The City Beer Board on Thursday morning, after a closed-door meeting with City Attorney Phil Noblett, reversed course on allowing beer at the Shady's Corner bar.
The board voted 5-2 to allow beer sales - with Vince Butler and Cynthia Coleman opposed.
That comes after the board had denied the beer permit application on April 7 following a lengthy hearing in which members of the nearby Islamic Mosque lined up to voice strong objections. The bar had been allowed to open, but with only liquor and wine sales - not beer.
City Attorney Noblett said after the meeting that the owners of Shady's Corner had filed suit in Chancery Court.
He said there is a conflict between the UGC zoning that the bar on Cemetery Avenue had obtained and the rules of the Beer Board. He said the Beer Board operates under rules that bars not be within 500 feet of a church, school or daycare. However, he noted, that UGC zoning does not have such restrictions.
Board member Dan Mayfield said the conflicting regulations "have left us in a bad position. It's not a good scenario for anyone.
"Chattanooga is growing rapidly and changes have been made to meet the density needs. But someone at the city needs to take a long look at the ambiguities it has brought."
He added, "The people at the house of worship are going to wonder what happened."
At the start of the meeting, board member Ron Smith made a "motion to reconsider" that was approved.
Mr. Butler made a motion to deny the motion to overturn the board's previous Shady's Corner ruling, but it failed.
A motion to allow beer at the bar was then approved by Chair Monica Kinsey, Tiffany Bell, Reginald Washington, Mr. Smith and Mr. Mayfield.
Mr. Butler said afterward, "I just hope the city looks into this and gives us some direction."