Plans for the former Carluccio’s and former Marchbrae store in St Helen’s Square to be turned into a hotel, restaurant and bar with roof terrace have taken a step forward.

The £3.5 million development by Tokyo Industries would see a ‘speakeasy’ bar and restaurant created in the former Carluccio’s alongside the tearoom that has already opened. The first floor would be opened up and live jazz or burlesque shows could take place at the venue.

The former Marchbrae next door would be turned into a hotel. The roof terraces would also be opened as bars with seating but would close earlier than the indoor areas.

Police and the council raised concerns about the venue at a licensing hearing. Police worried about the impact of the new bars opening within the city centre red zone for crime related to alcohol. They also questioned the late opening hours – but said they welcomed the owner’s willingness to make changes to these.

The council has concerns about noise from the venue and the impact on neighbours. The licensing team is currently agreeing conditions to the licence which will determine restrictions such as opening hours and these will be published soon.

Solicitor Paddy Whur, representing Tokyo Industries, said the venue will be “very high end” with cocktails at the ‘speakeasy’ bar costing up to £15 each.

Aaron Mellor, the owner of Tokyo Industries who runs 32 venues across the UK, said the upper floors of the buildings have been derelict for decades and the scheme would bring two large sites back into use and create 120 jobs.

Sgt Jackie Booth from North US Police said there have been no reports of crime in relation to Mr Mellor’s other venues. But she said: “In effect there are nine bars over four floors, including two rooftop terraces.

Given the demand already placed on calls to the police given the saturation of premises within this area, the police would not support an application for licensable activities until 3am. The proposed conditions offered by the applicant are welcomed by police and go towards mitigating concerns regarding crime and disorder and public nuisance.”

They asked for the council’s licensing panel to add extra conditions to the licence, including earlier closing times and extra door staff.

Mr Whur said: “Aaron’s pulled the opening hours back significantly from what was applied for. He’s certain that he can prove to you that at 3am on a Saturday he’s not going to have an impact on the issues in and around York.

“Everything the police are asking for at impactful times they will get. Aaron wants that support to make sure the premises runs safely. We will liaise with the residents. We will create a noise management plan, which will have to be agreed and signed off.”

“At a time when the leisure industry and retail is suffering more than we’ve ever seen, you’ve got a person of quality prepared to invest £3.5 million and create 120 new jobs in the centre of York. This is a ground-breaking development.

“Do you really think we’re going to invest this money in a massively expensive high end hotel and then create a nuisance in our other premises next door so that the hotel fails?”

Coun John Galvin said: “It seems to me that this is not going to be a cheap drinking establishment and I don’t say that by way of insult, it’s probably a compliment. I suspect that you are not aiming to attract the stag nights and the hen nights.”

The licensing committee made their decision in private but decided to grant a licence – with conditions that have not yet been published.

The development still needs to secure planning permission. Four planning applications have been submitted and neighbours have lodged objections to the project. Conditions will be imposed on the licence.