Restaurants go on the political offensive

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An unusual message from the New York City Hospitality Alliance hit the inboxes of Big Apple eating and drinking establishments on Monday. As the industry’s main lobbying force in a city known for dropping anvil-caliber burdens on local businesses, the alliance “often tells you about our efforts fighting against anti-restaurant and nightlife legislation,” the communication explained. “Today, we were again in the halls of government, fighting in favor of proposed legislation,” a departure novel enough to warrant a heads-up.

The communication went on to review five legislative fronts where the alliance would like to see multiple bills passed, including new protections against evictions and a brake on runaway rents.

For a trade known in some political circles as the “industry of no,” the restaurant business is showing a decidedly activist streak in its recent political activity. In addition to pushing for legislation in New York City, restaurant lobbyists are demanding a fix in federal tax legislation and leaning hard on Maryland Gov. Larry Hogan to veto legislation raising the state’s minimum wage to $15 an hour, using new industry research as a stick. 

Here’s a sampling, starting with several of the unusual measures being championed in New York:

Putting the brake on runaway rents

Any developer receiving at least $1 million in financial aid from the city for a new project would be required under a proposal favored by the New York City Hospitality Alliance to offer ground floor space to restaurants or other small businesses at an “affordable” rent. What constitutes “affordable” would be determined by an assessment of the area and its business community by economic-development officials. 

Proponents note that retail rents in the borough of Manhattan averaged $156 per square foot in 2016, an increase of 44% over the mean for 2006.

Easing development in the Big Apple

A packet of bills being pushed by the Alliance is intended to ease the daunting task of developing a restaurant or other small business in the city. The measures include a call for creating a database of available storefronts and a requirement that New York’s notoriously complex business regulations be rewritten and consolidated into one easy-to-understand primer. Another calls for making fundamental business help available to entrepreneurs.

Countering evictions

Among the more unusual measures included in the grouping favored by the Alliance is one patterned after regulations that extend certain protections to residents who are evicted from their rental homes. The proposal would provide small businesses with access to legal counsel if they are similarly evicted by their landlords. 

Fixing a tax snag

On the federal front, the National Restaurant Association is championing a Senate bill that would fix an alleged slip in President Trump’s sweeping 2017 tax bill. The provision in question inadvertently eroded the tax benefits that restaurants and other businesses can peruse for physical improvements to their brick-and-mortar operations, or what are known as qualified improvement property (QIP). Because of what the association describes as a mistake in language, the depreciation write-off for those upgrades was spread across 39 years instead of the previous 15. The breaks lasts longer, but are far shallower per year. In addition, operators are denied a bonus depreciation allowance that was included in the tax bill. 

“It’s a deterrent, limiting the degree to which restaurants can invest, which ultimately impacts the customer experience,” said Jim Fris, chairman of the Pennsylvania Restaurant & Lodging Association and CEO of PJW Restaurant Group. 

A fix to the situation is expected to be a major focus of the national association’s Public Affairs Conference later this month. 

Pushing back in Maryland

Both chambers of the Maryland legislature approved a bill on March 20 that would raise the state minimum wage to $15 over a multiyear period. The threshold would have to be met by businesses with 15 or more employees by Jan. 1, 2025, and for everyone else by July 1, 2026. 

Gov. Larry Hogan has come out against raising the state minimum by roughly 49% from the current $10.10 per hour, but has not said whether he will veto it. Proponents say they have enough votes in the legislature to override a veto, and say that public opinion is on their side.

Among the prods being used to encourage the governor and change public perceptions is a new study from the Restaurant Association of Maryland. The research acknowledges that nearly a majority of Maryland residents favor a $15 an hour minimum wage, but that support wanes considerablywhen residents learn the cost will likely be higher consumer prices and lost jobs. 

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