Oh, Landlordy! (re)Setting the TableBy on March 24, 2020 in Coronavirus
Dear HL Clients,
In all of my years as both an operator and a lawyer, I never felt that I had any true leverage with landlords. NYC has traditionally been a landlord’s market with plenty of ready, willing and able tenants lined up to take your space if you didn’t like your deal. It was dog eat dog and landlords played hardball because they could. You don’t like your lease terms? Too bad, pay me. You want to talk about your crazy tax bill? Screw you, pay me. Well, the tables are turning and for the first time, landlords need tenants, and we as renters may actually get to sit at the table with them with the same stack of chips.
I was on the phone all day with landlord attorneys talking about the state of affairs of our respective clients. Now, you know I am no landlord lover, but we do have to empathize and understand their predicament if we are going to be negotiating with them. They know that the tsunami of empty rent envelopes is coming but they don’t want to renegotiate at this point. It’s too early. They, like us, are in a holding pattern for the next few months. They want to see if there will be any legislation that will help them financially in the form of a reduction in city real estate taxes or an abeyance of their commercial loans. If the pressure on them lifts, they will be much more approachable and the negotiations more genteel. If it doesn’t, it will be rougher and bare-knuckled.
What terms are we going to negotiate? We think the entire lease and all of its terms should be on the table if the rental landscape changes as dramatically as we think it will. This means negotiating for a lower rent, a lease extension, resetting of the base tax year and a full or partial abatement of rent for the time the restaurant was closed to name a few.
When should we approach your landlord to renegotiate? The answer is, it depends on a few things like your relationship, if you want to stay in the space or leave, if your rent is above or below market, how much time is left on your lease and other factors. We will help you figure it all out and come up with a sound strategy.
We are providing our clients with an inexpensive flat-fee package ($750) to get the ball rolling that includes:
- Step 1 – A review of your lease and guaranty, paying particular attention to:
- Force Majeure clauses
- Any other abatement rights
- Any termination rights (by the Landlord and Tenant)
- Landlord’s remedies for non-payment of rent
- Good Guy Guaranty notice period
- Any other good guy requirements (lockout periods, termination fees, not being in default, etc.)
- Continuous Operation clauses
- Term extensions due to government shutdowns
- Step 2 – We will prepare summary email/document to you breaking down each important item to be aware of.
- Step 3 -We will discuss negotiation points and strategy with you and then prepare a letter to the landlord re: rent abatement/deferral, good guy notice, lease renegotiation, etc.
- Step 4 (If Necessary) – Negotiations with Landlord (billed hourly)
$$$$$ Saving information
Any time we hear of a way to save you money, we are going to check it out and then send it along so you can take advantage and implement.
Insurance by: Eric Weiner, Madison Avenue Brokerage
What owners can do to maintain proper coverage and lessen their costs:
Are you operating as a delivery only business? Discuss the following with your Insurance Broker/Agent
- Advise them you are delivering – some policies do have limitations and may require adjustments or a rewrite
- Explore adjusting your food/liquor revenue and if you are not delivering liquor – see if you can delete your liquor coverage for the time being
- Discuss if you are using hired/non owned vehicles for delivery
Did you cease operations completely? Discuss with your broker/agent how you can mitigate some of your costs while maintaining the necessary coverages
- As stated above, explore amending receipts and deleting coverages not needed at this time if your policy terms allow removing coverage
- Explore if your landlord would agree to lower Umbrella liability limits during this time because no patrons are occupying your space
Do you have no employees on payroll?
- Many Workers Comp carriers are willing to lower policy payrolls
- See if your carrier offers – Pay As You Go Workers Comp – so you only pay for the employees on payroll on any given week
- If you no longer have employees – notify your broker immediately. The carrier will perform a mandatory audit and then make a final adjustment (up or down). Be careful If your payrolls were actually higher than the payrolls on your policy –auditing could cost you more. Your broker/agent can guide you through this
- Don’t forget to adjust your NYS DBL/PFL to reflect the amount of employees you current have on payroll.
SLA Updates as of 3/24/2020
Liquor License Renewals
The SLA has stated that licenses with a March or April expiration may file the renewal applications without the normal renewal fee. Licensees will have 60 days from filing, or until June 1, to pay the renewal fee. Businesses with upcoming license renewals must still file a timely renewal application, including the required 30-day Community Board advanced notice. At this time, this is only in effect for March and April license renewals, should this change, we will keep you updated.
The payment demand letters for all monetary penalties approved by the SLA will now be suspended for the next 60 days. At the 60-day mark, the SLA will reexamine this decision and extend the timeline for a longer period if necessary. For any fines that have already been issued but not paid, licenses will not be suspended or canceled if you do not pay during the next 60 days.
The SLA is also making some allowances for distributors which may, in turn, lead to discounts for you. The distributor can now offer a volume discount with a smaller quantity requirement.
*Please reach out to our licensing team at email@example.com if you have any questions or would like our office to handle your liquor license renewal.
From our client and friend Ivy Mix: This is a resource for hospitals to receive extra gloves, masks etc. For restaurants not opening up for weeks or months, we can donate our gloves (and whatever else we may have) to this service. The hospitals are running very very low! https://getusppe.org/give/
Many of you have commented on the groovy illustrations that we use in the newsletter. Well, it’s the work of LMNOP, a phenomenal branding company based right here in my lovely Greenpoint neighborhood. They do a ton of work in the hospitality industry and we recommend them to everyone.
As the great Madeline Kahn sang in Blazing Saddles: “I’m tired”.
Hang in there,