The bar inside the National Hotel has been shut down indefinitely for multiple violations levied by the state. Its ownership is currently exploring the possibility of renting out most of its rooms to an overflow homeless population from Oakland. Photo by: Scott Thomas Anderson

The National Hotel won't be open for business any time soon.

The California Department of Alcoholic Beverage Control caught its employees selling drinks to a minor and operating in other illegal ways - prompting a "20-day to indefinite" suspension of its liquor license. At the same time, a new plan by the National's ownership to rent rooms to an Oakland church organization seeking low-cost housing for its overflow homeless population is also drawing a visceral response from local business owners.

Representatives from ABC confirmed this week that the agency was forcing a mandatory shutdown of the National Hotel's bar after agents sent an undercover decoy minor in, who was then successful in buying alcohol. Agents also came down on the National for being in violation of its liquor license.

"The National Hotel currently has a Type 47 liquor license," explained Lori Ajax, an agent with the ABC. "That means to serve alcohol, they have to have a full restaurant. Our understanding is that they haven't had one for years."

Though the citations were issued to the National seven months ago, it took until this week for the state's administrative process to allow ABC to literally force a closure.

"A 20-day to indefinite suspension means that the National has 20 days to start a restaurant, in full compliance with the (California) Health Department, or apply for a different type of liquor license," Ajax added.

The National was also cited for possession or serving of "contaminated" drinks.

With alcohol sales out of the picture, the National's owner, Bill Smith, and marketing consultant Thom Walker have been in "negotiations" with an Oakland church group about the possibility of renting a large portion of the hotel space for homeless individuals from the East Bay.

"We're looking at every option we can in terms of using the hotel," Walker told the Ledger Dispatch on Tuesday. "Right now, we're in a holding pattern as we wait to see if the church group can afford to rent the rooms for what we're asking."

Walker recently posted a lengthy comment on the Ledger Dispatch's online forum, under the National's corporate name ENG #1 Inc., mentioning the new possibility of renting the hotel out for Oakland's homeless. The idea instantly sparked concerns among merchants up and down Main Street Jackson.

"It wouldn't be good for business," said Stan Lukowitz, who owns Trader Stan's Pawn Shop, as well as 17 different buildings along Main Street. "It would be absolutely detrimental to the retail environment of downtown Jackson."

Jay Michel, owner of Add Art, felt the same way. "Why don't we just blow the whole street up," he remarked. "If anything could kill what's left of business, that would be it. I'm a hundred percent against it."

Reid Mackey, owner of Antiques on Main, which sits next to the steps of the National, worked extensively with the homeless in Sacramento as a volunteer for the Working In New Directions program. Reid feels the homeless issue requires compassion and public attention, but questioned the motives of Smith and Walker for getting involved with it.

"You don't just flip a switch and open a place like the National up as a homeless shelter; it's just not that simple," said Mackey, who regularly takes food to the homeless living in an outdoor camp not far from his store.

"There's a lot of special needs you have to address," he added. "There's codes you have to follow and safety issues you have to think about. It's not something you can take lightly. I'm all for helping the homeless, but if the people running the National are just bringing them in to make money - you know, patting themselves on the back while they're lining they're pockets - that's wrong."

Jackson City Manager Mike Daly shared Mackey's concerns about code enforcement. "The city hasn't been approached about this at all," Daly observed. "But I can tell you they would have to meet all health, safety and fire codes. And if they were going to have any kind of food preparation for the people who would be staying there, they'd have to be in compliance with the health department. The issue of whether the hotel would actually be considered a shelter facility would also probably come up - in which case they could end up needing a use permit. Given the overall condition of that building, I can see a lot of problems arising."

Walker acknowledged that ENG #1 Inc. was only in the beginning stages of looking at the option and hadn't yet explored many of the code issues. Nevertheless, he doesn't believe any laws would require the hotel to be re-classified.

"We haven't consulted attorneys about any of this yet," he said. "But as far as I know, as long as the hotel is a hotel and the organization is renting rooms - then who is in the rooms is not relevant."

The concern over Bay Area homeless people flooding the streets of Jackson doesn't represent the first controversy ENG #1 Inc. has been linked to in recent memory. Back in July, Smith sent a letter to the city of Jackson requesting information about the permitting process for demolition of the National Hotel. The overture ignited widespread panic that one of Jackson's most recognizable structures, which even appears on its letterhead, would be razed. According to Walker, that's no longer the approach ENG #1 wants to take.

"Personally, I really resist the idea of demolition," Walker said. "Even though it's in decline, it's a local historic treasure and arguably one of the oldest continually operating hotels in the entire state. I think we should avoid bringing it down at all costs."

Walker went on to point out that, in trying to boost the hotel's profile as a historic destination, Smith was willing to let the Amador County Historical Society move some of the presently closed county museum's artifacts into the basement of the hotel for the public to view again. "We're going to use the time we're closed to do some cleaning up and make the place more presentable, and I think helping out the fans of history around here - if it's something they'd like to partner up on - I think that would be ideal."

Walker hasn't yet contacted the historical society with ENG #1 Inc.'s proposal. He added that he hoped showcasing the hotel in a more historical light would improve Smith's chances of selling it for the $1.9 million he's currently asking.

"It doesn't look like it's going to sell anytime soon - not until this is a better tourist destination again," Walker said. "The deterioration of Main Street is affecting the hotel's viability in finding a buyer for the price the owner wants."

Lukowitz, who's also a member of the Jackson Revitalization Committee, said it's the way Smith has managed the National Hotel that has played a major role in the deterioration of Main Street.

"I think the key to the revitalization of Main Street is someone else owning the National Hotel other than Bill Smith," Lukowitz challenged. "As long as it's run as the kind of establishment it's being run as now, we'll never get the kind of people and clientele we want down here."