MODESTO — The Copper Rhino, which closed its doors several months ago, plans to reopen New Year's Eve.
But the downtown Modesto nightclub faces a couple of hurdles: It owes the city several thousand dollars and has yet to file its income tax return for two years, which has drawn the notice of the state.
Les Knoll, the club's majority owner, said he's confident he can resolve those issues. He said the bigger issue is the continuing economic slump. He estimates that business for downtown clubs is off at least 50 percent in the past several years.
Knoll said the nightclub will reopen under a new name and with new décor. He declined to reveal the name but said the club will be open five days a week and feature local bands. Knoll said he plans to open the smaller section of the club, which can hold 150 people. He said he's considering selling pizza by the slice and other food.
The city's Entertainment Commission recently conditionally approved an entertainment permit for the Copper Rhino after the nightclub's previous permit expired. The club can operate without a permit, but it can't have live music.
The conditions include providing proof of insurance and satisfying the past-due payments the club owes the city. The debt is for a promissory note Knoll signed in November 2011 in which he agreed to pay the city $479.11 a month. As of October, he had an outstanding balance of $4,179, according to a city report.
City officials said Knoll owes Modesto money for citations issued against the club and for the cost of hiring off-duty Modesto police officers who worked overtime during special events at the Copper Rhino.
Knoll said he'll pay off the city debt by today or Tuesday.
The state Franchise Tax Board recently had the California Department of Alcoholic Beverage Control place a hold on the Copper Rhino's alcohol license for failure to file tax returns for multiple years, tax board spokesman Daniel Tahara said.
The hold prevents the Copper Rhino from transferring or selling its ABC license until it files the returns for the missing years. It can continue to sell alcohol to customers. Tahara said he is not allowed to say how many years are missing.
Knoll, who opened the Copper Rhino eight years ago, said the returns are for 2010 and 2011. He said the nightclub lost money both years and won't owe taxes. He said he is working on getting the returns filed.
Speaking in general terms, Tahara said the tax board can ramp up enforcement against businesses that don't come into compliance. That can include stripping the business of its status as a corporation or limited liability corporation, which prevents it from operating legally.
Knoll said that before the recession, the Copper Rhino generated $20,000 to $25,000 a week in gross sales. Gross sales now are $6,000 to $7,000 a week.
He said the Copper Rhino closed in mid-September, although it was open one day in October for a live show.
"Maybe I'm just stubborn," Knoll said when asked why he was reopening. " But I think there is hope for downtown."
Bee staff writer Kevin Valine can be reached at email@example.com or (209) 578-2316.