The NYC Hospitality Alliance released a statement in response to the new job figures and testified before the City Council’s Committee on Small Business about the city’s COVID-19 recovery agenda
The following statement was released by the NYC Hospitality Alliance in response to the new job figures released yesterday by the Department of Labor:
"Restaurants and bars are essential to the social and economic fabric of New York City and the industry job loss is at a crisis level like we’ve never experienced. Over the past year, restaurants and bars lost 140,700 jobs, a 43% drop, and an even more shocking 55% loss in the full-service restaurant sector. The industry lost another 11,700 jobs between November and December 2020, which can be attributed to more permanent restaurant closures, the state shutting down indoor dining for a second time, and fewer people eating outside in winter temperatures. If New York City is to pull itself out of this economic grave and gain jobs, we must safely bring back regulated indoor dining like it’s permitted in the rest of New York State, and the Biden Administration and Congress must enact the RESTAURANTS Act stimulus plan very soon."
Testimony on COVID-19 Recovery
Today the NYC Hospitality Alliance testified before the City Council’s Committee on Small Business about the city’s COVID-19 recovery agenda. The following is an excerpt of our testimony.
COVID-19 has decimated our city’s hospitality industry and without aggressive action and support from every level of government we will continue to lose even more beloved small businesses and jobs. Thousands of local restaurants and nightlife establishments have already shuttered and countless more are teetering on the edge of survival. According to a report published by the state’s Comptroller’s office it’s projected that without adequate government support, one-third to half of New York City’s approximately 25,000 eating and drinking establishments will permanently shutter. Pre-pandemic our city’s restaurants and bars employed 325,000 people. After the initial shutdown order in March, jobs plummeted to 91,000 and increased to 193,000 thanks to the Open Restaurants outdoor dining program and limited indoor dining. Unfortunately, due to the cold winter weather making outdoor dining less attractive and the second shut down of indoor dining many of those jobs that came back are being lost again, as the most recent unemployment numbers show.
While the greatest support must be provided by the federal government via enactment of the RESTAURANTS Act, city government must also provide critical support. Thus, we present 17 polices to support eating and drinking establishments during the COVID-19 pandemic and to also correct structural regulatory burdens that existed pre-pandemic:
1) Sales Tax (COVID-19 Policy): Convert sales tax collected by restaurants and bars into grants. These small businesses need an immediate injection of cash to help them survive during the government’s COVID-19 restrictions on their operations. Since these monies are on hand, converting (and/or reverting) the sales tax collection into a grant will help small businesses immediately with needed cash flow while they will also stimulate economic activity.
2) Rent, Property Tax, Commercial Rent Tax, FICA Tax & Liquor Excise Tax (COVID-19 Policy):Our most recent rent survey found that 88% of restaurant, bar and club respondents could not pay any or full rent in October and only 1 in 10 have renegotiated their leases, which is a troubling pattern reoccurring each month since April. The City should provide: (1) a reduction in property tax payments for these small businesses that pay them as a pass through by their landlords; (2) landlords should be provided tax incentives to forgive back rent and renegotiate new leases; (3) the inequitable Commercial Rent Tax must be eliminated for those businesses subject to the tax; (4) the City and State Finance Departments should permit the FICA Tip Tax Credit to be an allowable subtraction from that business’ taxable income; (5) eliminate the unfair liquor excise tax imposed by the City on all local liquor license holders.
3) Planning, Coordinating and Notifying (COVID-19 Policy): The ever-changing COVID-19 restrictions placed on restaurants and bars pose significant challenges and compound the severe uncertainty small business owners already have. Ensure that any changes to city laws, regulations and policies affecting the city’s hospitality industry limit burdens to the greatest extent possible, are clearly and effectively communicated to the industry and consistently implemented, while providing as much advanced notice as possible.
4) PPE, COVID-19 Tests and Vaccines (COVID-19 Policy): Provide PPE at no charge to restaurants and bars, offer coordinated COVID-19 testing to their employees and conduct additional outreach to businesses to ensure they’re aware of its availability, and prioritize that hospitality workers are eligible for the vaccine asap.
5) Data Ownership: In today’s digital world, data is a valuable asset for businesses to market to their customers and enhance operations. Some third-party companies, such as certain delivery and reservation platforms used by restaurants and bars do not share with these businesses their own customer data or they restrict how it is used. Pass a law providing businesses ownership of their customer data (and related analytics) that is collected by third-party companies.
6) License Renewals (COVID-19 Policy): All licenses and permits such as Health Department permits, etc. must be renewed automatically, and licensing fees be waived until eating and drinking establishments may open at 100% indoor occupancy.
7) Cut the Red Tape and Reduce Fines: Review all laws and regulations governing restaurants and nightlife establishments to determine which are antiquated, duplicative or inappropriate. We should then amend or repeal the identified mandates to streamline the permit and licensing process and enhance the experience businesses have when interacting with the government, including making the sidewalk licensing process faster, less expensive and simpler. Also, requiring that inspectors educate businesses first, by explaining why a violation exists and how to correct and prevent it. The goal should be to reduce fines, increase education and compliance, and provide a warning or cure period before a fine is levied for any violations that do not pose an imminent hazard to the public.
8) Coordinated Inspections: NYC restaurants and nightlife venues receive unannounced inspections by multiple city agencies, sometimes during prime hours like dinner service, which disrupt business operations and the customer experience. It’s often reported by small business owners that different inspectors provide different and sometimes contradictory information. To fix these issues, the city should coordinate to the greatest degree possible pre-scheduled, multi-agency inspections to streamline the process, reduce burdens and ensure that accurate and consistent information and requirements are provided.
9) Commercial Rent Tax & Property Tax: NYC should begin the process of eliminating the unjust Commercial Rent Tax (CRT), which is effectively a 3.9% surcharge that only businesses located south of 96th Street in Manhattan pay on their annual rent when it exceeds a given threshold. This tax is discriminatory as it only applies to businesses in a certain area of Manhattan with the highest rents, and is calculated on the rent, not income. CRT has already been repealed citywide, except in this one geographic area. Most commercial tenants pay a portion of their landlord’s property taxes, in addition to their rent. These taxes pose a significant financial burden on small businesses. Provide small businesses with a tax credit against a portion of the property taxes they pay.
10) Health Department Letter Grades: Amend the NYC Department of Health’s Letter Grade inspection system by allowing cure periods for minor violations and eliminating points for non-food safety related violations that calculate a letter grade. Also, introduce “due process” into the inspection system so a judge’s ruling determines the frequency of inspection, instead of an inspector’s accusations, which is how the unfair system currently works.
11) Scaffolding: Scaffolding (sidewalk sheds) are essential in protecting people from building construction, etc. However, it is no secret that scaffolding left up for an extended period has a devastating impact on restaurants and bars. The effects range from a significant loss of business, to the reduction of employee hours and layoffs, to a major factor in some businesses closing. Some small business owners even suspect that unscrupulous landlords have kept up scaffolding to drive them out of business to get a higher rent-paying tenant or for them to sell or demolish the building. A law must be passed to require more aesthetically pleasing scaffolding and forbid it from staying up for unnecessarily long periods of time, without significant penalties. Tenants must also have a private right of action to recoup money in appropriate circumstances.
12) Rent: Similar to the way cities negotiate deals with real estate developers to provide affordable housing in new developments, deals must also include affordable commercial space for small businesses. Existing developments that seek taxpayer subsidies could also have such requirements as a condition of the benefit.
13) Community Boards: Standardize the process to apply for and renew liquor licenses and sidewalk cafe permits across community boards. The expectations of applicants should be clearly defined, and community board specific policies should be provided. Community boards should also identify locations where late-night hours for nightlife establishments are appropriate in their respective districts and provide applicants with constructive guidance, so stakeholders’ time is not wasted.
14) DEP Water Shutdowns: The NYC Department of Environmental Protection (DEP) must provide businesses with sufficient time, such as 30-day notice (or the longest notice period possible), before scheduled water shutdowns. Restaurants sometimes receive less than 24-hours notice, and sometimes only a few hours notice before a prescheduled, non-emergency water shutdown. Without working water, restaurants and nightlife establishments and workers suffer significant loss of income when their reservations and events are cancelled last minute.
15) Office of Nightlife: Increase the budget and staffing of the Office of Nightlife so it can effectively fulfill its mandate, which will allow it to provide greater support to nightlife businesses, residents and other stakeholders. Direct persistent nightlife establishment conflicts to the Office of Nightlife so they can mediate situations, instead of immediately involving the NYPD (or other agencies) for enforcement purposes where non-imminent safety matters occur.
16) Agent of Change: This proposal places the responsibility on the party entering the community to take action to mitigate/eliminate potential conflicts that may arise between businesses and residents, such as requiring a new residential developer to pay for the soundproofing of an existing nightclub next door
17) Dancing: Now that NYC repealed the Cabaret Law, the City must create a panel of expert stakeholders to conduct a citywide review of the Zoning Resolution, and submit recommendations to the Mayor and City Council, for additional areas.
New York City will not recover if our local government fails to do more for small businesses. These policy proposals will help protect and sustain small businesses and jobs throughout the pandemic and in the longterm recovery. We appreciate the City Council and the Small Business Committee for their time and consideration on this matter.