Introduction

20 Policy Ideas for 2020,NYC Hospitality Industry Edition.

With 24,000+ restaurants and nightlife establishments, the NYC hospitality industry employs more than a quarter of a million people. This industry is vital to the economic footprint and social fabric of New York. It creates an entry point into the workforce, provides upward mobility, and offers careers to people of diverse backgrounds. Our restaurants and nightlife are a driving factor of why people want to live, work and visit New York City.

Hospitality businesses, however, are facing perilous times. In an industry that is known for its low margins, high failure rates, government overregulation, intense market forces and tough competition, these small businesses are under intense fi nancial and operational pressure. We must work collectively to address the plight of small businesses and vacant storefronts in New York City. As we enter this new decade, we need a comprehensive plan to support the

hospitality industry and reverse these negative trends. This is why the New York City Hospitality Alliance presents: 20 Policy Ideas for 2020, NYC Hospitality Industry Edition.

Enclosed you will fi nd a menu of 20 progressivepolicy ideas that will support our neighbor-hoods’ restaurants and nightlife venues andthe people they employ. This menu is segmented by: New York City & New York State, New York City, and New York State respectively. Please select policies from the menu that you support. Let’s work together to keep New York City the hospitality capital of the world, and the city that never sleeps!

Please contact Andrew Rigie at 212-582-2506 or arigie@thenycalliance.org with questions/comments.

The New York City Hospitality Alliance presents 20 ideas to preserve and protect the hospitality industry.

Menu

Cut the Red Tape & Reduce FinesWorker Benefit ProgramsData OwnershipTaxes (miscellaneous)third-party Fees & consumer disclosure

100

200

300

400

500

1700

1800

1900

2000

80/20 RuleTip SharingEnhanced Security Guard Training200 Foot Law

New yorkCity600

700

800

900

1000

1100

1200

1300

1400

1500

1600

Commercial Rent Tax & Property TaxHealth Department Letter GradesSidewalk CafesScaffoldingSurchargesRentDEP Water ShutdownsOffice of NightlifeAgent of ChangeDancingCommunity Boards

New yorkState

New York City New York State&

Cut the Red Tape & Reduce Fines 100

Worker Benefit Programs 200

Data Ownership 300

Taxes (miscellaneous) 400

Third-party Fees & consumer disclosure 500

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 with the purpose of streamlining the permit and licensing process and enhancing the experience businesses have when interacting with government. This should include a requirement 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.

Pass a law requiring that prior to any employer-funded and administrative mandates are introduced, such as healthcare, paid vacation, etc., a diverse stakeholder committee be created to determine the feasibility of providing such benefits via an insurance fund and/or government administered and funded mechanism. This approach is similar to how social security, paid family leave and other benefit programs are administered. In today’s changing marketplace, small employers in particular, should not fully shoulder the burden of these social benefit programs. There are also many advantages to workers when their benefits are portable and not tied to a specific employer.

In today’s digital world, data is a valuable asset for businesses. Unfortunately, some third-party companies, such as certain delivery and reservation platforms used by restaurants and nightlife establishments do not provide these establishments with their own customer data and/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.

The tax code is used to support and incentivize economic and pro-growth activity. Benefits such as the Excelsior Jobs Tax Credit should be extended to employers in the hospitality industry. Restaurants that purchase certain amounts of product from New York farmers and/or food & beverage manufacturers should be offered incentives to encourage NYS commerce and jobs. The City and State Finance Departments should permit the FICA Tip Tax Credit to be an allowable subtraction from that business’ taxable income. Eliminate the unfair liquor excise tax imposed by the City on all local liquor license holders.

In today’s marketplace, hospitality businesses rely on third-party companies to transact all kinds of business, from delivering food to booking reservations. These third-party companies often charge hefty fees to such businesses, which are debited from customers’ orders, something customers never see. Enact a law providing businesses the option of disclosing the third-party fee and passing it on to customers.

New York City New York State&

Commercial Rent Tax & Property Tax 600

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.

Health Department Letter Grades 700

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 that a judge’s ruling determines the frequency of inspection, instead of an inspector’s accusations, which is how the unfair system currently works.

Sidewalk Cafes 800

When a person purchases a business with an existing unenclosed sidewalk cafe, they should be permitted to operate that cafe under the prior owner’s conditions until they are able to apply for and receive their own cafe license. This will decrease the business’ startup costs and provide much needed revenue to a new business because they would operate the sidewalk cafe immediately (and not lose a season’s worth of business). A temporary license to operate should also be available to restaurants looking to open in a currently vacant space that previously had an approved sidewalk cafe license as long as the same cafe license is being requested. Other cafe reforms should also be adopted to make the process faster and less expensive. For example, all government agency reviews should take place at the same time, not one after the other, and policies should be adopted to make the process faster and less expensive. Lastly, businesses should not have to hire an architect just to submit a simple cafe plan. Any accurate plan should suffice as they do with other commercial uses of the public sidewalk.

Scaffolding 900

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 as a means to drive them out of business in order 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 forbiding 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.

Surcharges 1000

Allow hospitality business in NYC the option of adding a clearly disclosed surcharge to restaurant menus. A disclosed surcharge is allowed everywhere in the country, even elsewhere in New York State. This antiquated rule, implemented for an unrelated reason over 40 years ago by the NYC Department of Consumer Affairs, can be interpreted to prohibit this practice. The surcharge works successfully in other progressive cities like San Francisco as a way for local businesses to generate revenue to cover skyrocketing operating costs. It is also a way to reduce wage disparity between the front of house workers who earn big money in tips, and kitchen workers who cannot legally particpate in a tip pool.

New yorkCity

New yorkCity

1600

DEP Water Shutdowns 1200

The NYC Department of Environmental Protection (DEP) must provide businesses with sufficient time, such as 30-day notice (or the longest notice period possible), prior to scheduled water shutdowns. Restaurants sometimes receive less than 24-hours notice, and in some cases 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 and their customers suffer when their reservations and events are cancelled last minute.

Office of Nightlife 1300

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 stake-holders. 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.

Agent of Change 1400

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.

Dancing 1500

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 where dancing should be permitted.

Community BoardsStandardize 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 made available. 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 that stakeholders’ time is not wasted.

Rent 1100

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.

80/20 Rule 1700

Tip Sharing 1800

Enhanced Security Guard Training 1900

200 Foot Law 2000

Reform the NYS Department of Labor’s so-called 80/20 Rule that creates significant legal and financial liability for restaurants and hurts workers who want to work more hours and gain more skills. The law prohibits an employer from taking the tip credit for an employee if they work more than 20% or two hours of their shift in a non-tipped job capacity. Effectively this means employees are prohibited from working five hours of a shift as a bartender earning tips and then three hours doing inventory, tastings and purchasing, which is non-tipped work. If they do, they violate the 80/20 Rule and enormous financial liability results for the employer, including loss of the tip credit, double damages and attorney fees. The 80/20 Rule also prevents the employee from earning more money and gaining additional skill sets, thus limiting their income and opportunity for professional growth. The 80/20 Rule must be amended to provide employees more flexibility to work in a tipped and non-tipped capacity during the same shift.

NYS law prohibits kitchen workers from participating in a restaurant’s tip pool. This results in a growing disparity of income and can breed animosity between kitchen workers and servers (bartenders, bussers, runners) who often earn significantly more money than their colleagues in the kitchen because they earn tips. Amend the law to allow non-managerial kitchen workers (if the employer chooses to) to participate in a restaurant’s tip pool, which is allowed in other states around the country.

Under NYS law, security guards are required to take the same training whether they are guarding a nightlife establishment or a pharmacy. Require security guards working in nightlife to receive enhanced training tailored for their work environment including de-escalation techniques related to intoxicated individuals, addressing sexual violence, harm reduction, active shooter, gender identity, etc.

Amend the State Liquor Authority’s post-prohibition law preventing a full-service restaurant from obtaining a liquor license if they are located within 200 feet from a school or place of worship. This would allow for economic development, increased jobs and additional local restaurants to open where they’re now unable.

New yorkState