The American Rescue Plan Act was signed into law in March. This long overdue federal legislation includes a $28.6 billion restaurant revitalization fund to provide direct grant support for restaurants hit by the COVID pandemic. Food service and drinking establishments are eligible for this, including caterers, that are not an affiliated group with more than 20 locations. Publicly traded companies are not eligible. The eligible expenses include payroll, mortgage, rent, utilities, supplies, food and other expenses from February 15, 2020 to the end of 2021 deemed essential by the SBA. For restaurants in operation before 2019, take your 2019 gross revenue, deduct 2020 gross revenue and total amount of PPP loans to determine amount of grant funding. For restaurants that opened in 2019, it is the average 2019 monthly gross revenues times 12, less 2020 revenues and PPP loans. Final regulations are being determined by the SBA.
We have received many inquiries over the past two months regarding temporary retail permits for new liquor license applications. This was due, in part, to a posting by the NYC Hospitality Alliance which some read to say that these retail permits are now available, and that has created confusion. A temporary retail permit is issued in New York while a liquor license application is pending, and allows the holder to purchase (COD only) and sell alcohol as if the holder had a liquor license. However, to be clear, the temporary retail permit is only available within the City of New York if the applicant is filing for a transfer of an existing license and certain specific requirements are met. It is NOT available in New York City for a new license application, that is for space that is not currently licensed and is not a transfer. Outside of the city, if the 500 foot rule does not apply, temporary retail permits are, however, available for new license applications. The change to allow this within city limits has been proposed and strongly advocated by the NYC Hospitality Alliance and others in the industry, but it is not the law currently. We will of course be following this and will update as necessary. Please call us if you have any questions about temporary permits.
A “floating island” conceptualized in 2013, Little Island is a converted old pier off 14th Street that will be a public park, with short walking paths, sitting plazas, rolling grassy areas and a 689-seat waterfront amphitheater. Under lease with the Hudson River Park Trust, Little Island is an initiative of the Diller-Von Furstenberg Family Foundation. There will be programming six days a week featuring dance, theatre, arts, educational classes, comedy and other performing arts events throughout the nearly three acres of space. The park will be open to the public at all times and also includes a 300 seat main plaza. Food and beverages, including wine and beer, will be provided by Savory Hospitality Group until 11pm nightly. Little Island is an integral part of Governor Cuomo’s New York Art Revival, a public-private partnership to bring back the arts, and will open in May 2021. Bernstein Redo, P.C. is proud to be part of the Little Island team.
Cobi Levy and Chef Alex Guarnaschelli plan to open Osteria Lola, the Italian follow up to the popular SoHo Lola Taverna. Osteria Lola, currently under construction, will be located on the corner of 18th Street and Tenth Avenue in the Thomas Heatherwick designed Lantern House. Alex is an Iron Chef, best-selling cookbook author and Food Network star. Cobi owns Lola Taverna and Babu Ji. Osteria Lola will be a breezy coastal Italian restaurant celebrating the finest local ingredients. They have hired GRT Architects to create an approachable, elegant interior. Bernstein Redo, P.C. is proud to be part of the Osteria Lola team.
On November 12, 2020, the New York State Bar Association is sponsoring a continuing legal education course on “Legal Challenges Facing Restaurants During and After a Pandemic.” The two hour, two credit course begins at 1pm. Topics to be discussed include navigating the ever change labor and employment laws, recent issues regarding restaurant leases and landlord-tenant issues, protecting a restaurant’s intellectual property, and Bernstein Redo, P.C.’s Donald Bernstein will review Covid-related rules relating to liquor licenses and indoor and outdoor seating guidelines. Registration is through the NYSBA’s website: https://nysba.org/events/legal-challenges-facing-restaurants-during-and-after-a-pandemic/
After stating yesterday that the date for opening indoor dining in New York City was uncertain, Governor Andrew Cuomo just announced this afternoon that it will be permitted as of September 30, 2020. There are restrictions that will be imposed, and he announced some of those today. All indoor dining will be restricted to 25% occupancy. By November 1, the Covid-19 infection rate will be reviewed with the possibility that occupancy could increase to 50%. The Governor warned, however, that the occupancy could also be cut back. The temperature of all patrons must be taken at the door, and at least one person in each party must give contract tracing. No bar service will be permitted; all bars must be used only as service bars meaning patrons will not be permitted to sit at or order drinks at the bar. All restaurants must close by no later than midnight. Restaurants will be expected to limit air circulation and have enhanced purification. The Governor has encouraged the public to report non-compliant restaurants. Accordingly, all restaurants will be required to post the telephone number of the task force that will be overseeing enforcement. This is a welcomed step in the right direction, as the restaurant industry has been reeling from the effects of Covid-19. We will provide updates as necessary.
Governor Andrew Cuomo and the New York State Liquor Authority issued new rules on outdoor dining in order to halt the spread of COVID-19. These more strict rules are in response to what is perceived to be non-compliance with social distancing and complaints about outdoor space turning into bars and street parties. The Governor ordered a “three strikes you’re out” initiative whereby any restaurant or bar that holds an on premises liquor license will have that license summarily suspended upon the occurrence of a third violation of the outdoor dining rules. Egregious conduct may result in a suspension before the third violation. The State Liquor Authority also modified its earlier rules which only required the food be available for sale for take-out, delivery, or outside dining. The new Guidance posted on the SLA website today requires that food be sold with an initial drink order by every patron. This is required for take-out as well. The minimum food requirement is salads, sandwiches and soups. A shareable food item is permitted if it is sufficient to serve the number of people in the party. Licensees are also required to ensure that no patron opens any closed container of alcohol, beer or wine within 100 feet of their premises. These new rules are all posted on the SLA website. https://sla.ny.gov/guidance-requirement-licensees-premises-service-privileges-serve-food-alcoholic-beverages
With outdoor restaurant use in New York City to be permitted as part of the Phase 2 reopening, which expected to be in late June or early July, the New York State Liquor Authority announced a new Guidance, effective June 4, 2020, to allow a restaurant to add available outdoor space to its license on a temporary basis. Generally, new space can only be used after approval of an Alteration Application, which can take many months. The new Guidance however requires no prior SLA approval in most instances. The licensee is required to file floor plans for the new outdoor space within five days. The Guidance requires that any consumption of food and/or beverage must be in outdoor, open-air areas, without a fixed roof (besides a temporary or seasonal awning or cover); food and/or beverages can only be consumed while seated at a table, bar, counter, or similar contrivance; all tables must be 6 feet apart; any seat at a bar, counter, or similar contrivance must be 6 feet apart; all staff of the licensed business must wear face masks at all times; and all customers must wear face masks at any time they are not seated. If, however, the existing license has a restriction against use of outdoor space, whether by agreement or stipulation with local municipality or the local community board, then use of the outdoor space must be approved in writing by that party. Moreover, if a permit is required under any municipal law by any other agency, that will also be required. The City Council is working now on legislation to expedite the process with the Department of Transportation and the Department of Consumer Affairs for permits to permit the use of public space.
Korean automaker Hyundai will open a three story 43,000 square foot showroom in a new ten story building being constructed at Tenth Avenue between 13th and 14th Streets known as the Solar Carve Tower. The venue is designed to promote its luxury car brand, Genesis, and also provide for programming, with a food and beverage component featuring a Korean-based menu to be run in partnership with Restaurant Associates. The cellar space will hold private events for up to 232 guests, and the second floor restaurant will include an outdoor terrace facing the Highline. The first floor showroom will showcase the Genesis brand automobiles. Bernstein Redo, P.C. is proud to be part of the Genesis House team.
The City Council took decisive, if temporary action this past week to assist the restaurant industry during the current COVID-19 pandemic. As reported here on April 15, 2020, the Council was considering capping third party delivery fees at 10% of the order. The final bill that passed modified that proposal under pressure from Grubhub and others. Third party providers cannot charge more than 5% for orders placed, and up to an additional 15% as a delivery charge. While more than the initially proposed 10% cap, it is less than the 30-40% that has been charged. Penalties for violations are steep, up to $1,000 per day.
The Council also sought to provide relief for restaurants that cannot afford rent during the current closure period, which is pretty much everyone. If a commercial tenant is in default in rent between March 7, 2020, and a specified date after the closure orders are lifted, a landlord cannot enforce any personal lease or rent guaranty for arrears during that period. There are also a number or anti-harassment measures enacted. The rules on personal guaranties leave open questions, and are not a long term solution. They do however give restaurants some breathing space and can be used as an entry point to negotiate with a landlord. How effective these rules will be remains uncertain, and they are likely to be challenged in court. We will continue to monitor these and other developments.