This is an incredibly difficult thing to pull off. We had a similar club here in Detroit, with 100 games, private (not open to the public), membership (far less than $300/yr too), etc. It went well for a while, then problems developed, heads collided, and things fell apart. Pinheads are vengeful. Cities are really difficult to deal with. Add it up and it's a formula for disaster. It doesn't surprise me that they couldn't get their project off the ground.
I think a better approach is to do what the Shark's Club in Howell Michigan is doing. That is, put pinballs (as many as they will take) into an already established bar or movie theater or coffee shop or other venue. Then the city doesn't have you by the nads to any great extent. But to open a "pinball only" venue is difficult, and the city just has so many things to hang their hooks on, and to prevent you from getting the place open. After all everyone wants a new coffee shop, but no one (but us) wants a new pinball arcade (which is how they view this stuff, using that dreaded word, "arcade.")