This past weekend, the brunch crowd sipped Bloody Marys and chatted over lobster rolls and French toast on Hank’s Oyster Bar’s packed patio. Or rather, half-packed.

Twenty of the 40 seats on the restaurant’s newly expanded outdoor seating area are gone, leaving an empty, fenced-in concrete slab. A large sign posted there reads: “THIS AREA OF HANK’S OYSTER BAR IS CLOSED DUE TO AN INVOLUNTARY AGREEMENT.”

Nearly three weeks ago, Alcoholic Beverage Control investigators forced Hank’s to shut a portion of its patio following a dispute with a handful of nearby residents over the restaurant’s termination of its voluntary agreement with the neighborhood.

Since then, Hank’s has become the hottest battleground in a larger debate about how much power small groups should have over the operations of restaurants and bars. This isn’t just about a handful of tables in Dupont Circle; the clash is the latest twist in the District’s long saga of NIMBYs vs. new businesses. Should the city defer to residents trying to hold on to peace, order, and quiet? Or should it push for a lively, urban environment, particularly in dense neighborhoods like Dupont?

“I think it’s a tipping point,” says Restaurant Association Metropolitan Washington president Lynne Breaux of the unusually vocal response that followed Hank’s owner Jamie Leeds’ very public calls for support and reform. “People are just getting fed up with antiquated liquor laws.”

After Leeds made the dispute public, RAMW took the rare step of backing an individual restaurant’s cause, which it believes has larger implications. The organization called on the D.C. Council to take a closer look at laws that allow neighbors to negotiate hours and rules for restaurants and bars in order for those businesses to obtain liquor licenses. As few as five people—or as few as three in neighborhoods with caps on licenses—can lodge protests, which are most often put to rest by the establishment signing a “voluntary agreement,” or, as many restaurant folks call it, an “involuntary agreement.” RAMW says only elected Advisory Neighborhood Commissions, not small ad hoc groups, should get that kind of power.

As it happens, the council is about to try to rewrite all those rules anyway. A new bill introduced by Ward 1 Councilmember Jim Graham on Tuesday proposes that only residents or property owners within a 400-foot radius of a bar or restaurant be able to protest its license. Right now, anyone living anywhere can protest a liquor license application. The bill would make agreements with ANCs trump any others, so bars and restaurants wouldn’t have to navigate multiple deals with multiple groups.

How the high-profile Hank’s dispute, and the zeal with which the city’s food and bar businesses have come to Leeds’ defense, will affect that bill isn’t clear yet. Graham started discussing recommendations for reform in December, and says the Dupont Circle situation didn’t play into deliberations. But the timing has the council taking up the issue just as the less savory effects of the current law are on full display.

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The Hank’s Oyster Bar dispute dates back to 2005, when Leeds prepared to open the Dupont restaurant. It was first of what will soon be three area locations, with one in Alexandria and another in Capitol Hill on the way. The same group of neighbors tied up with Leeds today protested Hank’s liquor license then. But hearings on the matter were repeatedly pushed back, and at the time, there were no measures in place to ensure a timely decision. So Leeds couldn’t get a license, or serve booze, unless she entered into a voluntary agreement. In the low-margin restaurant world, most business plans depend on alcohol, which can sell at a far higher markup than food.

“I wasn’t going to open without a liquor license. You’re dead in the water if you do that,” Leeds says. “I was kind of forced with my back up against the wall.”

That agreement limited Hank’s hours and operations and prevented it from expanding. So, in 2010, when the space next door became available and a loosening of the area’s liquor license moratorium allowed Leeds to take over the adjoining spot, she went to the ABC Board to terminate the voluntary agreement. At the time, 22 residents protested, but ultimately, liquor authorities agreed to the termination with the unanimous support of the Dupont Circle ANC.

Leeds spent more than $400,000 to build a new lounge and dining area, plus the expanded patio. She opened the renovated space last August. But the same six neighbors who pushed for the initial voluntary agreement believed the liquor board acted illegally in terminating it. They took the case to the D.C. Court of Appeals, which reversed the decision. Now, the board is taking another look to decide whether the voluntary agreement stays.

The conflict exploded a day before the Capital Pride Parade, one of the busiest days of the year for Hank’s. At 11:30 p.m. on Fri., June 8, an ABC investigator showed up to say that Hank’s would have to close the expanded section of its patio, pending a decision from the board, which could take up to 90 days from the hearing date.

That was the last straw for Leeds. While many restaurateurs deal with such issues behind the scenes, Leeds went public. She posted an open letter on the restaurant’s website, calling on supporters to contact the D.C. Council. Blogs and the press picked it up, as did the Urban Neighborhood Alliance, the Gay and Lesbian Activists Alliance, fellow restaurants, and neighbors rallied behind Hank’s. Alcoholic Beverage Regulation Administration director Fred Moosally says the agency has received more than a thousand emails on the matter.

“In terms of the virtually spontaneous outpouring of support in one of these cases, I think it’s unprecedented,” says Andrew Kline, the licensing representative for Hank’s and the lobbyist for RAMW. “The population has changed a bit, and there are a lot of people who’ve moved into town to take advantage of an urban lifestyle, and I think they’re being heard from.”

While Leeds awaits a decision, the restricted hours and limited patio seating mean she’s missing out on $3,000 to $4,000 a day in revenue, she says.

The protesters (one of whom dropped out this weekend, saying the fight had gotten too divisive) argue that the area already has too much outdoor seating serving alcohol. They’re concerned that if left unrestricted, the noise and crowds would negatively affect property values and disrupt the general peace and quiet of the neighborhood. They also don’t want too many alcohol-serving establishments, preferring a balance of stores, homes and apartments, and restaurants.

The neighbors are also concerned, though, with hypotheticals. Michael Fasano, one protester who’s lived in Dupont for more than 40 years, argues that if Hank’s gets to double its patio, then “it seems to me we’re obliged to allow” anyone else in the neighborhood to do the same. And while protesters say they think Hank’s has been a good neighbor overall, they worry that Leeds’ liquor license could one day transfer to someone else who allows more noise and disruption.

The reaction to the patio closing surprised some of the neighbors, who say they’ve been unfairly vilified for standing up for their principles and exercising their legal rights. As for ANCs taking the lead in negotiating with restaurants, they say the commissions don’t always have the time, resources, or interest to properly address matters that affect specific residents.

“Gandhi had an expression: Even if you’re a minority of one, if you’re right, you’re right,” Fasano says. “Let’s be honest here, ANCs can be extremely political…I don’t think forcing every issue through the ANC is the answer.”

Which, in essence, is why the restaurant business can’t stand the current licensing regime: It grants disproportionate power over how bars and restaurants operate to small groups whose strong feelings about them may not be representative of the wider neighborhood. Bar Pilar and Café Saint-Ex co-owner John Snellgrove says dealing with the various local organizations and ad hoc groups who can speak out on liquor licenses can be a “grueling and soul-sucking experience.”

No matter what winds up happening with Graham’s bill—which will come up for debate July 12, just before the council closes up for a summer legislative break—some people are guaranteed to be unhappy with it. Which means everyone may need a drink before this is over.

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Photo by Darrow Montgomery