Pavilion Partners appeal claims Indiana Dunes liquor permit denial was unlawful

The liquor license application was for the pavilion at Indiana Dunes State Park in Chesterton, which Pavilion Partners has gutted and plans to renovate with a fine dining restaurant on the top floor. The group also plans an adjacent, 17,000-square-foot banquet and conference center.

In an appeal filed Tuesday and provided Wednesday to the Post-Tribune, Pavilion Partners, led by Valparaiso businessman Chuck Williams, states that, "Denial of the permit negatively affects Pavilion Partners financially and deprives customers of the ability to purchase alcoholic beverages."

The appeal notes that the decision by the ATC on Oct. 6 and by the Porter County Alcoholic Beverage Commission on Sept. 10 "was arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with the law... was contrary to a constitutional right, power, privilege or immunity... was in excess of, or contrary to, statutory jurisdiction, authority, limitation, or rights... (and) was unsupported by substantial evidence."

Yet those were the very factors that David Cook, chairman of the ATC, said were not met and were why the state board upheld the county board's 4-1 decision to deny the liquor permit. The county board met before a crowd of around 520 people at the Porter County Expo Center in a meeting that stretched on for four hours, and in which the majority of those in attendance were against a liquor permit.

Pavilion Partners has a long-term lease agreement with the Indiana Department of Natural Resources for the project, and has already spent well over $1 million gutting the pavilion, installing an elevator shaft, and building an outside comfort station with restrooms and showers, officials said.

The appeal states that the decision of the ATC and the vote of the local board on which it was based "were erroneous and should be reversed."

The case will be assigned to an administrative law judge with the ATC, which in this instance will be David Rothenberg, the commission's executive secretary, Cook said. There is no time frame for when Rothenberg will hear the case.

"It is a de novo proceeding, which means all the evidence could be re-presented," Cook said, adding Rothenberg has the right to limit evidence, which is expected because the state has tapes from the state and local hearings, as well as the letters and emails for and against the license that have already been submitted. "That will be taken into consideration and be a part of it."

New information can be presented at the hearing, as well as additional testimony, he said.

Once the hearing is over, the judge will put together proposed findings of facts and conclusions of law and submit his recommendations to the ATC to either adopt or reject his decision.

"That becomes the final agency action before they decide to seek review in a court of law," Cook said.

A relatively small percent of liquor license applicants go before an administrative law judge, Cook said, and typically do so because their livelihood is at stake.

Under the terms of the lease between Pavilion Partners and the DNR, which was signed in late February, Pavilion Partners can break off the arrangement "as a result of… no longer being able to sell alcohol" and would be compensated for its investment in the completed work.

The 35-year-lease, with the option of two, 15-year extensions, stipulates that Pavilion Partners will pay DNR $18,000 each year. The lease, which specifies the construction of a banquet center, notes that two years after the renovated pavilion is complete, Pavilion Partners will start paying DNR 2 percent of its revenue from that facility, including from alcohol sales. The terms are the same starting two years after the completion of the banquet center.

Pavilion Partners is investing $6 million in the project, according to the lease.

Representatives from Pavilion Partners and Indiana Dunes Tourism have said that the project cannot be financially successful without a liquor license.