Noffsinger: Take steps to help restaurants reopen, stay open
The restaurant industry has suffered greatly the past three months from state mandated closures and now limited capacity dining. Restaurants owners are faced with great challenges as diners cautiously return to dining rooms greeted by masked wait staff and a laundry list of conflicting guidelines to provide for a safe but awkward dining experience.
If asked to identify any emerging theme resulting from the events of 2020, I’d have to say that we are challenging historical norms at a record-setting pace. There is a large degree of discord in our political system regarding the state of our economy and the suggestions on how to fix it are endless.
Fortunately, the federal government has offered a lifeline to business owners through the PPP forgivable loan program that has now been extended 24 weeks; however, it feels like the state and many local governments are waiting on the sidelines to offer any tangible assistance for long-term sustainability.
Both levels of government have done a mediocre job of communicating with the hospitality industry about reopening plans. It has now been two weeks since Gov. Polis first announced guidelines for reopening. It is difficult to make business decisions not knowing the timeframe. Having defined time periods for phasing would assist greatly with rehiring or hiring new staff and ordering products for inventory.
I applaud the efforts of the governor and local jurisdictions to allow for more outdoor seating. While this may be a short-term solution for some restaurants, the current more restrictive and complex formula from the county for indoor/outdoor seating is contrary to the governor’s call for unlimited outdoor dining. Additionally, the cost to implement outdoor seating is prohibitive for many small restaurants. Easing other restrictions or barriers will be critical for survival as restaurants get creative on how to weather this never-ending storm.
Restaurant owners need a clear path of financial assistance beyond reopening. There are three main programs that I propose at the state and local level:
- Increase Personal Property Exemption — Currently, the first $7,700 in actual value of personal property is exempt. This threshold is extremely low and should be adjusted significantly. At the height of the pandemic, personal property taxes were due with the only relief being a delay in making payment in full. Restaurants currently pay $3,000-$5,000 for furniture, fixtures, and equipment. Reducing these taxes would assist business owners next year.
- Suspend Minimum Wage Increases — The impact of minimum wage increases the past three years has been a huge hit to the restaurant industry. Profit margins have dwindled to nearly half of previous year as a result of these progressive measures. It has also furthered inequality in pay between front of house and back of house employees. It will take months for restaurants to recover from the loss of revenue. An increase to minimum wage will only magnify cash flow problems with another hit on Jan. 1, 2021.
- 1% Sales Tax Reimbursement — Taxing authorities were gracious to waive penalties for late payments of sales tax. Sales tax collection is an immediate tool that can be used to get cash back in the hands of businesses quickly to keep their doors open in the short term. Understanding that sales tax is necessary to provide essential services, if it were not for a thriving business community, governments would have to find other sources of revenue for these services. Most governments have been fiscally responsible with hefty reserves in rainy day funds. There is no better time than now to access these reserve funds. Without sacrificing services, the temporary relief from diverting newly collected sales tax back to restaurants is a small investment into the business community for a long-term view on economic health to support state and local governments.
Sadly, there will be some attrition in the restaurant industry due to the economic hardships many small businesses are facing. It is imperative that state and local governments establish programs quickly to assist an essential sector that contributes greatly to the vitality of our communities.
Jeff Noffsinger moved to Northern Colorado in 2012. He is a former city planner and town manager and currently is the owner of Origins Wine Bar & Wood Fired Pizza in Loveland and Locality Kitchen & Bar in Fort Collins. Noffsinger wrote this column on behalf of NoCo Strong for Business, a group that brings local government officials together to discuss ideas for how they can support businesses, now and in the future.