City & state governments announce phase two: outdoor on-premise service of food and beverage
Mayor de Blasio and the New York State Liquor Authority ("SLA") have announced that the SLA will permit licensees—restaurants, bars, etc.—in regions that have been identified as being in phase 2 of the state's reopening strategy, to expand their premises to any contiguous outdoor area over which it has some legal right (lease, licensing agreement). The SLA will also allow for local municipalities to make the public property and areas adjacent to these licensed premises available to the licensees for customer service. This means that licensees will be permitted to serve alcoholic beverages in their own outdoor areas, not typically used for service, and adjoining city sidewalks, provided they comply with the requirements in the guidance and complete an approval process. While most of the requirements are fairly achievable, one will likely negatively impact and slow down the process which is intended to offer fast track approval. The SLA guidance appears to be requiring a letter from the local community boards, consenting to such outdoor use. The actual language states, "if a licensee’s existing license operates with stipulations restricting the use of outdoor areas, through . . . [an] other entity, such licensee must submit a letter from . . . [the] entity with which it has stipulated approving such additional outdoor use of premises." As most restaurant owners in the city are aware, liquor licenses and especially those with outdoor seating are rarely issued without a set of stipulations with the local community board. The reality is that nearly every restaurant in the five boroughs operates with some "stipulations restricting the use of outdoor areas". While I appreciate the state and city governments thinking creatively about how to help quickly resurrect one of the hardest hit industries, a requirement giving local community boards veto power over these temporary expanded uses of spaces, is misguided. While individual members of the boards may be concerned about this industry and the greater economy, the previous positions of the Boards casts doubt on whether they will be guided by that principal when actually voting to permit outdoor expansion of a restaurant which is in some proximity to their apartment. I predict that community boards would be willing to temporarily expand the premises for some, but will attach burdensome strings to such approval. The government, in its apparent goal to get this temporary regime in place quickly, is overlooking the inefficiency of the community board approval process. In my experience, the boards do not have an interest in operating quickly and will likely insist on some sort of presentation from the licensees. Moreover, boards will likely demand applicants commit to fewer hours, fewer seats and other additional limitations. Such presentations require notice to the members of the community, so they will not be scheduled immediately. All of this will delay the state's intended immediate relief for these small businesses. The release from the city has the same spirit as the SLA guidelines: that the governments understand the stress these businesses are under and they are going to move quickly and creatively to allow for immediate revenue generation. The city has yet to lay out the mechanics of the approval process which will allow restaurants to use areas in streets that are closed off and areas of sidewalks, but the message from the Mayor is that the red tape has been cut and the procedural burdens on the businesses will be minimal. Perhaps the Mayor is in a position to influence the community boards should they create the hurdles that I fear, but it is far from clear that he has that authority. Additionally, as any restaurateur who has a sidewalk cafe license knows, applying for a license is not an efficient process. It is my hope that the Mayor's message of efficiency and his intention to create a "simpler, streamlined process" for licensing outdoor service of food and beverage, will not be lost in the implementation. New York City is not set to enter Phase 1 until next week and then Phase 2 sometime thereafter. But my partners and I will be keeping an eye on the state and city governments' actions and any associated developments. We are always available to discuss how they may affect your reopening strategy and to assist you in any way. We wish you the very best in these challenging times.
Michael Ferrari is a founding partner of Farber Schneider Ferrari LLP. Mr. Ferrari brings with him the legacy of his partnership with his father, Robert V. Ferrari, who built a vanguard practice serving the restaurant, food and beverage industry over the course of a half-century.