For the first time, one of Carmel’s three drinking establishment use permits may be available.

In the 1990s, city officials decided the village of Carmel-by-the-Sea could only tolerate so many drinking establishments – businesses whose primary purpose is serving alcohol – to preserve the city’s character. That number, debated at the time and still a source of tension, was three. The locations selected to receive the permits have changed very little since their inception and housed Barmel, Sade’s Cocktails and A.W. Shucks (formerly Maxwell McFly’s).

In the past year, that exclusive list has seen a shakeup. Today, A.W. Shucks operates as a full-service restaurant, with most of its revenue, roughly 5-to-1, coming from food sales rather than alcohol, according to co-owner Karen Basi during a Carmel Planning Commission meeting on Oct. 11. Over the past eight months, the use permit – which runs with the property, not the business owner – has come into question. Planning commissioners have debated whether the landlords should retain the permit if the business continues operating in its current form.

On Wednesday, Feb. 11, when the Planning Commission discussed the issue for the fourth time, commissioners determined the landlords had abandoned the use permit. They voted 4-1 (with Commissioner Erin Allen dissenting) on a resolution giving the business owners six months to either scale back restaurant operations and convert back to a drinking establishment, or surrender the permit.

“I love the food and service at A.W. Shucks. I’ve been a regular customer for many years and was at Maxwell McFly’s back in the day,” Commissioner Stephanie Locke said. “When McFly’s changed to A.W. Shucks and added food service, it changed from a smelly cigarette-filled bar to a great restaurant over the years. But it’s not a drinking establishment. It’s not a bar.”

John Plastini, who represents landlord TSD Carmel Properties, argued that removing the use permit would affect the property’s value, and said the A.W. Shucks owners had relied on city officials’ communication to ensure compliance.

“Our tenant purchased it in 2023 for a significant amount of money,” Plastini said. “That use permit is worth about $250,000. When we market and lease the property, everyone knows that. We followed the rules and acted in good faith.”

The lease with A.W. Shucks ends in nine years, with an option to renew. Parties have until Feb. 27 to appeal the decision to the City Council. Commissioners maintained their position that the city should allow only three drinking establishments rather than add a fourth permit. If this decision is upheld, the use permit could become available to other applicants in six months.

“In this case, the City acted with misdiscretion in continuing to approve a full-line restaurant,” Commissioner Michael LePage said. “But as a planning commission, we are not bound by those decisions. This business is operating as a restaurant. What we’re proposing is not a taking. It’s our responsibility to make decisions on what the land use law says.”