New administrator Sal Petilos assumes the helm as the commission faces staff shortages, a backlog of license applications and a federal lawsuit.

The new administrator of the Honolulu Liquor Commission knows he has a tough job ahead of him.

The powerful agency, which also has two new commissioners, is hoping to move away from its marred past, which, over the decades, has involved bribery, a backlogged licensure system and alleged harassment of LGBTQ+ bars and clubs.

“It’s difficult to deal with an agency that has a reputation,” said Sal Petilos, who assumed charge of the commission’s daily operations in August. But he said he’s giving it a shot.

Sal Petilos moved to Honolulu after retiring from the Utah Department of Alcoholic Beverage Control in 2021. After being nominated for a part-time volunteer commissioner position, Civil Beat found that he did not meet the three-year residency requirement, so the city made him the commission’s administrator instead. (Ben Angarone/Civil Beat/2023)

One of the biggest effects of the recent problems and high turnover is that the system is currently backlogged. Almost 230 liquor license applications are pending, with about a nine and a half month average wait, according to the commission website’s Data Dashboard tool.

The new commissioners will also help with this backlog, said Petilos. Previously, the five-member volunteer board had two vacancies, meaning that it could not hold a weekly meeting if any one commissioner was absent. 

A Litany Of Problems

Petilos also must tackle a staff shortage and deal with a federal civil rights lawsuit against the commission, which accuses investigators of harassing the popular LGBTQ+ bar Scarlet Honolulu as well as the newsletter Gay Island Guide.

In August, one newly hired investigator filed a federal complaint, alleging that the commission is a hostile and discriminatory workplace that skimps on hiring and training.

Petilos is hopeful things can get better with a more collaborative approach between the liquor commission and local businesses. 

“I want to move forward, I want to try to make sure that we are doing our job effectively, and also trying to make sure that we look forward and become more customer service-oriented,” he said.

The Honolulu Liquor Commission is powerful. Any place that wants to serve alcohol in the City and County of Honolulu must first get a license from it, and there are about 1,500 active licenses on Oahu, according to a September newsletter from Petilos

If an establishment is charged with violating some rule, like serving alcohol to a minor, the commission can vote to issue a penalty – whether that be a warning, a fine or even a revocation of their liquor license.

Pearl City strip club Club Hot Ash was in the hot seat during a hearing on Thursday. It had been charged with permitting a dancer to perform topless outside the designated performance area. For that, the commission issued it a letter of reprimand. Later in the hearing, the Beretania Street bar Anna O’Briens requested permission to sell Jell-O shots. Its request was granted.

Scarlet Honolulu owner Robbie Baldwin.
Scarlet Honolulu owner Robbie Baldwin sued the Honolulu Liquor Commission and several of its employees in 2021, alleging that the commission’s enforcement was unfair and discriminatory. (Cory Lum/Civil Beat/2022)

Not all interactions are so benign. 

When the coronavirus pandemic hit in 2020, rules regarding social gatherings frequently shifted, and many bar owners became frustrated with investigators’ new power to promptly shut down bars for 24 hours if they found a violation of a Covid-19 restriction. 

Scarlet and Gay Island Guide filed their federal civil rights lawsuit against the commission in late 2021, alleging that liquor commission investigators had forced their way into the bar and assaulted an owner. Scarlet became a poster child for what some argued was an abuse of power by the commission

When Gay Island Guide wrote about this in its newsletter, the lawsuit alleges, the liquor commission retaliated by clamping down on daytime gatherings it would host at a Waikiki hotel. 

Separate From Staff Investigators

Two of Mayor Rick Blangiardi’s recent nominees to the commission have served on the Hawaii LGBT Legacy Foundation’s board of directors, in addition to having experience working with businesses. 

But while volunteer commissioners have an important role in the organization, it’s the salaried staff investigators whose work has been criticized most recently. 

“They basically insulate themselves from the commissioners,” said James DiPasquale, the lawyer representing Scarlet Honolulu and Gay Island Guide. 

Businesses waited to be called to testify in front of the Honolulu Liquor Commission at a weekly Thursday meeting in November. (Ben Angarone/Civil Beat/2023)

Commissioners are supposed to have some degree of separation, the thinking being that this helps them rule impartially when investigators bring them charges against establishments. 

Volunteer commissioners don’t receive much training besides being given books of relevant rules and laws, though new commissioners Kevin Sakamoto and Joseph Bock said they have been studying these hard. 

Finally A Quorum

Confirming quality commissioners can help rein in investigators indirectly, said Petilos, who previously led Utah’s Department of Alcoholic Beverage Control.

It would be bad for the commissioners to “rubber stamp” every single charge brought to them by the investigators, since that would essentially allow investigators to do whatever they want, according to Petilos. Commissioners who ask good questions force investigators to respond with good answers. 

“It’s really placing the agency in a position where you have to present your case – present it well,” he said.

Recruiting good employees can also help, he said. Plenty of vacancies exist: about 28 investigator positions are included in the budget, but only about 15 have people on the payroll, as of July 1.

Recruiting people is hard when the starting salary for a field investigator is about $48,000 and night work is the norm. An audit from 2019 said there was poor staff morale, and an internal systems review from the summer noted a lack of training and unclear enforcement policy.

Better training is on its way, said Petilos, with the goal being to get new procedures ready by the next fiscal year that begins July 1. For now, he said, he’s meeting with employees to learn more about how to improve clarification.

As of last week, the Honolulu Liquor Commission had not yet updated its wall to show that its two commissioner vacancies had recently been filled. (Ben Angarone/Civil Beat/2023)

He’s also hoping to add more supervisory positions to allow for career advancement, as well as raise starting salaries – though that’s tricky because employees are part of the state union and have salary schedules already in place. The hope is to attract more job applicants.

License Backlog

More people can also help with quicker processing of liquor license applications.

With such a long wait, some businesses have resorted to applying for comparatively simpler special licenses as they await their regular license. 

Special licenses only allow liquor to be served for three days at a time. To maximize their effect, businesses like the Brazilian steakhouse Texas de Brazil have been requesting 30 issuances of special licenses at once, adding up to a total of 90 days.

“General ones have been taking anywhere between nine months and a year,” said Devon Nekoba, who identified himself as the liquor representative for Texas de Brazil. The special licenses are intended to allow alcohol to be served before the general license application is approved.

“It’s a bridge,” he said on Thursday, before quickly stepping back into the hearing room to request the same thing for his clients Kan Sushi and Kayak Cafe. 

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