A New York restaurant with alfresco dining.
Photo: Jamie McCarthy / Getty Images
On May 26, the New York City Council passed an important local law called Local Law 1932-A for Weak Entrepreneurs. "Local Law 1930 – What?" You might ask. "Can I take my Piña Colada with me?" Well, no, but maybe your favorite bar has given some leeway to continue working. How did the law do that and why are so many owners concerned that it will go out? Grub will answer this question for you and a few others.
What is Local Law 1932-A?
It has been passed under a number of local laws designed to help bars, restaurants, and other small businesses, and temporarily suspends personal liability requirements for businesses affected by mandatory closings or service restrictions. This includes the entire restaurant and bar industry as well as fitness studios, fitness centers, cinemas, retail stores, hairdressing shops and salons as well as tattoo and piercing salons. The purpose of the law is to "temporarily prohibit the enforcement of personal liability provisions in commercial leases or leases involving a tenant affected by COVID-19" so that owners do not have to worry about their own financial ruin. The law applies for a period from March 7 (retrospectively) to September 30.
Theoretically, this is supposed to give companies some respite, from landlords who might otherwise come to rent them, who find it difficult or impossible to pay while not able to do their business. When it was introduced to the New York City Council, co-sponsor Carlina Rivera said: "As the federal government continues to hold further relief for small businesses, it is imperative that the City Council take all possible measures to support long-standing companies that have one important part of the structure of our neighborhoods. "
Why are we talking about it now?
The keyword is temporary. The liability provisions are only suspended until September. While it is a relief for restaurant and bar owners, it is seen as another example of how you can simply step down the can down the street, especially since it is clear that the restaurants will not return at the time this relief expires are normal. The owners that Grub has spoken to are concerned about the end of the suspension and consider this one of the most important issues they face. "I think protection must continue urgently and urgently, otherwise we will see some serious problems," said Roni Mazumdar, who owns the Adda, Masalawala and Rahi restaurants. "It would be a fatal blow to the restaurant industry if they didn't extend it."
Did lifting the liability rules help the restaurants?
Yes, because it gave the owners more time, but also, Mazumdar says, because it has given some tenants leverage in a city where real estate interests have a huge impact. "New York City has always been a landlord's place," Mazumdar says. "For the first time, it gives us at least one vote to have a conversation." He adds: "If this law didn't exist, I don't think there would be any talks – most people would just be knocked out and that would be the end." Not many landlords are sitting and think: Oh, I wonder if my tenant can actually pay his own bills. "
What are the owners worried about?
Last week, restaurateur Gabriel Stulman, who previously spoke about the possibility of bankruptcy, wrote on Instagram to write about his own current problems: “I am being threatened by my landlords that they will give a personal guarantee after the Bill overthrow in 1932 will take over. what they are actively pursuing, ”and his own lawyers and advisors say that“ no protection against personal liability is promised ”. Stulman is not alone, and other restaurateurs recognize that this situation is a real problem. "If this is overturned or if it is in what September?" So many people have just thrown in the towel because they say: "It's just not worth it," says Fabián from Valtierra, co-owner of Contra and Wildair. "I hope it won't be overturned. If so, we will likely see a lot of restaurateurs who wouldn't have given up simply because they thought there was no real help at all."
Are many restaurants facing eviction?
The country is facing a possible evacuation crisis. CNBC reports that more than 40 percent of tenants are at risk of eviction and that we could see as many evictions in August as we did in 2016 as a whole. This is an impending problem for restaurant owners as well. According to a survey by the NYC Hospitality Alliance, 75 percent of restaurants did not pay the full rent in June. The expiry of the personal liability regime could lead to a mass wave of closings, explains von Hauske Valtierra. "Rent is the only thing that keeps the business under pressure. If it is not extended, many people will be more willing to close," he says. "I think it is the only thing that allows people to say: Let's just get through. Let's see what happens and where we come from. "
Mazumdar agrees. "On September 30th, if this is not extended, you may see a large number of evictions. Evictions will continue to do so exponentially, and I think this will be the last straw many restaurateurs cling to," he says "Rent is a flat number that must be reached regardless of your sales, especially at a time when you are forced not to sell. What does that mean? We are all aware that the landlords are not in a favorable position either. "
But restaurants could sell frozen take-away drinks, and now they can eat outside. Why is rent a problem?
In his post, Stulman raised the issue of continuing to pay his full rent while not being able to do business as usual. Von Hauske Valtierra says that people are essentially at the mood of their landlord and their location, and eating out in his shops makes no difference. “We can accommodate 40 people in a place like Contra. We can have four tables outdoors. A place like Wildair offers the same number of seats indoors, but we can take 20 people outdoors, ”says von Hauske Valtierra. "It doesn't add up. The amount you previously paid for real estate doesn't add up to the outside area – or in some cases."
Mazumdar is also unable to use the outdoor food, as there are obstacles at each of its locations – bus stops and hydrants, as well as busy streets and intersections.
For him and his team, the uncertainty of the future means that the suspension cannot end so quickly, let alone so early in the crisis. "Nobody in my circle has a damn idea where we're going and how many months it will take," he says. "We'll talk about a vaccine by the end of the year. What does that mean? How long does the sales process take? How does it look? "He also sees no quick fix on the horizon:" I think 2020 is over and I think 2021 is also a wash, "Mazumdar complains." What does this mean for everyone? "
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