NYC Office of Nightlife Listening Tour

Ariel Palitz, Senior Executive Director of the New York City Office of Nightlife, and referred to as the “Nightlife Mayor”, conducted the last of the five Borough meetings of the office’s Listening Tour in Manhattan last week.  Hundreds of residents, business owners, and community board members attended the meeting at The Town Hall on West 43rd St. Manhattan Borough President Gale Brewer, as well as a number of City Council members, spoke at the gathering.  Director Palitz moderated a panel of representatives from 10 city agencies including the NYPD, the FDNY, DOB, and the NYS Liquor Authority, represented by Deputy CEO Jones. Borough President Brewer said that nightlife was “an economic engine in the City” generating over $48 billion in revenue. At the same time, she expressed concern that there were, by her count, 653 new liquor licenses issued this year through mid-October, though she did not state how many of those were liquor or grocery stores as opposed to restaurants, bars or hotels. That figure did also not take into account closings. Director Palitz said that the growth of licenses issued is only about 2%, less than in prior years.  She said that the goal of her office is to balance the vitality of the industry with quality of life issues and welcomes comments from the industry and from concerned residents.

Voters Approve Term Limits on Community Boards

New York City voters yesterday overwhelmingly approved imposing term limits on community board members.  Those boards are intimately involved in the liquor license process in the City and have varying degrees of influence on license approvals.  Mayor Bill deBlasio’s Charter Revision Commission had suggested this change.  The view of the Mayor and the Commission was that the boards did not always reflect the changing demographics of the neighborhoods they represent and that new members would bring fresh ideas. Manhattan Borough President Gale Brewer opposed the change and was of the opinion that experienced board members should not be jettisoned and replaced by new inexperienced members who could not hold up against experienced real estate developers.  City Council Speaker Corey Johnson, formerly chair of Manhattan Community Board 4, also opposed term limits.  There were other council members however who supported the measure, as did the Brooklyn Borough President, Eric Adams. With yesterday’s approval of the proposal, board members will be limited to two four year terms and then would have to take a two year hiatus before they could be considered for reappointment.  This will go into effect in April 2019. Terms served prior to that date will not count towards the term limit.

November 2, 2018 Continuing Legal Education Class on Retail Liquor Licenses

On Friday November 2, 2018 at 9:30 a.m. Bernstein Redo, P.C.’s Donald Bernstein will teach a three hour class sponsored by the National Law Institute on New York Retail Liquor Licenses at 1500 Broadway in Manhattan. This class will be for 3 continuing legal education credits, though it is not limited to attorneys. Anyone interested may attend. The class will review all aspects of the licensing law and process, including who may be licensed and who may not, the tied-house rule, the 200 foot rule, and the public interest test of the 500 foot rule, the legal and practical challenges of licensing a hotel, issues regarding licensing private members clubs, temporary permits, the community board process, and other issues. There is no charge for this class. Registration is through the National Law Institute website, www.nationallawinstitute.com.

Third Party Providers

Over the past few years a number of third party providers (TTPs) have provided platforms for brick and mortar stores licensed to sell liquor to list and sell their inventory online. By providing a platform for these sales, TTPs are filling a demand during a period of changing consumer buying habits. This has raised issues in a number of states, including New York, as these TTPs are not licensed to traffic in alcoholic beverages, yet they are profiting from the sale of liquor. Some of these TTPs have asked the New York State Liquor Authority to approve their method of operation and confirm that they are able to share in the liquor revenue without themselves being licensed. While some would argue that TTPs should be licensed, the Authority has tried to create a framework in which these TTPs can operate without a license. The smartphone technology did not exist and could not have been anticipated when the liquor laws were written post-Prohibition, so the Authority has had to deal with this on a case by case basis. In the early rulings sought by Groupon and Living Social, the Authority ruled that the licensee must retain control over any sale, prohibited the TTP from sharing in revenue that was percentage based, and placed a 10% of annual revenue cap that a licensee could pay the TTP. In the Ship Complaint ruling from 2013, the Authority ruled that the TTP’s profit cannot be “a substantial portion of the sale.” In the Drizly ruling the Authority looked into whether the licensee had a passive role and what financial interest the TTP had. The Authority further expanded the rights of TTPs in its Slingr ruling in 2015. Slingr took a percentage of profit, and also had a physical presence in the brick and mortar stores. A number of additional rulings have followed. At least one commentator has argued that the Authority’s rulings over the years have been inconsistent and even contradictory, or at the very least “created a hazy regulatory landscape,” that though clear at first then “crumbled” in subsequent rulings. See Alexa Bordner, How New York Drinks: If and How Third-Party Providers Can Integrate with the Three-Tier System, 83 Brook. L. Rev. (2017). Despite task forces, and proposed legislation on TTP’s including proposals that there should be a required Third-Party Provider Permit, the issues surrounding them remain fluid and evolving.

Lily Fan Appointed SLA Commissioner

This week Lily M. Fan was confirmed by the New York State Senate as a Commissioner of the New York State Liquor Authority. Ms. Fan, a graduate of Yale College and Yale Law School, was born in Hong Kong and speaks fluent Cantonese. She is a New York City resident and was appointed a member of Manhattan Community Board 4. She served as the Board’s Co-Secretary from 2016 to 2017.
Ms. Fan was previously a lawyer at the law firms of Shearman & Sterling LLP and Morrison & Foerster LLP, specializing in white-collar criminal litigation and securities class actions. She also served as Legislative Counsel in the New York State Senate in 2010. Ms. Fan founded Scandobean Productions LLC, a theatrical and film production company, in 2010. She also has a real estate business and mediates family, entertainment, and other contract disputes.
Ms. Fan is a Tony-nominated and Oliver-nominated theatre and documentary film producer. She is currently supporting numerous Broadway productions. She was recently represented on Broadway in the new plays Chinglish and Hand to God, and the revivals of Jesus Christ Superstar and Love Letters. Ms. Fan was also an Executive Producer of Weiner, a documentary feature about Anthony Weiner’s 2013 campaign for New York City Mayor, which received the U.S. Documentary Grand Jury Prize at the 2016 Sundance Film Festival.
Ms. Fan is a Member of the Board of Advisors at the Yale School of Drama. She serves as Secretary to the Board of Trustees of the Lark Play Development Center. She is the Treasurer to the Board of Directors of The Lilly Awards. She is a member of the New York City Bar Association’s Land Use Planning and Zoning Committee. She is also a member of the National Committee on United States-China Relations and she serves as a trustee to both her parents’ charitable foundations.

The Maze of Licensing Private Members Clubs

In recent years there has been a surge of private members clubs wanting to open in New York City, many born in London where there are hundreds of clubs. Bernstein Redo, P.C. client Soho House, which opened on Ninth Avenue in 2003, set the bar, and now everyone wants in. We have particular expertise in this, and have counseled many members clubs including Ludlow House, Dumbo House, Neuehouse, The Wing, Zero Bond, 5 Hertford Street, Groucho Club, Norwood, Classic Car Club, and others in navigating the uncommon license laws of New York. New York law dictates who can apply for a members club liquor license, where such clubs may be located, and imposes strict rules regarding who the members club may allow in and that also control how it may operate. These differ significantly from the laws that govern hotels, restaurants and bars that are open to the general public. When faced with the maze of rules on members clubs that can seem daunting, we are constantly asked, “how does Soho House do it?” We know, because we did it.

Ariel Palitz Appointed NYC Nightlife Mayor

Last September Mayor Bill DiBlasio created the Office for Nightlife for New York City, and this weekend named Ariel Palitz as its first Executive Director. Ariel, a former bar owner was also a member of Manhattan Community Board 3. The Office for Nightlife will be part of the Office of Media and Entertainment headed by Commissioner Julie Menin. In a post she wrote after her appointment, Ariel said “I look forward to working together with the Advisory Board, and hearing feedback from nightlife operators, curators and community to ensure that New York culture is not only preserved, nurtured and protected, but respected.” We congratulate our friend, Ariel, and look forward to working with her team on nightlife issues.

Butter Group and Marc Forgione Take Former Spice Market Space

Richie Akiva’s Butter Group, whose holdings include 1 Oak, was approved by the New York State Liquor Authority yesterday for a planned new restaurant in the basement of what was Spice Market on Ninth Avenue and 13th Street. Butter Group will partner in the new space with chef Marc Forgione, who is also an owner of American Cut. The new Meatpacking District restaurant will feature Italian-Mediterranean fare. At the SLA hearing yesterday a number of residents as well as a representative from Manhattan Community Board 2 opposed the application. It was approved however with restrictions on the proposed method of operation, including hours.

Donald Bernstein To Teach A Continuing Legal Education Class on Retail Liquor Licenses

On Friday February 9, 2018 at 9:30 a.m. Bernstein Redo, P.C.’s Donald Bernstein will teach a three hour class sponsored by the National Law Institute on New York Retail Liquor Licenses at 1585 Broadway in Manhattan. This class will be for 3 continuing legal education credits, though it is not limited to attorneys. Anyone interested may attend. The class will review all aspects of the licensing law and process, including who may be licensed and who may not, the tied-house rule, the 200 foot rule, and the public interest test of the 500 foot rule, the legal and practical challenges of licensing a hotel, issues regarding licensing private members clubs, temporary permits, the community board process, and other issues. Registration is through the National Law Institute website, www.nationallawinstitute.com.