Who was there first? Rules not to be bent in his favor, but rules possibly bent to be fair. Maybe those rules aren't right in the first place. A liqueur license should always be individually considered, and his would just make good sense both for his survival and for downtown revitalization.
Many churches allow alcohol on their own property, anyway and there are already taverns close to daycare centers--and as long as the vendor cards his patrons, there won't be any sold to children--it's not like most of those school kids don't already see any alcohol use in their personal lives.
And there you are (pompous bureaucracy) telling your old, sick or poor citizens (of age) that they will have to walk a little further if they want to buy a drink of alcohol. If they can make it a hundred feet, they can make it a couple blocks. At least they don't have cars to drive "home" after they tie one one, like some of those who make the rules, do.
So, you allow no carry-outs of liqueur from his establishment. One of those "indigents" (who has every right to drink alcohol, really, same as any other citizen of age) would have to come in and actually patronize his establishment. If THAT PERSON becomes a problem, then deal with him/her. If that person has no money in the first place, then it doesn't become a problem, does it?
Does the Community Care Center house people over-night? Most of the billiard hall business is done during evening hours, and on weekends--and inside his own building.
Desperate? Yes, survival in a business you have sunk your life in to can become a desperate effort, sometimes. He should be assisted by those his taxes support, not set up to fail by them.