have the Independent Budget Analyst do a cost-benefit analysis of the hospitality industry.  How much does it cost to assign x number of police officers to PB,  or the Gaslamp or East Village, just to keep the drunks in line?  Seems like a valid question.   Not one city councilmember is interested.  Why not? Because political opponents will claim they're anti-business....and no politician is going to risk losing one...single...campaign contribution from a bar owner.  Follow the money....

    Here are the communities with the most violent crime (murders, rapes, robberies, aggravated assaults) this past year (Jan-Nov, from the SDPD website.  Consider how many of these are the areas where tourists go. 

    East Village  290

    PB 209

    Core Columbia (downtown) 164

    Logan Heights 157

    Hillcrest 130

    North Park 127

    Colina del Sol 121

    Gaslamp 113

    Midway 108

    San Ysidro .108

    Citywide, the average community had 39 violent crimes.