May 6, 2020

Governor Gavin Newsom
Governor, State of California
State Capitol, 1st Floor
Sacramento, California 95814

RE:  Saving the Hospitality Industry

Dear Governor Gavin Newsom,

The Greater Los Angeles Hospitality Association represents some of the hardest hit small businesses in our city during this COVID19 Mandatory Shut down and phased re-opening.

As you know the hospitality industry employs more than 1.4million workers and generates more sales tax annually then any other industry at $7Billion annually.  The vast majority of the state’s 90,000+ restaurant locations are owned and operated by independent proprietors who live in the communities where they serve their customers. Additionally, 60 percent of California’s restaurants are owned by people of color, reflecting the great diversity of our state. The hospitality industry is a massive employer with incredible job creation power in the State of California and now decimated by COVID19 economic conditions.    

It is GLAHA’s position and our commitment to work with all of our leaders to maintain the health and safety of our population by supporting and respecting the mandatory shut down in March.  At the same time, we believe our city and state has a moral obligation to take equally aggressive and swift action to address the immense economic harm caused to its people.  Implementing business-friendly policies and initiatives to help our restaurants, bars, nightclubs and concert arenas get through these grim times and survive the outcome long into our future.  These recommendations are necessary.  Unless bold measures are taken by our city and state, we are likely to lose 30 percent or more of California’s restaurants, Permanently.

Our Board of Directors along with available Board members in these times, have agreed and put forth the following recommendations for policy changes and initiatives that with your help could save a powerful industry to the State of California’s economy.

STATE ISSUES

PPP & EDIL

  • Increase loan amounts/formula respectively as mandated shut down has been extended past the original March 30th Opening to well past May 15th for our particular restaurant/bar/nightclub/concert arena industry
  • Amend PPP loan program ‘Forgiveness Rules’ and allow payroll use to be within 3months after restaurants/bars can legally open
  • Allow all PPP money to be forgiven if used for Payroll, Mortgage/Rent, Utilities, Insurance without the specific allocated 75/25% rule
  • Modify pay-back time frame to allow businesses to fully recover.  1 year before first payment due with final due in 7yrs

MINIMUM WAGE

  • Implementing a Tipped Wage Credit or Tipped Wage Law for tipped employees at an hourly wage minimum consistent with industry average of per capita tips

CTDFA

  • Forgive Sales Tax due for the first quarter of this year entirely
  • CTDFA Active Audits – remove all penalties/interest and negotiate debts due
  • Allow Credit Cards to be used for Tax Payments

INSURANCE CARRIERS

  • Mandate insurance carriers to pay out ‘BUSINESS INTERRUPTION’ to those who pay for it.  Our industry was closed by Government Mandate – NOT a virus infected industry/business. 
    • Insurance carriers were ordered by Commissioner Lara to return March & April, with May pending, GL premiums, yet carriers are not complying
    • Insurance carriers are refusing to adjust coverage costs during the closure time.  There are thousands of business with no liability as they are sitting empty.  Only property insurance need be maintained
    • Insurance carriers are canceling policies for non-payment

STATE LICENSING

  • ALL permits/licensing/regulation costs should formulate based on capacity/size of business, not a one size fits all as we have now.  This supports the success of our businesses.  It is all too common in this state and city that businesses go broke before they ever get to open their doors.
  • Labor Laws/regulations/mandatory compensation should be calculated by how many employees a business has and its ability to sustain/pay such mandatory compensation (sick leave, maternity/paternity leave, workers comp, etc.).  Not the one size fits all that we currently have in place. 
  • Extend/Suspend all license/fees/etc. renewals for a minimum of 6months to year during COVID19 shut down with no penalties/fees
  • Changing an Entity or Entity ‘Name’ only with no member/owner change should not cause a new-application process and fees.  This is the case with nearly every government agency license or permit.  A timely and costly burden for both an operator and the State/City

MALICIOUS & FRAUDULENT LITIGATION

  • Small Businesses are a hotbed target for Malicious & Fraudulent litigation.   California allows litigation whether it has merit or not.  Lawyers make a living on settlements, not trials, leaving the insured with increased premiums or the inability to attain insurance at competitive rates.  We need to implement a defendant’s ability to recoup all litigation costs in the event the plaintiff losses against defendant.  WOW, would this free up our courts for the real stuff
    • There will be many lawsuits arising from COVID19

PROTECTION OF OUR PEOPLE

  • Protect EVERYONE from foreclosure/eviction in connection with COVID19.  Mandate Banks to suspend mortgage payments for 6 months to 1 Full year and extend mortgage terms putting amount suspended on back-end
    • NO FURLOUGH
    • Mandate landlords to discount rents 50% and/or use security deposits to cover rent payments with no payback.  Landlords should extend the same opportunities they are being extended by their mortgage lenders and not using it to make money
  • Credit Freeze as of March 13th, 2020 for up to 2yrs

TIERED SALES/CONSUMPTION

  • Supporting later Sales/Consumption of alcohol in our entertainment corridors across our city so to compete with other destination cities such as Washington, Nevada, NY, Texas, Chicago.  Not to mention the duplicative sales/consumption that we currently covet and adds to security issues at 2am, as well as the stress on our fire/life/safety at 2am due to the mass exodus at 2am and binge drinking.  Even relaxing the consumption hour will have a great effect on our security issues, fire/life/safety stresses.

LOCAL ISSUES

  • CUP/CUB costs should be based on the capacity of the business, so to allow and support the operator’s true ability to recoup costs.  Not the one size fits all program that we currently have in place – this is an easy fix and very business friendly!
  • Eliminate the duplicative and costly ‘Effectuation’ of an approved CUP/CUB.  This is another layer of bureaucracy that is truly burdensome, duplicative & excessive
  • Eliminate the lack of a Certificate of Occupancy road-block in permitting/planning/LADBS that continually holds up the process or blocks a business from opening entirely
  • One of the biggest bureaucracies, our own zoning codes for commercial, industrial, residential and manufacturing designations.  Commercial districts are designated for Restaurant, Retail, Office – stop the ‘change of use’ trigger when a commercial location changes from a Retail to a Restaurant use, a burdensome, costly and lengthy process to a small business owner.  Most cities in our nation follow this basic policy which stops litigation, NC’s from nimby demands, City Planning from ambiguous conditions that leaves LAPD in a tail spin upon inspections and their interpretation of these conditions
  • LA county is the ONLY county in the state to use an ‘A’, ‘B’, ‘C’ health department rating, all other counties, including SF and San Diego use ‘Pass’ / ‘Fail’

The Greater Los Angeles Hospitality Association is here to support our leaders by drafting policies and initiatives to get through this together!

Thank you for continued hard work through these extremely stressful times for all of us.

Sincerely,

Tricia La Belle
President
The Greater Los Angeles Hospitality Association