LIFE (AND REAL ESTATE) AFTER COVID - SAVE THE COFFEE SHOP, SAVE THE CITY
November 5, 2020
Over the past couple of months, my team and I have been gathering stories and forecasts about the future of city life in the wake of this pandemic. While we will be the first to admit that we do not have all of the answers to “what happens next?” our extensive discussions with a diverse group of City place-makers and industry leaders in the Bay Area have given us some thoughtful insight into potential next steps.
Our recent investigations have outlined certain age groups, organized by their life-stage and how their respective life statuses impact their temperament for city living in the wake of a global pandemic. From this investigation, we’ve determined that those individuals in the 23-35 years old range who are singles or pre-children couples are those most likely to stay in cities because of the communities and social networks they have with other young people.
These people will have the flexibility to work elsewhere but will generally choose to remain in cities as they continue to seek out the vibrant communities that the City has to offer. These are the individuals who are predominantly focused on meeting new people, pursuing romantic relationships and incubating their professional careers; all of which are accelerated in the City.
The vibrant culture that exists within the City extends beyond an individual’s place of residence and work. In fact, one could argue that the largest benefits of living in a City are in fact neither of those two things. The City is a diverse collection of places and people who each offer a unique contribution to the colorful City experience. These places are not the sidewalks or the city streets, they are the local boutique coffee shops, the summertime ice-cream parlors and the small Italian restaurants with photographs of famous patrons covering the walls. The City will always offer a palette of life that does not exist in other, less lively, areas of the country.
These same businesses that contribute so much to the allure of City life, are the same businesses under the greatest threat of survival post-Covid. As the City continues to face various crises throughout the pandemic fallout, it will be the responsibility of City and State agencies to address them swiftly and justly. Local restaurants who have endured the difficulties of running their businesses through traditional practices will need the City’s help now more than ever in order to continue to do business in the Bay.
Through our discussions with many leading industry players in the hospitality space, we have identified some creative ways that the City and State can support these small business owners. These include the expansion of open-space dining, alleviation of ABC regulations, and tax relief-programs.
Open Space Dining
Across all of the conversations we have had with City restauranteurs, one common theme amongst them is the concern for consumer capacity. At its core, the restaurant industry is a capacity utilization business, and as indoor capacity is diminished as a result of social distancing practices, restaurants will need to recoup some of this capacity in creative ways. This is where the City and State have a great deal of influence as restaurants turn to outdoor spaces as a means of recapturing this lost space.
Using New York City as an example for this initiative, three creative ways cities can facilitate open space dining is by allowing for curbside and sidewalk seating, as well as designating certain streets as “Open Streets”.
New York City, as part of its Phase 2 Reopening plan, which is set to start in mid-June, will allow for restaurants in commercial corridors to utilize parking spaces along the roadbed as well as sidewalk space in front of restaurant store fronts for dining service.
Consistent with the Bay Area, many restaurant owners in NYC have found the application process for a “sidewalk café” to be cumbersome, taking several months or more for approval. With the summer months upon us, it will be in the best interest of the City to expedite this process and even further, as is the case in NYC, allow for online registration and self-certification.
As is common in the city space, restaurants are not always fortunate enough to have significant outdoor space to utilize. New York City has found a way to solve this issue by creating what are called “Open Streets”. This is a city initiative that is currently opening 45 miles of roadway across the city for restaurants to use as seating areas. The goal is to ultimately open 100 miles citywide and will prevent through traffic (aside from necessary services) from 8:00AM to 8:00PM in those designated areas.
One could envision similar arrangements along dozens of local commercial corridors such as Chestnut Street in San Francisco’s Marina, or Uptown and the Grand Lake district in Oakland. Not only do we have more space along these sidewalks and streets, but our local climate is far more suitable for such an arrangement than is New York’s.
ABC Regulations
Extending beyond outdoor dining, the ABC has issued its first Notice of Regulatory Relief on March 19th, which allows for restaurants to sell and deliver prepared drinks and pre-mixed cocktails in to-go containers in conjunction with meals prepared on-site. This is an important step in supporting restaurants and bars who are not afforded space for outdoor dining. The next progression from this would be to further ease restrictions and allow this to-go relief to on-sale licensees that do not operate kitchen facilities, such as certain bars, wineries, distilleries, and breweries. This would further promote sales for small restaurants and support the comfortability of patrons hoping to support their local businesses.
Tax Relief
Across the United States, many state governments are adapting tax penalty forgiveness for smaller businesses that cannot make tax payments on time during shelter in place months (primarily during April and March, but in the cases of Colorado and Connecticut tax payments for April were extended through May). As of June, California has gone as far as to allow for qualifying small business to continue to file for tax filing extensions and payment extensions, as well as the waiving of late fee penalties and interest on late payments. Effective March 30th, those small businesses filing a return for less than $1 million in tax automatically have until July 31, 2020, to file and pay sales and use tax for Q1, 2020. Our same discussions with restaurant and other hospitality business owners have concluded that this is not enough – many of these same small businesses will succumb to their debt services as payments continue to pile up. Additional tax relief is essential for the survival of our City’s restaurants.
The future of American Cities relies heavily on the survival of its small businesses, primarily in the hospitality sector. For those individuals who continue to seek out city life in the wake of Covid-19, those aspects of City life that are so irreplaceable will need to still be there when our Cities reopen. We implore you to consider the lessons we have gathered from hospitality leaders Bay-wide as you continue to develop solutions to the pandemic fallout.