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Sidewalk Cafe Permit Fees Amendment Intended to Help One Restaurant — Just Not The One You Think

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Sidewalk Cafe Permit Fees Amendment Intended to Help One Restaurant — Just Not The One You Think

August 26, 2017 - 21:19

Council Member Ivar Hyden addresses New Rochelle City Council on Sidewalk Cafe Permit Fees

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NEW ROCHELLE, NY -- Alvin & Friends Restaurant was the primary beneficiary of a 2014 change in the pricing of Sidewalk Cafe Permits from a fee based on the area taken up by a restaurant's outdoor seating to a fee based on the number of seats in a restaurant's outdoor dining area.

Under the law, prior to the change from area-pricing to seat-pricing, Alvin & Friends should have paid an annual fee of  $4,162.50 (they never paid more than a fraction of that fee, more on that in a moment). After the change, Alvin & Friends paid just $300 for an annual Sidewalk Cafe Permit, a whopping 93% fee reduction.

Alvin & Friends permits state their partitions are 10’0” on sides in front of storefront windows 30’0” wide or 300'0" square feet. Talk of the Sound measured the partitions at 16'6" on the sides and 25'0" wide or 412'5" square feet (in fact, in 2013 Alvin & Friends paid a fee of $1,400 based on $3.40 x 411'8" square feet). But Alvin & Friends cafe area sticks out 16'0" from their storefront. The City Code states the fee is calculated based on the furthest distance of the cafe area from the storefront which is 16'5" + 16'0". So, where 32'5" x 25'0" is 812'5, the fee should have been 812'5 x $5.00 +$100 or $4,062.50 + $100 or $4,162.50. Alvin & Friends never paid a fee even remotely close to that amount.

Of the 9 holders of a Sidewalk Cafe Permit in 2014, most permits cost between $150 and $350 a year. Three permits cost well above that amount: Wykagl Bagel Cafe ($840), Sorrel's Wine Shop ($1,155) and Alvin & Friends ($4,162.50). In the case of Alvin & Friends their permit cost was $4,162.50 but they did not obtain a permit even though they set up a sidewalk cafe and so paid nothing (the year before they paid $1,400).

Alvin & Friends was, far and away, the biggest beneficiary of the amended ordinance.

Some have speculated that the New Rochelle City Code was amended to reduce Sidewalk Cafe Permit fees at the request of a particular restaurant owner with a friend on City Council. Through our reporting, Talk of the Sound has confirmed that this was, in fact, the case but the real story of who and why may come as a surprise to many readers.

The story begins more than 30 years ago. A law permitting restaurants and cafes to operate outdoor dining facilities in front of their establishments was adopted by the Council of the City of New Rochelle on November 22, 1983. The ordinance came into effect upon the adoption of a Zoning Ordinance provision permitting outdoor dining on public property. The ordinance was amended several times, most notably in 2008 and 2009, 2014, and most recently in 2017.

Twenty-six years later, Sidewalk Cafe dining received a renewed boost in 2009 with an initiative by the Downtown Business Improvement District when the BID provided stanchions and BID banners to a dozen restaurants and cafes in downtown New Rochelle. The original group of participants were Bella Bella Italian Restaurant, Brickyard Bistro, Cholo’s Peruvian Kitchen, Coromandel Cuisine of India, Gallery Café, Java Dreams Café, Kaffeine Espresso Café, La Herradura I Mexican Restaurant, Little Mexican Café, Mexican Corner Restaurant, Mo’s New York Grill, Posto 22 Restaurant, Rangoli Indian Cuisine, and Spectator’s Sports Pub.

Of the original twelve, only half remain in business in 2017: Coromandel Cuisine of India, La Herradura I Mexican Restaurant, Little Mexican Café, Mexican Corner Restaurant, Posto 22 Restaurant, and Spectator’s Sports Pub. Of those six, only two still had a Sidewalk Cafe Permit in 2017: Mexican Corner Restaurant and Posto 22 Restaurant. As some restaurants closed or discontinued their outdoor dining operations, new restaurants came (and in some cases went) and restaurants outside the downtown area took out permits. By 2014, there were 9 restaurants with a Sidewalk Cafe Permit of which 5 were in the downtown area (The Mexican Corner Restaurant, R Cafe & Tea Boutique, Sorrel Wine Shop, Patrias Ceviches Tapas Restaurant, Pronto Pizza)/ Sidewalk Cafe Permits were issued to 3 restaurants in the North End (Maestro's Italian Restaurant, La Herradura Inc II, Traditional Bagel Cafe) and 1 in the West End (Saccone's Pizza).

In the years immediately prior to 2014, the Sidewalk Cafe Permit fee was calculated based on a flat fee of $100 plus the size of the area in front of a particular restaurant at $3.40 per square foot. In 2014, the fee was raised (apparently by administrative action despite a legal requirement that fees be raised only by City Council) by increasing the area fee to $5.00 per square foot. Later that year, the pricing structure was altered to charge a fee based on the number of seats in front of a restaurant (1-4 seats at $100, 5-12 seats at $200, more than 12 at $300).

After a review of the City Code, past legislation, public discussion and debate on City Council and speaking with many of the city officials involved in the decision as well as restaurant owners it is fair to say no one in the New Rochelle City government seems to have studied the economics of Sidewalk Cafe Permits, surveyed restaurant owners (all of them or even the handful who have obtained a permit over the past few years) to understand their wants and needs, or done even a rudimentary financial analysis of the impact of the various pricing models considered or actually implemented by the City.

How the permit pricing was arrived at in its current state is an unflattering story of City government in New Rochelle. What is most troubling is that the people involved still do not seem to understand how backwards and self-defeating the effort to change the pricing was and continues to be.

We downloaded and edited two videos from the City Council meetings in 2014 where the per seat pricing model was adopted then partially transcribed the video (see below).

We spoke with all of the key players in the video and obtained records from Corporation Counsel Kathleen Gill. Everyone (except City Manager Chuck Strome) in the video appears to be wholeheartedly in favor of sidewalk cafes. Strome is his usual taciturn self and otherwise indifferent.

The stated goal is more sidewalk cafes. The means to that goal is lower fees, with a simpler method of calculating fees. Yet no effort was made then or since to consider whether the means would or, in fact did, support the goal.

Here is a simple question: did the new pricing result in a significant increase in either the number of restaurants with permits or the number of cafe seats in the downtown area?

The answer is "no".

In 2014 there 9 restaurants with a Sidewalk Cafe Permit. In 2015 there 10, in 2016 there were 12, in 2017 there were 16 but of those, most permits were issued outside the downtown area In 2014, there were 5 restaurants in the downtown area and 4 elsewhere. In 2015, there were 6 restaurants in the downtown area and 4 elsewhere. In 2016, there were 5 restaurants in the downtown area and 7 elsewhere. In 2017, there were 6 restaurants in the downtown area and 10 elsewhere. The impact of the change to per-seat pricing had virtually no impact on the amount of outdoor dining in the downtown area.

Why? Simple, because the cost of the permits does not drive the decision to open a sidewalk cafe. It is primarily driven by customer demand and labor costs. The reality is that restaurants in downtown have found that patrons are not comfortable dining while pedestrians -- including homeless people and panhandlers -- loom next to them. The City gave away money for nothing.

No effort was made to study the restaurant economics. There was just a blind, uninformed belief that lower fees would translate into more outdoor dining in the downtown area.

There is one other problem. The new priciing did not appreciably lower fees for smaller restaurants. That should have been obvious in adopting a staggered but regressive pricing model where 24 chairs costs $12.50 per chair and 2 chairs costs $50.00 or 400% more. Here is how that works.

In 2013, the Sidewalk Cafe Permit fee was charged based on a flat fee of $100 plus the size of the area in front of a particular restaurant at $3.40 per square foot. In 2014, the fee was raised by increasing the area fee to $5.00 per square foot (given the lack of paperwork it appears the DPW Commissioner raised the price on his own authority as a way to increase revenue for his department). Later that year, the pricing structure was altered to charge a fee based on the number of seats in front of a restaurant (1-4 seats at $100, 5-12 seats at $200, more than 12 at $300).

For those thinking Mayor Noam Bramson lowered the fees to help Alvin Clayton of Alvin & Friends, it was actually Council Member Ivar Hyden who sought to lower the fees to help Giovani Velez of Sorrel's Wine Shop.

On September 17, 2014, Hyden states he is raising the issue for "a lot of smaller cafes and restaurants" and wants to reduce fees "to make it a little more equitable across the board". He is not doing that but this is what he says. In fact, he is speaking for Sorrell's Wine Shop, the third largest permit holder (he even quotes the figure $1,200 which is about the Sorrel's Wine Shop fee of $1,15 in 2014).

Hyden says "Most of the smaller places in the downtown they can’t put out more than four chairs no matter what because they simply don’t have the space to do it.". While axiomatic, this is not based on speaking with restaurant owners.

During the initial discussion on September 17th, Strome says "The fee is supposed to be relative to the cost the City encounters in administering the fee." While that is debatable, that cost is the same regardless of square footage or the number of seats so by that logic Strome should propose a single flat fee.

Does he? "No."

Instead, on October 7, 2014, Strome says "We tried to be as simple as possible" then proposes what is arguably the least logical, most regressive, convoluted solution possible (1-4 seats at $100, 5-12 seats at $200, more than 12 at $300) that actually raises permit costs for smaller restaurants and hands massive savings to the biggest restaurants and has no correlation to the cost the City encounters in administering the fee.

Incredibly, after Strome announces the Byzantine new per-seat pricing model which is more complex and raises prices for smaller restaurants, Hyden says the proposal is "a very appropriate and sensible proposal and I mentioned it to some of the downtown restaurant owners and they are very pleased with this and this is appropriate given the situation".

Mayor Bramson chimes in with support " I agree. This is a much better policy."

Better for who?  The City lost revenue and got no appreciable increase in sidewalk cafes in the downtown area. And Sorrell's Wine Shop went out of business anyway.

On the enforcement side, Albert Tarantino asks "who's going to be watching?" Strome says "No one".

Mayor Bramson says, "I almost don’t care if it’s unenforceable, you know? If someone is authorized for four chairs and they put out six chairs because they’ve got business going, hallelujah. It’s not the kind of thing we should be spending a lot of time policing so let’s just find out the most rational way to do it and get it down to as low as it can realistically be and let’s encourage activity we all think is (crosstalk)."

Most restaurants with Sidewalk Cafe Permits have four seats within a four-foot area in front of their storefront on a sidewalk that is about 10 feet wide. If restaurants do what the Mayor suggests, add two seats, one per table to seat six patrons, there will be two chairs sticking out another 2-4 feet at each table, making the sidewalk all but impassable for pedestrians and entirely obstructed for wheelchair enabled persons.

The City Council is amending a law it does not intend to enforce with a new, complex pricing model it does not expect restaurants to follow. Council Members are not clear how the then-current permit fee is calculated. There is no discussion about what drives adoption of sidewalk cafes, no discussion about what might attract restaurant and cafe owners to open or expand outdoor dining, whether there is any downside to outdoor dining, what the cost of a permit is under the existing and proposed pricing model. In short, there is no data collected and no analysis of the data.

With all that said, although Alvin & Friends benefited tremendously from the new permit pricing policy (and yet still opened the 2017 outdoor dining season by operating without a permit), and although the motivation to amend the City Code was to help a particular restaurant, the change was a misguided attempt by Ivar Hyden to benefit Sorrel's Wine Bar which went out of business a year after the new pricing policy went into effect.

If the City of New Rochelle wants sidewalk cafe dining to succeed in the downtown area they are going to need to take a fresh look. They will need to survey all restaurant owners in the downtown area.

One suggestion is to take public areas like Memorial Plaza and Faneuil Park (near the New Rochelle armory) that are central to a group of restaurants, make the City responsible for setting up and breaking down cafes at peak times and providing security (the cost covered by fees) and allowing restaurants to rent space among the tables to serve customers in the seats they rent -- more like an outdoor food court. There are plenty of other ideas out there. One thing is for sure, bllindly reducing fees as if fees are the primary driver of decision-making by restaurant and cafe owners has not and will not work.

 VIDEOS AND TRANSCRIPTS

CIty Council Meetings on September 17, 2014, and October 7, 2014

CITY COUNCIL AGENDA COMMITTEE OF THE WHOLE SESSION

TUESDAY, September 17, 2014

REQUESTED BY CITY COUNCIL

d.d. Fees for Outdoor Dining Permits

Requested by Council Members Hyden and Rackman

IVAR HYDEN: In the spirit of reducing fees I would like to propose that we reduce fees the current fees for outdoor dining permits and make it a little more equitable across the board. It’s been difficult for a lot of smaller cafes and restaurants that have physically larger spaces but still only have a couple of small tables, the fee structure makes it difficult for them to operate efficiently so I think the best thing to do, the simplest thing to do and I have discussed this with several of the restaurant owners is to charge a flat $25 a year per chair fee instead of the current fees which can go up to twelve-hundred dollars for the same amount of outdoor tables.

We do need to charge something in this case we do have the responsibility every year of going out, making sure the restaurants or cafes have liability insurance and make sure their operations are neat, there is enough space on the sidewalk to permit wheelchairs and disabled people to get around conveniently and easily so we do have to go out there an examine so there is a cost

So rather than the current fee structure which is quite a bit higher to consider lowering the fees. I think all of us feel that having outdoor seating in these cafes is a welcome and appealing thing in our business area so I’d like to make it as easy as possible for the current operators.

SHARI RACKMAN: It’s a nice experience. It really adds a nice flavor to the restaurants but doing it by I believe it’s square footage right now is exorbitant right now because if you have a larger area but only utilize part of it you are paying you can’t do it it’s just cost prohibitive

AL TARANTINO: I agree with you what you are talking about her, trying to figure out you enforce the per chair fee because if I was a restaurant owner I’d put out four chairs but if all a sudden I got busy I’d bring the other chairs out whose going to be watching?

CHUCK STROME: No one.

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CHUCK STROME. The fee is supposed to be relative to the cost the City encounters in administering the fee.

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IVAR HYDEN: Most of the smaller places in the downtown they can’t put out more than four chairs  no matter what because they simply don’t have the space to do it.

AL TARANTINO: Why don’t we have a lower per square foot fee…(crosstalk)…that way its fixed, you know what it is.

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NOAM BRAMSON: I almost don’t care if it’s unenforceable, you know? If someone is authorized for four chairs and they put out six chairs because they’ve got business going, hallelujah. It’s not the kind of thing we should be spending a lot of time policing so let’s just find out the most rationale way to do it and get it down to as low as it can realistically be and let’s encourage activity we all think is (crosstalk).

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CITY COUNCIL AGENDA COMMITTEE OF THE WHOLE SESSION

TUESDAY, October 7, 2014

PROPOSED AMENDMENT TO CODE OF THE CITY OF NEW ROCHELLE

RE: FEES FOR PERMITS FOR OUTDOOR DINING

18. Communication dated September 26, 2014, from Alexander Tergis, Commissioner of Public Works, wherein he recommends, in response to Council Members’ request, annual stepped fee schedule for Outdoor (Sidewalk) Cafes, forwarded with approval of Charles B. Strome, III, City Manager, noted thereon, and appropriate legislation for consideration.

NOAM BRAMSON: This is an outgrowth of a discussion item placed on the table by Council Members Hyden and Rackman.

CHUCK STROME: We tried to be as simple as possible with what the request was…so here it is, 1 to 4 chairs a hundred dollars a year, 5 to 12 two hundred, and over 12 three hundred

IVAR HYDEN: …It’s a very appropriate and sensible proposal and I mentioned it to some of the downtown restaurant owners and they are very pleased with this and this is appropriate given the situation.

NOAM: I agree. This is a much better policy.