Kavitha Surana SLA offices

The State Liquor Authority has denied a full liquor license to an East Villager hoping to open a Latin bistro on the Lower East Side, handing another victory to a group fighting rampant nightlife in the neighborhood.

About 30 people appeared at the liquor authority’s Harlem offices today to support Jose Rodriguez and Robert Payne, whose seven-month struggle to score hard liquor for their establishment at 106 Rivington Street — currently called 106 on the LES — at one point touched off accusations of racism. Their attorney, Donald Bernstein, tried to argue that a Latin establishment serving rum was culturally important for the 40,000 Latinos living around the Lower East Side and that it would change a dilapidated storefront into a commercial space that late-night partiers would be less likely to vandalize.

Residents who live in the popular nightlife neighborhood, loosely organized as L.E.S. Dwellers, have strenuously opposed plans for a full liquor license at every turn since September, showing up at Community Board 3 hearings and publicizing their opposition and concerns through flyers and social media.

They cite fears of over-saturation and increased alcohol-related disruption in the neighborhood, as well as a lack of transparency and communication with the applicants. Though Mr. Rodriguez and Mr. Payne are lifelong East Village residents (Mr. Rodriguez’s family even owns E&S Wholesome on 159 Essex Street) and have been active in supporting the community in the past, they have no track record of operating a restaurant. The L.E.S. Dwellers, weary of past establishments that billed themselves as “restaurants” only to turn into rowdy bars, were loathe to give leeway on the issue of a full liquor license.

“We’ve been scarred,” said Diem Boyd, an organizer of L.E.S. Dwellers. “Without anything in place, we have to rely on our experiences so far. We can’t take any more risk in the neighborhood.”

Anne Johnson, a community board member, spoke in support of the applicants. She argued that the restaurant would fill a need and that “you do not punish the good people for what the bad people do” – referring to other club and bar owners that have misrepresented their establishments as restaurants.

Ultimately the liquor authority based its rejection on a strict interpretation of the 500-foot rule, which requires would-be licensees located within 500 feet of three other licensed establishments to prove that they’d be in the public interest. Commissioner Jeanique Green clarified that she believed the applicants were earnest and sincere in their plans for a restaurant rather than a bar, but that the law did not justify issuing a full liquor license.

“A full liquor license is not convincing me,” she said. “But know that this does not reflect on your commitment to the community.” Chairman Dennis Rosen agreed with her assessment, adding, “If we were to issue a full license, that would be a rejection of the law without prior history.”

The committee indicated that it would approve a beer and wine license if the applicants agreed to close at 1 a.m. Thursday through Saturday and at midnight Sunday through Wednesday. Mr. Rodriguez expressed agreement with the restrictions, but will now have to file a new application.

Correction: April 5, 2013. This post was revised to correct errors. The original version misstated that both business partners were from the East Village. Only Mr. Rodriguez lives in the neighborhood. That version also misstated that Mr. Rodriguez was an owner of E&S Wholesome Foods. His family members own the business, not Mr. Rodriguez.