It's a bone-chilling Tuesday night on Church Street, but inside Burlington City Hall, Nancy Cunha is feeling the heat. Cunha, who owns Manhattan Pizza &; Pub, waits anxiously for the City Council, acting in its role as the Local Control Commis-sion, to decide whether to suspend her liquor license for 48 hours. The proposed penalty, which stems from an October incident in which a patron was allegedly served too much alcohol, would effectively shut down her business during Mardi Gras, when some 20,000 revelers descend on downtown.

For 11 years, Cunha has operated the pub and pizza parlor on the corner of Church and Main, which on weekend nights is the most bustling intersection in Vermont. This was her first liquor license violation. According to the police report, an intoxicated man was arrested down the street at Superior Court Plaza for threatening pedestrians with a broken pool cue. He told officers he'd been drinking at Manhattan Pizza, then walked out with their pool cue.

The man, whose blood-alcohol content was nearly twice the legal limit, was admitted overnight to a detox unit. He later testified that he was also on antidepressants at the time and couldn't remember where he'd been drinking or where the pool cue came from; Cunha insists that none of her pool cues went missing that night. But despite some fuzzy facts and Manhattan Pizza's otherwise clean record, the license committee recommended the two-day shutdown.

Cunha doesn't have to wait long for the verdict. Councilor Bill Keogh (D-Ward 5), who chairs the three-person License Committee, moves to deny Cunha's attorney's request to stay the suspension pending an appeal to the Vermont Supreme Court. Keogh's motion is seconded and the council unanimously agrees. The entire proceeding takes five minutes.

Afterwards, Cunha is furious.

"Mardi Gras is our busiest weekend of the year," she says. "It's what pulls us out of debt for the whole winter. And Keogh knows that."

Two days later, the Vermont Supreme Court grants the temporary stay and Manhattan Pizza is back in business for Mardi Gras. But the whole affair leaves Cunha angry, frustrated and financially strapped. "I've just gone through a virtual witch hunt that's going to cost me nine grand," she says. "Bill Keogh has a vendetta against downtown."

Other downtown restaurant and bar owners share that view of the License Committee chairman. Though few are willing to say so on the record, the prevailing sentiment is that a handful of city councilors, and Keogh in particular, would rather see Burlington roll up its sidewalks at 11 p.m. Bar owners' snipes about Keogh and the License Committee are nothing new. For years, Keogh butted heads with Jack O'Brien, the pugnacious former owner of Red Square, who was repeatedly cited for liquor and fire-code violations.

Lately, however, the chorus of complaints has spread to other business people in the hospitality industry. Currently, there are 88 places in downtown Burlington to get a meal and/or a drink. On the Flynn block alone, which has the highest density of bars in Vermont, more than 1000 people can be drinking alcohol at any given time. But many of the owners say that when it comes to granting entertainment permits and overseeing liquor sales, the License Committee paints all establishments with the same brush.

They find this attitude particularly frustrating because in the last year, the hospitality industry has made a concerted effort to clean up its act. Last May, the Church Street Marketplace Commission helped launch the Hospitality Resource Panel, bringing together various downtown stakeholders to tackle issues such as excessive noise, underage drinking, vandalism and late-night rowdiness.

Not surprisingly, most restaurant and tavern owners are uneasy about publicly voicing their dissatisfaction with the License Committee, fearing retribution when their liquor licenses come up for renewal. Several express a fear of becoming "the next Jack O'Brien."

"All of us feel intimidated because it's our livelihood," explains Al Gobeille, the owner of Breakwaters, Shanty on the Shore, Burlington Bay Market &; Cafe, and Lake Champlain Cruises. Gobeille chairs the Vermont Lodging and Restaurant Association, and has nine liquor licenses in Burlington. "If you're a builder, you don't fight with the building inspector if you want to be a builder for very long. And if you're a bar owner, you don't fight with the liquor commission."

Nevertheless, many downtown proprietors are equally concerned that Burlington is earning a reputation for being inhospitable to its hospitality industry, a sector that now employs about 2100 people, or 10 percent of the city's workforce. Some people suggest it's why Higher Ground didn't move to Burlington, even though co-owner Alex Crothers is also part owner of the former Sh-Na-Na's building on Main Street. (Crothers says only that the decision to locate in South Burlington was based on a number of considerations.)

Deserved or not, Burlington's neo-prohibitionist reputation is having an impact. "It's affecting Mardi Gras, it's affecting Jazz Festival, it's affecting our live-music scene and the sale of businesses," says one Church Street restaurateur. "[Keogh] wants all the fun to end when the sun goes down."

Like many of his fellow restaurant owners, Gobeille was incensed when he heard that Keogh nearly pushed through some major changes to the liquor-license requirements without holding public hearings or seeking input from the business community. The proposed conditions, which were brought to the City Council February 7, included a provision that restaurants couldn't earn more than 30 to 35 percent of their gross revenues from alcohol sales. Another provision would require food establishments "maintain complete restaurant services" whenever they serve alcohol, effectively forcing them to keep their kitchen staffs on duty until closing time.

Yet another change would mandate that all licensees "maintain a clear, unobstructed view of all areas of the premises . . . where alcohol will be sold or consumed." That condition raised a host of logistical dilemmas for establishments with private dining rooms, balconies, patios and pool rooms, and even room service at the Wyndham Hotel. The requirement would have forced bar owners to make costly renovations or risk a citation.

The City Council voted to send the provisions back to committee for further review. At the License Committee's next meeting on February 17, bar and restaurant owners showed up in force to express their outrage, not just with the new rules but with the entire process.

"I have a wife and three kids who depend on my income, and employees that I cherish," Gobeille told the committee. "With the stroke of a pen you can hurt a business, and that can never be done in a vacuum or behind closed doors."

Greg Noonan, owner of Vermont Pub &; Brewery, was equally disgusted. "I think this whole thing, very honestly, was very poorly crafted," he said at the meeting. "And the way this whole thing was done was very irresponsible."

License Committee member Barbara Perry (I-Ward 6) later admitted that the proposed changes were only supposed to be a communication to the council and should never have been brought to a vote. "That was inappropriate," she says. "The business community was very upset, and they had a right to be."

Keogh, who didn't attend the February 17 committee meeting, now says the more controversial measures will likely be scrapped. "What we tried to do -- and it kind of backfired on us -- is explain to licensees what some of the regulations are," Keogh says. "We probably went too far."

Keogh rejects the charge that he and his committee paint all bar owners with the same brush. "That's not true," he says. "But we have to come up with rules and regulations that apply to everybody, including those who want to push the envelope." Then he adds, "Go see what downtown is like at 2 o'clock in the morning on a warm June, July or August night. All those people out there that have been drinking for two or three hours? It's scary. It's scary!"

The folks in the hospitality industry say remarks like that, and this recent episode with City Council, are indicative of the underlying problem: The city's License Committee, which wields enormous power and influence over bars and restaurants, is chaired by a city councilor who finds the late-night bar scene inherently distasteful. And that fuels an adversarial environment whenever licensees go before the committee to renew their liquor licenses, change their hours of operation, apply for an outdoor entertainment permit, or sell their businesses.

Consider, for example, a permit request filed last year by Bill and Melissa Shahady, owners of Wine Works, across the street from City Hall Park. They asked the License Committee to allow them to put six tables on the sidewalk and serve drinks outdoors until 11 p.m. Wine Works has been in business for six years and never been cited for a license violation. The Shahadys got the OK from every other city agency, including Planning and Zoning, Public Works and the fire and police departments.

But the License Committee dragged its feet for four months and refused to bring the matter to a vote, according to Shahady. Each time he went before the committee, a new condition was added, he says, including one that Melissa personally notify every resident on the block of their intentions to serve drinks outdoors.

Shahady spent about $550 on the process, including the cost of adding the city to his insurance policy to cover the sidewalk in front of his business. By the time the License Committee acted on his application, the weather had turned cold, effectively making the request moot.

Keogh, who's been a city councilor for nine years and has chaired the License Committee for the last six, categorically denies that he's an opponent of the Burlington nightlife. By and large, he says, Burlington's restaurants and bars are well managed; it's the few "bad apples" who spoil it for everyone. "We have maybe 10 bars that cause all the problems, not the 95 others that are no problem at all," he says. "But when we draft regulations, we have to do it for the 10 that are always looking for a loophole."

One "loophole" Keogh objects to allows restaurants to turn into bars after 11 p.m. Under state law, proprietors apply for either a restaurant or a cabaret license, depending upon whether their primary source of revenue will be food or alcohol, and whether they'll offer live entertainment. The Local Control Commission recommends to the Vermont Department of Liquor Control (DLC) which type of license should be issued based on several factors, including how close the establishment is to residential neighborhoods, its proposed hours of operation and its seating capacity.

"We're having people who come in for a restaurant license that later morphs into a bar," Keogh explains. "They convince all of us that it's going to be nice, that they'll have adults and a little live music. Six months later, the college kids are in there until 2 a.m. raising hell and having a good time."

Keogh says his committee intends to crack down on such places, either by not renewing their liquor licenses or by scaling back the hours when they're allowed to serve booze. Although he admits that such a move would only affect "maybe three" downtown establishments, he says it would "send out a message" to other restaurant owners that they shouldn't "push the envelope to the edge or off the edge."

"That could happen in the next couple of months," Keogh adds. "When they renew their licenses for April 1, we can say, 'Restaurant license? No way! And you're in a residential neighborhood and we're not going to give you a cabaret license.'"

Tim Halvorson, owner of Halvorson's Upstreet Cafe and chairman of the Church Street Marketplace Commission, says that attitude overlooks a desirable characteristic of the downtown scene. "Burlington, and Church Street in particular, is blessed with a bunch of amorphous operations that are restaurants and bars in combination, and serve an adult population in a very positive way," Halvorson says. "But [some councilors] don't like the fact that sometimes when you go into Leunig's or Sweetwaters it feels more like a bar, and sometimes you go into Rí Rá's and it feels more like a restaurant. They feel like they got bamboozled."

Moreover, the city already has noise ordinances, and the state has laws about over-service, underage drinking and overcrowding. Many business owners can't understand what's driving this "get-tough-on-bars" attitude, especially when, by most measures, things in downtown are getting better.

Burlington Deputy Police Chief Walt Decker notes that in recent years, the downtown area has seen a steady decline in the number of disturbances, arrests and individuals taken to detox. He attributes this trend to improved education and training of bar staffs, increased cooperation between the police and club owners and, most importantly, proprietors "taking ownership" of their patrons and policing themselves.

Decker says the key to addressing alcohol-related problems such as over-service, underage drinking, patrons' misconduct and drunk driving is "responsible property owners and responsible business management." In part, that means bar managers who are willing to call the police before a minor incident escalates. But a number of club owners admit privately that they're often reluctant to call 911, since it's widely believed that the License Committee uses those police calls against them when reviewing their license renewals.

Keogh denies the charge. "We do not take that into consideration whether or not the license is going to be renewed," he insists. "They're encouraged to call the cops."

Councilor Perry says, however, that when the License Committee debated how to penalize Manhattan Pizza, they considered the fact that the police had been called to the corner in front of that establishment more than 40 times in the last year. She adds that the License Committee uses those incidents as an opportunity to "create some positive conditions to work with the police department to see why problems are happening and see how to make them better."

Perry also emphasizes, though, that the committee doesn't look to deny liquor licenses or dole out harsh punishments. In fact, she says, the city is more lenient than the DLC when it recommends penalties for license infractions. "We love our bars and restaurants," Perry says. "I don't want to give up the vibrancy of downtown. I'm often down there after the Flynn having a 12 o'clock meal. It's fantastic. We just have to find a way to keep some of this outdoor entertainment quieter."

What can be done to create a more cooperative climate? One promising solution now in the works is the Hospitality Resource Panel (HRP), a committee made up of various downtown stakeholders, including representatives from the hospitality industry, area residents, public safety agencies, and the city's economic development office. HRP panels have been successful in 26 other cities around the country. In May, Mayor Peter Clavelle appointed an HRP steering committee to address late-night noise and outdoor entertainment.

The HRP has been slow out of the gate. Nancy Wood, executive director of the Burlington Business Association, hopes the HRP will be used to address a number of business concerns, such as streamlining the licensing process for establishments that have sold alcohol for years without incident.

Councilor Perry agrees that the HRP may be effective. However, she also points out that sometimes the License Committee has good reason to move cautiously before approving a new liquor license. Sometimes, she says, the only opportunity the city has to change an existing business is when it's sold. "Every time we've gone too fast we've regretted it," Perry says. "Folks need to understand that a liquor license is an important piece of paper and an important responsibility."

For his part, Keogh is cautiously optimistic about the HRP and hopes it will relieve the License Committee of many of the time-consuming tasks involved in overseeing downtown. "We have a better group of bar and restaurant owners now than we've had in 10 years," Keogh says. "With the HRP, I think we can work this all out together, I really do. Whether I'm on this committee another year or not, I think we're moving in the right direction."

Does that mean Keogh is planning to leave his position as License Committee chairman? He says he hopes this will be his last year. That'll be music to the ears of many bar owners.