Restaurants & Bars
Downtown San Jose Nightclubs Operating Without Permits
"I can't really say anything negative about these clubs, but I do think it's B.S. they aren't jumping through hoops like we are," he said.
July 16, 2025
Downtown nightlife venues with ties to San Jose’s political elite have flouted city regulations by staying open past midnight without permits for more than a year — incensing other nightclub owners who pay steep to play by the rules.
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San Pedro Social and Kaizen Lounge in downtown San Jose have operated without conditional use permits — despite hosting large, drunken crowds past midnight — since they opened in March 2022 and September 2024, respectively. Both businesses also lack police-issued entertainment permits required of venues that sell alcohol, according to records obtained by this news organization.
San Pedro Social is part of the San Pedro Square property owned and developed by former Mayor Tom McEnery. Kaizen Lounge sits in an East San Fernando Street building owned by an LLC named “Lion Building,” which state records show is connected to the prominent Swenson Builders.
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The skewed playing field for politically-connected businesses is infuriating other local entrepreneurs who have spent years — and tens of thousands of dollars — complying with San Jose’s strict rules for downtown nightlife. Many spoke to San José Spotlight on condition of anonymity, fearing retribution from the city.
“I can’t really say anything negative about these clubs, but I do think it’s B.S. they aren’t jumping through hoops like we are,” one prominent downtown nightclub owner told San José Spotlight.
Another nightclub owner called it outrageous to skip regulations that are a “nightmare” for businesses that comply.
“They’re really hard to get if you don’t already have one in place. It’s near impossible. I can tell you it makes it a nightmare for business owners who might want to move locations,” the nightclub owner said.
City officials say the politically connected Kaizen Lounge nightclub was operating past midnight without conditional use permits. Photo by Brandon Pho for San Jose Spotlight
A conditional use permit costs more than $26,000, according to the city. San Jose’s approval process can be bureaucratic, time-consuming and riddled with red tape, nightclub owners said. It highlights ongoing challenges in a city seen as unfriendly to downtown nightlife, even as the area contends with economic strain, business closures and blight.
“The reality is that the expense, time, energy and hassle of a (conditional use permit) is immense,” longtime San Jose business lobbyist Jerry Strangis told San José Spotlight. “City code enforcement should not be allowing any operation to operate without a valid conditional use permit, unless that conditional use permit is in process.”
City planning and code enforcement officials denied allowing politically-connected operators to skirt the rules, and said they’ve tried to hold the two clubs accountable.
San Pedro Social and Kaizen Lounge have open code enforcement cases for operating past midnight without conditional use permits, as well as for other reported concerns, according to a city spokesperson.
The city sent San Pedro Social an order to cease operating past midnight in February, nearly three years after it opened. The city issued a $5,000 fine in April and warned of additional administrative fines of $2,500 for every instance it stays open past midnight.
“Since then, code enforcement inspections have confirmed that the business is operating in compliance. The business was also required to pay $1,916 in administrative costs,” the city spokesperson said.
Social media posts from dismayed downtown partygoers indicate San Pedro Social has changed its hours.
McEnery did not respond to a request for comment. Mayor Matt Mahan’s office declined to comment.
‘Playing by the rules’
Records show Kaizen Lounge applied for a conditional use permit in May — nine months after it opened.
City officials last week said they’ll issue an order to Kaizen Lounge to close at midnight after inquiries from this news organization. The owners have also racked up $1,750 in citations for blight-related violations.
Case Swenson, president and CEO of Swenson Builders, did not respond to requests for comment.
Strangis questions whether political influence alone plays a role in the city’s lax compliance approach in downtown San Jose. The city’s planning and code enforcement teams are stretched thin, he added, and its urban core is still reeling from the pandemic.
“Is it necessarily a wink-and-nod? We know downtown is suffering enough right now. It’s a sensitive issue,” Strangis said. “The planning department really does its best. They’re short on personnel. They don’t have a lot of help. Especially the code enforcement division. But they should really not be allowing any operation to run past midnight without a (conditional use permit).”Entertainment permits and conditional use permits act as a guardrail for businesses that serve alcohol, preventing them from wreaking havoc on their neighbors. McEnery himself spoke out against the proliferation of nightclubs downtown, raising concerns about surges in drunken fights and shootings.
The city has issued nearly 40 entertainment permits for nightlife businesses in San Jose, according to records reviewed by San José Spotlight. That permit regulates the occupancy, noise, and security staffing requirements of businesses serving alcohol
“They’re actually hurting themselves,” one downtown business owner said, “because we’re one of the only metropolitan cities in America that doesn’t have a vibrant nightlife core.”
San José Spotlight is the city's first nonprofit news organization dedicated to independent political and business reporting. Please support our public service journalism by clicking here.
