Inside Scoop on Indoor Dining, Surcharges and 1932A

BIG SUR!!!! CITY COUNCIL COMES THROUGH WITH CRITICAL SURCHARGE BILL!

Am I missing something or is there any reason that every restaurant  won’t be ringing up the full, fat, 10% surcharge the minute Da Mayor makes it legal?  Surely, we can forgive the government for passing off its fiscal failings to the customer and that we have to collect money for them (taxes) and that the customers might whine and that the staff might get less tips.  Let’s forget all that and zero in on what it really means.  It’s 10% straight to your bottom line of course and will leave you in tiptop shape when paired with more money from the Feds, 100% occupancy, safe indoor dining, prolonged outdoor dining, propane heaters, rent relief, an honest election, an orderly transfer of power, a mild winter, no second wave and an effective, available vaccine.  So, Labor Day 2021 should do the trick.

The surcharge is a good start though and everyone should take full advantage of it.  You need the money to stick around so it’s in everyone’s best interest for customers to kick in to keep the lights on.  Also, the industry has been ripe for a price hike for a long time now and maybe this will get the guests comfortable with paying more to dine out.  As long as most restaurants are adding the surcharge, it should be ok.  Look, you will know pretty quickly if it will work for you so you may as well start it at the full 10% and give yourself some room to move around.  You can be nimble and charge 10% on Monday and 5% on Tuesday so why not take a shot? Plus, they gave it a noble name: Covid-19 Recovery Fee.  Really, not bad for the bureaucrats. 

Well, we missed you all very much and, as promised, we have updates for you on the matters that matter. We also have prognostications and explanations and rumors and it’s just a big ol’ kitchen sink of vital information so settle in, have a glass or a smoke or some pasta, and we hope you enjoy.

1932A Update.

Two things happening here.  First, there was a hearing in Federal Court last Friday in the case challenging the constitutionality of 1932A and the related commercial tenant harassment law. Landlords have asked the Court to issue an emergency preliminary injunction order to bar tenants from invoking 1932A to terminate their personal liability while the case is pending. In turn, the City has asked the Court to dismiss the case. 

I attended the hearing by conference call.  Landlord’s attorneys were well-prepared, smart, succinct and clearly ready for battle.  Their arguments were weak in some instances but overall, it was the type of solid performance that you would expect from a reputable law firm.  And then it was time for the City to present its case.  Honestly, it was just not a good showing. The City attorney’s were not well-versed in the realities of the industry and they struggled to make their points to the judge and they were badly outmatched.  Ultimately, it was tough to tell how the judge felt about the arguments and she did not make her decision at the hearing so we are waiting on that.  Should be any day now.  If the judge rules in our favor, 1932A’s power as a bargaining chip will increase and if we lose, then the power dynamic shifts heavily in favor of Landy.  

However, even if 1932A is ultimately upheld, landlords and their attorneys are coming up with creative arguments that 1932A does not apply.  For example, if your guaranty is a separate piece of paper than your commercial lease, landlords are arguing the 1932A does not protect the guarantor.  Another example is that landlords are arguing that 1932A may protect from non-payment between March 7^th to September 30^th , but does not permit you to simply hand in the keys and walk away from the lease.  Landlords have gone around the moratorium on eviction proceedings by filing lawsuits in supreme court and making these arguments.  None of these cases have been determined yet, but landlords are testing the extent of the law.

Also, 1932A is set to expire on September 30th.  The City Council (and thank god for the City Council as they have been behind every law that helps us) is set to vote next week on extending 1932A to March 31, 2021.  There seems to be broad support for this to pass and we are expecting it to pass and for the Mayor to sign.  Now, if the extension does pass and if the judge does not rule for Landy on it’s motion to restrain us from using 1932A, we will be in our best bargaining position with Landy post-Covid. Landy won’t be able to continue to claim with any confidence that 1932A will be overturned and they will also have to reckon with the possibility that a tenant could hang around until April without paying rent and then split without any personal liability.  If the judge rules against us, the extension will not mean a whole lot as 1932A will have lost most of its value. 

If you want to use 1932A before September 30th, make sure to not wait until September 29th to do it. It’s actually complicated to do it right, meaning to truly avoid liability, so you need to hire a lawyer as soon as you make your decision to do it. You don’t just mail in the keys and write a farewell note and hope Landy leaves you alone.  Because he won’t.  He will sue you for a lot of money and defending yourself will greatly disrupt your life.  So, remember to always be careful with Landy and call us if you need help.

PPP Update:

The big question here is not if there will be more PPP but when Congress will be able to pass a new stimulus bill to get it to us.  Speaker P has the R’s by the chads and she is tightening her grip. The R’s are losing in the polls and need to pass some kind of relief bill before the election.  This leaves Speaker P holding the cards and she will wait until the R’s fold and give the D’s what they want and then we will have a deal. 

Now, there have been rumblings of discontent from some  D’s in tight races and some of them have teamed up with some moderate R’s and they have put forth a bill that is a compromise between the skinny R bill and the chubby D bill.  This could work to get things moving as the pressure has now been turned up on Speaker P to loosen up and get a deal done.  The latest proposals include another round of PPP for small businesses.  Following this closely.

Oh yeah, there’s that whole indoor occupancy thing that’s getting started and more SLA shenanigans and all sorts of other fun stuff . So, here’s Joey Regs with an update.

Joey Regs Says…….

As everyone in the universe has heard at this point, NYC is finally going to allow indoor dining.  Hallelujah!  Too bad it’s a few months, a few lawsuits, and way too many shutterings too late.  Anyway, here’s what you need to know, as we enter this absolutely critical stretch…

Restaurants will be allowed reopen for indoor dining beginning on September 30, ONLY if the business operates in accordance with the strict guidelines and protocols established by the New York State Department Of Health. If NYC hits 2% in COVID-19 transmission rates at any point in the coming weeks, the City will reassess to determine whether indoor services can continue operating. Otherwise, these existing limitations will be reassessed by Governor Cuomo no later than November 1, in the hopes that indoor occupancy restrictions can be increased from 25% to 50% if COVID-19. But transmission rates must remain at or below current levels.

Many of our clients have informed us that they will actually NOT be opening at 25% indoors, even when they’re allowed to do so.  Why?  Because 25% is a freakin joke and it’s not going to boost their businesses by any meaningful amount, and they’d rather not risk NOT getting to 50%, which is where we really need to be for businesses to stand a chance.  The logic actually makes sense: just because you can go to 25% doesn’t mean you have to; so if you maintain the status quo, then hopefully so does our transmission rate, and then boom – fast tracking to 50%. And now we can talk about a future.  Of course not everyone can afford to make decisions like that, but if you can, I think it’s worth considering.  OK. Back to the Rules and Regs…

The following list outlines those guidelines imposed by New York State specifically in connection with the re-opening of indoor food service in NYC, but may not be inclusive of all other existing guidelines that remain in full force and effect after being promulgated in connection with the re-opening of outdoor dining in July 2020.

INDOOR CAPACITY LIMITATIONS

• You must limit your indoor capacity to no more than 25% of the maximum occupancy listed on your certificate of occupancy (or letter of no objection). For those of you (most of you) that don’t have a PA permit, your mandated max occupancy is 74 persons.  Thus, your 25% number is 18.5 persons.  This limit does NOT include employees.
  • If, however, an employee is seated in the dining room during a break or while eating a meal, that employee must be counted towards and included in that occupancy count.
• The 25% capacity limit applies to private events held indoors, with the understanding that event capacity will also be governed by the 50-person gathering restriction currently in effect in NYS.
  • What does that mean? That even if your 25% occupancy limit exceeds 50 people (allowing 50+ patrons to eat indoors at your establishment at once), you still cannot host an event or organized gathering with more than 50 people.
• At all times, you must maintain an accurate count of your indoor occupancy.
  • We anticipate that an inspector will not only verify that your indoor occupancy actually complies with your 25% capacity limit, but also ask about whatever tracking system we have in place to ensure that it accurately monitors the number of individuals exiting and/or entering the premises.

MANDATORY STAFF & CUSTOMER SCREENINGS

• Any employee or customer entering the physical premises must have their body temperature taken immediately upon entry. No individual with a temperature greater than 100.0 F can remain indoors.
  • Please note that this expands your existing duty to have your employees submit to a daily health screening and effectively requires that temperature checks be a mandated part of this screening, as opposed to a mere best practice.
• A customer may only dine indoors if at least one (1) person from their party has provided you with complete and accurate contact information that can be used if necessary in contact tracing efforts.
  • You may collect this information via an reservation platform or similar third party online, but just be sure you get a full name, address, and phone number for each party. This info must be kept on file for at least 28 days.

OUTDOOR-INDOOR RULE OVERLAP

• Just like our seating outside, our indoor tables and chairs must be separated by a minimum of 6 ft. in all directions.
  • Where distancing is not feasible, erect physical barriers between such tables. These barriers must be at least 5 ft. in height and must not block emergency/fire exits. And yes, all customary ADA rules still apply when making structural adjustments like these. 
• Remember that you cannot seat more than 10 people at a single table. Communal tables should only be seated if 6 feet of distance can be maintained between groups.  
• You are required by NYS to designate separate entrances/exits for customers and employees, respectively, to the extent it is possible to do so. Those distinctions should be clearly marked and also pointed out by your employees, for the purpose of both enforcement and controlling the flow of traffic.

• No mask, no entry. Under no circumstances should an employee, customer, or vendor be permitted to enter your establishment unless wearing a CDC-compliant face covering. Be sure to keep extra face masks stocked on the premises, as required by law, to provide a compliant face covering for any individual on our restaurant premises without one.

LIMITATIONS ON INDOOR OPERATIONS

• You are prohibited from providing indoor bar service.
  • Customers should not be able to sit, walk up to, stand at, or be served at the bar. Indoor bars should only be used by employees preparing beverage items for customers seated their table.

• All food and beverage service must stop no later than midnight.
  • While customers are permitted by law to take an additional 30 minutes after the end of service to finish a meal, it’s your responsibility as an operator to not only make sure that your customers are not lingering excessively after they finish eating, but that they are out the door absolutely no later than 12:30am. Your failure to enforce curfew will result in a penalty for the business, not the customers.

FUCKING RIDICULOUS AND STILL UNCLEAR HVAC RULE

• If you have a central air handling system in your premises, you will be required to have a certified professional verify that your HVAC system filtration meets the highest rated filtration compatible with the currently installed filter rack and air handling systems, at a minimum MERV-13, or equivalent or greater (e.g., HEPA).

• If you have a central air handling system that cannot handle the enhancements listed above (because it would be unable to perform at the minimum heating/cooling levels currently maintained before any such installation), you’ll need to have a certified professional verify as such and provide you with explicit documentation detailing its findings.
  • You’ll then need to adopt additional ventilation – or filtration mitigation – protocols. NYS has provided an extensive list, based on CDC recommendations, but does not explicitly require that a certain number of the following protocols be implemented. So, for now, we’d advising that you’d go through the list and see how many you can implement without burdening the business (especially financially).
    • Performing necessary retro-commissioning of central systems, as well as testing, balancing, and repairs as needed
    • Increasing ventilation rates and outdoor air ventilation to the extent possible
    • Keeping systems running for longer hours, especially for several hours daily before and after occupancy
    • Disabling demand-controlled ventilation, and maintain systems that increase fresh air supply
    • Maintaining relative humidity between 40-60% where possible
    • Opening outdoor air dampers to reduce or eliminate recirculation to the extent possible
    • Sealing edges of the filter to limit bypass
    • Regularly inspecting systems and filters to ensure they are properly operating, and filters are installed, serviced and within service life
    • Opening windows to the extent allowable for occupant safety and comfort
    • Installing appropriately designed and deployed ultraviolet germicidal irradiation (UVGI) to deactivate airborne virus particles
    • Using portable air cleaners (e.g., electric HEPA units), considering units that provide highest air change rate at appropriate performance level and do not generate harmful byproducts

• And if you somehow are lucky enough to not have any control over your central handling system (by means of specific lease terms, for example, which might grant your landlord complete control over the HVAC system on the premises), then you’ll just need to go through and adopt as many of those CDC-approved protocols listed above as possible.

REQUIRED POSTERS & NOTICES

• As a reminder, you must post signs throughout your entire premises, reminding employees and customers of their responsibility to themselves and to others when it comes to health/safety practices specific to COVID-19.
  • These signs can generic in nature, downloaded and printed from any government website – or you can create your own to target your workplace or day-to-day operations a bit more effectively.
  • Here’s a recapped list, for handy reference:
    • Stay Home if Sick
    • Cover your nose and mouth with a face covering at all times for employees, and at all times except when seated for patrons
    • Quarantine if you have recently been to a state with significant community transmission of COVID 19, pursuant to DOH travel advisory
    • Properly store, and when necessary, discard PPE
    • Adhere to social distancing instructions
    • Report symptoms of or exposure to COVID 19, and info on how to
    • Follow hand hygiene and cleaning and disinfection guidelines
    • Follow appropriate respiratory hygiene and cough etiquette
    • Report any violations by calling (833) 208-4160 or txting “VIOLATION” to (855) 904-5036

• You must post the exact number of patrons permitted indoors, calculated based on your 25% capacity maximum detailed above.
  • A posting with this information should be placed conspicuously in your storefront window, since it is must be visible to employees, customers, and patrons.

• You must conspicuously post the contact information that employees and/or customers can use to report a violation general NYS protocol.
  • Once indoor dining begins, the public will be able to call 833-208-4160 to make a report or text VIOLATION to 855-904-5036.

• We recommend that you simultaneously post details about your internal “complaint” process, including the contact information for the restaurant’s designated site safety manager (i.e., our central point of contact for all things COVID-19).
  • While this poster should not – and legally cannot – dissuade someone from reporting a violation externally with the applicable government authorities, we want to do everything we can to make employees/customers feel comfortable addressing any questions or concerns that may have come up while on the premises, as opposed to escalating the issue without first bringing it to your attention.

There’s a lot here.  If you’re going to give 25% indoor service a try, please, please, please, be super tight.  We have asked our elected officials to give us a chance to show them that we can open responsibly.  And now it’s up to us.  Let’s show them what we can do.

REG BONUS: Whispers from the Liquor Rumor Mill.

Many of you know that the only way to get a Temporary Liquor License (which allows you to open for business and sell booze while the SLA is reviewing your full license application) in NYC is to buy the assets of an existing business, with an existing license that is active and in good standing.  What many of you DON’T know is that this particular mechanism only exists in NYC.  Outside of the five boroughs, [prospective] operators qualify for and are able to apply for these Temporary Liquor Licenses in every instance, regardless of whether they’re buying a business’ assets or not and regardless of whether a license existed there previously or not. 

It’s a weird perk that non-NYC business owners have enjoyed for years.  We can debate why on earth any regulatory body would create a rule like this, when it is and has always been the NYC operators who really need this type of assistance-not vice versa, but those arguments have always fallen on deaf ears.

I am hearing chatter about the State actually relaxing these rules, and thus allowing NYC businesses to take advantage of this program in the same way that those outside of the City have always been able to.  This would be a MAJOR move.  It would effectively mean that if you were so inclined to open a new business in NYC, you would have a temporary ability to sell booze (within 3-4 weeks from filing), while you waited the 4-6 months to get your full, permanent license.  These Temporary Permits would roll right through to full license activation, so there would be no lag in service either.  This would be a great incentive for people to get back in the game in NYC.

Many industry activists (myself included) have been pushing for something like this for years.  It seems that in light of our current crisis, it’s finally being considered in a very real way.  Stay tuned for developments here.

Joey Regs Out.

RIP Stanley Crouch and Toots Hibbert

RIP Alameda, Cherry Point, Fedora, Bar Sardine, Butter & Scotch, Mermaid Inn, West- borne, Mission Chinese.