NORFOLK, Va. (WAVY) — The owners of Scotty Quixx tell 10 On Your Side they were shocked to receive a letter out of the blue letting them know they could soon be out of business.
Last week, the owners of Scotty Quixx received letter from the City of Norfolk informing them that their special exception permit could be revoked by City Council. Meaning, the longtime restaurant could no longer serve alcohol, have live entertainment or be open until 2 a.m.
The move would drastically kill their business model.
“It just feels like they don’t want this type of establishment in the area. It seems like it is targeted to a more demographic than other places at the same time. When you look at anyone that has been discussed, they are the same type of establishment,” Chris Johnson, the co-owner of Scotty Quixx said.
City Manager Chip Filer recently said the city looking at any business open late and serving alcohol as they “deserve higher scrutiny because they are open late and doing other things.”
In the revocation notice sent to Scotty Quixx, the City of Norfolk letter said the “Meal Tax reports to the City are significantly lower than the amount reported to ABC.”
Under Virginia law, a business that holds an ABC mixed-beverage license must comply with a 45% to 55% radio. That means food and non-alcoholic beverages must make up 45% of a businesses total sales.
“We don’t know if they are under-reporting their food and beverage to us or they are over-reporting their food and beverage to the ABC,” Filer said. “The discrepancies are significant.”
Scotty Quixx ownership disputes this.
“We are doing exactly what is required by the city, by the state. We meet the requirements so that is why we are a little bit dumbfounded,” Al Ragas, the co-owner of Scotty Quixx, said. “Nobody can tell us exactly what we did wrong on that form.”
Johnson pointed out some mistakes in the letter.
“In the actual paragraph of the letter, it spoke about Legacy. [It] didn’t talk about Scotty Quixx,” he said.
A spokesperson with the city said he mention of Legacy on the first page was a “clerical error.”
Johnson said each time you come into Scotty Quixx, you pay a meal tax. He said you are also taxed on alcoholic beverages.
Johnson said they compile the numbers and submit them.
“It is just a whole number you give to the city and pay taxes on it,” Johnson.
Ragas said they pay exactly what they write down.
Johnson said he reached out to the city multiple times. He said they didn’t explain how much of a discrepancy there was.
10 On Your Side reached out to the city about the discrepancy. Read their response below:
As for the taxes, by law the city cannot disclose specific tax information on any business or individual without the consent of the taxpayer. No tax assessor and no person who worked with the tax assessor is allowed to reveal a taxpayer’s tac information to the public, unless they get permission of the taxpayer.
Tha said, the owner(s) of the establishment should have their own copies of their reported taxes. They could compare what they paid in taxes vs. what they reported to the ABC and share it with WAVY, if so inclined.City of Norfolk Spokesperson
“They didn’t really explain what it was and they brought up our incident from 2019,” he said.
The incident in 2019 left one person injured. Ragas said the incident didn’t happen inside their business. He said a man was kicked out of the club for being aggressive.
“Apparently, he came back and fired his gun.”
Since 2019, the owner said they have upped security and cut capacity to make a safer environment.
“We also stop serving earlier. We wand people when they walk in. They get patted down when they come in. We have increased our security,” Ragas said.
Years later, the club hasn’t had any other major incident.
Now, Johnson and Ragas are preparing for the worst.
“At that time, our doors are shut. We won’t be able to operate the way we are,” Ragas said.
He knows if the city council revokes their permit, he will have to have a tough conversation with his employees.
“I am sorry. We are going to have to shut down. You guys are going to have to go home.”
Johnson said they pay their taxes, but if there was an underpayment or mistake, they would be happy to pay it.
Norfolk City Council will vote on the permit on September 27.