Public debate over a planned $3 million expansion of Lawrenceville's Thunderbird Café has been dragging on since at least 2012, and has been pending in a courtroom since last fall. Yesterday morning, both the cafe's owner and local neighborhood groups thought an agreement might finally be in sight.

But by yesterday evening, that seemed far less certain.

Even as the two sides had been closing in on a settlement, a judge's ruling -- which neither side had seen until City Paper informed them of it last night -- had decided the case for them. And while there are still various avenues for the popular Butler Street venue to expand, the ruling could mean even more delays for the project.

"It's absolutely been frustrating," says Mitchel Zemel, the Thunderbird's attorney. Owner John Pergal "has been trying to work with [community] groups from the beginning," Zemel added. "It's been a long road, and it's frustrating to get to this point and have this happen."

Pergal had been seeking to add new structures to the existing club, increasing its capacity by as much as twofold while adding a restaurant kitchen and seven residential units. He planned to provide additional parking for customers in off-street lots. But while many in the music scene have supported the proposal -- the venue is popular with local and touring acts performing music in a variety of genres -- some neighbors had concerns. Residents worried about parking, traffic and other impacts in the already densely populated neighborhood around Butler and 40th Street. Last spring, the dispute came before the city's Zoning Board of Adjustment, from which Pergal sought exceptions to local zoning regulations; he also wanted to expand under an advantageous zoning classification that would designate his building as "restaurant (general)."

Last summer, the Zoning Board approved Pergal's request. In August, two community organizations -- residents group Lawrenceville United and the Lawrenceville Corporation, which represents area businesses -- appealed that decision to Common Pleas Court. But even as the two sides traded briefs before Judge Joseph M. James, they were meeting to see if they could work their differences out.

Although the matter was in court, "John is a good guy who's been willing to work with us," says Matthew Galluzzo, the executive director of the Lawrenceville Corporation. "He had a vision that didn't really align with the community's interests, but he's been more than willing to sit around the table and find common ground."

"John lives here and wants to be part of the neighborhood, and he wants to figure out how to make this work," agrees Lauren Byrne, who heads Lawrenceville United.

By Wednesday night, talks had produced at least the framework for an agreement, one the two sides thought could be used to forestall a ruling in the court case. The community groups held a meeting at the Icehouse, where they presented the framework to residents living near the Thunderbird. While the proposal was "not ideal," Byrne says, residents supported the framework. And though there were still details and disputes to resolve, attorney Tom Madigan, who represents the neighborhood groups, says the next step would have been to "go back to the judge and say, 'Can you hold your decision?'" The two sides would then have time to hammer out a formal agreement, which would be entered as a court order.

Details of the framework are not clear, though Zemel says it includes Pergal giving up "a significant amount of occupancy." The discussions were confidential; City Paper only learned of them late yesterday, when a disgruntled resident forwarded an email chain about the discussion between Byrne and another resident. When contacted yesterday afternoon, Byrne was reluctant to disclose details of the agreement, saying the matter was still in litigation.

Except apparently, it wasn't.

Shortly after speaking with Byrne, CP discovered that James had already written an opinion in the case, overturning the Zoning Board's ruling.

James ruled that the Zoning Board "erred in granting [the Thunderbird] special exceptions and variances because its findings that their plan complies with the Code's criteria are not supported by substantial evidence." The board's ruling, he wrote, was contingent on the bar's plans to furnish documentation on concerns like the impact on traffic volumes. But that documentation was never submitted, he wrote. And among other procedural problems, James ruled, the Board was wrong to classify the proposed use as "Restaurant (general)"; instead, it should have been deemed "Recreation and Entertainment, Indoor (general)" -- a designation that carries with it requirements for additional parking.

Zemel declined to respond directly to the judge's ruling except to say, "We're considering our options as to an appeal versus returning to the [Zoning] Board." A check of the paperwork on file at the city's Planning Department turned up some documentation by the club, including numbers culled from a 2011 traffic study of Butler St. by PennDOT. (Those numbers, Zemel wrote, showed that traffic in front of the Thunderbird peaked in the hours when the Thunderbird would be most active. Given that, he wrote, any increase in traffic volume would be "slight.")

In any case, while James' order was dated Feb. 25, it wasn't filed until Feb. 27 -- the day after residents signed off on a compromise approach. Phone calls to Byrne and Pergal last night revealed that neither party, nor their lawyers, had known of the order until CP informed them of it.

"The clock ran out," Madigan said last night. "We didn't get to a final agreement before the decision was issued. That's the long and short of this."

So ... what happens to the agreement? "I haven't had time to think about this, but I don't know that the parties can undo the judge's decision at this point," Madigan says. "We'll continue to talk with [Thunderbird], and work out an agreement in anticipation of their reapplying. But I think from an application standpoint, they are back at square one."

Madigan is careful to note that the ruling doesn't kill the Thunderbird's expansion. While James overturned the Zoning Board's approval of Pergal's parking plans, "[The ruling] doesn't mean they can't put in an expanded music hall." He notes that much of James' ruling concerned procedural issues -- including the absence of a traffic study in the record -- that Thunderbird could resolve on a second go-around.

"This isn't the end of the issue," Madgian says. "I wouldn't want people to think this [ruling] means the development has been stopped." Madigan had praise for Pergal's willingness to adjust his plans -- "I have to say the owners were cooperating and very agreeable to addressing the community concerns" -- and predicts that "those discussions will be the foundation for further discussions if they decide to proceed."

For his part, Zemel says, "We hope that the parties will follow through on what they've agreed to ... I would have hoped that the agreement was being reached for the good of the community, and not because they thought they might lose [the case]. And my hope would be that they keep to their word and hold to the agreement. Absent that, our options include appealing the judge's decision or going back to the zoning board" and restarting the process." (If an appeal does occur, Zemel says it would be based solely on the ruling, not on the progress of talks.)

But in the wake of James' ruling, it is not clear that the community will make the kinds of concessions it was willing to make as recently as Wednesday night.

For one thing, Galluzzo says the community groups were "prompted to strongly consider negotiating with the property owners" when the Zoning Board designated the expansion as "restaurant (general)." Because that designation had a lower parking requirement than the "Recreation and Entertainment" category the groups wanted, Galluzzo says, negotiating appeared to be "our best avenue to mitigate [the project's] impact."

"We realized it was sort of an uphill battle, and we wanted to mitigate that as much as possible," says Byrne.

But James' ruling appears to agree with community groups that the expansion should be treated as a recreation facility, and that more parking is needed. And that, says Byrne, "helps our position" and "shapes some of the conversation going forward."

"[W]e have to wait and see what [Thunderbird's] next move will be," Byrne adds. "We're willing to work with them, and we appreciate that they've been willing to work with us. "

"It's difficult to speculate on what the next step might be," adds Galluzzo. "In many ways, we all need to explore what transpired today."