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Liquor License Laws, Not as Easy as ABC

October 14th, 2009 No comments

By   Steve Rappaport

The liquor license conundrum; can’t get one, can’t live without one. Perhaps some information about this seemingly elusive essential ingredient to success in the food and beverage business might help.

The legal permission for selling alcoholic beverages is commonly known as a Liquor License. The New York State Liquor Authority (SLA)/Division of Alcohol Beverage Control (ABC) has established a classification system capable of coding and registering up to more than 70 different classes of Liquor License. In general, there are two distinctive methods of categorizing Liquor Licenses. There is the “Full License” allowing the sale of all forms of liquor (including hard liquor), and then there is a “Beer and Wine License”, which only permits the sale of beers and wines. The other categorizing method divides liquor licenses into “On Premise License” and “Off Premise License”. An “On Premise License” allows the sale and consumption of liquor inside an establishment, therefore is suitable for restaurants, bars and hotels. An “Off Premise License” does not permit on-site alcohol consumption, and is for wholesalers and retailers such as liquor stores or grocery stores.

According to SLA, On Premise Licenses include:
1. OP: On Premise is a full liquor license allowing for the sale and consumption of all types of alcoholic beverages. Additionally, a holder of an OP license may sell beer for off premise consumption.
2. CL: Club License allows the sale and consumption of all types of alcoholic beverages to members of clubs and their guests.
3. HL: Hotel License also permits the sale and consumption of all types of alcoholic beverages on site.
4. RW: Restaurant Wine License allows the sale and consumption of beer and wine.
5. EB: Eating Place Beer License allows the sale and consumption of beer on the premises.
Licenses for Off Premise consumption (means alcoholic beverages are sold “to go”) include:
1. L: Liquor Store License, which allows the sale of all forms of alcoholic beverages for off site consumption.
2. A/DS: Grocery Store Drug Store License allows the sale of beer for off site consumption.
3. AX/DX: Grocery Store Drug Store License allows the sale of beer and wine coolers for off site consumption.

The specific type of Liquor License required depends on the nature and scope of the business. The SLA requires that all applicants be a U.S. citizen or permanent resident alien, and at least 21 years of age. Applicants must not be a law enforcement officer with powers to arrest. Felons are not allowed to apply unless they have a Certificate of Release from Civil Disabilities. No On Premises Liquor License will be issued by the New York SLA if the premises are located within 200ft of a school or place of worship, unless the location was licensed prior to the existence of the school or place of worship, and has been continuously licensed ever since.

Under ABC law, Community Boards are extensively involved with reviewing applications for licenses that allow the on-premises consumption of liquor. Applicants for a liquor license must notify the Board of their intentions 30 days prior to submitting their application to the SLA. The Board takes this time to invite the applicants and their neighbors to a committee meeting, where the applicant’s business plans are discussed. Recommendations (approval, denial, or recommendation to change the business plan) will be made upon evaluating the positive and negative impact of the business on the local community, and then will be submitted to the SLA for consideration. Although the SLA is under no obligation to comply with the Board’s recommendations, it must consider it. Opposition from the Community Board usually means a stop sign, either temporary or permanent. The cases where applicants for Liquor License are able to bypass the Community Board’s recommendations are rare, if any. The notoriously difficult Community Boards in Manhattan Area include the Community Board 2 (SoHo, NoHo, Lower East Side, Chinatown, & Little Italy) and the Community Board 3 (East Village, & Two Bridges) which are both notably anti-nightlife.

If the new venue will be located within 500 feet of three or more existing liquor-licensed establishments, the SLA must hold a public hearing to determine if the new licensee will be in the public interest. This rule applies only to businesses that will serve hard liquor – those that will serve only beer and wine are not subject to it.

Professional legal assistance is not required for the application process but in practice is necessary. It is best to use a law firm specializing in liquor license law. The application process can be lengthy. The wait for approval after submitting all the required documents is expected to last about 6-weeks as formally stated by SLA. However, in reality, the process can sometimes take many months.

The timing and other unknowns involved in obtaining a Liquor License adversely affects the dynamic of commercial leasing. Restaurant owners often want their lease to contain a contingency clause allowing cancellation if the Liquor License doesn’t arrive within a set period. This is at distinct odds with a landlord’s interest. Keeping a property off the market for 6 or more months pending license approval is unrealistic. On the other hand, restaurant owners have understandable reservations about undertaking the cost of renovation until they are certain of getting a license. This push/pull is often resolved with a Community Board approval contingency. This precursor to formal SLA approval can be obtained quickly, often within a month, and often before a formal lease is executed. It is the preferred solution to a perplexing problem.

To speed the application process, the SLA recently launched a new self-certification program. This allows attorneys to certify that provided documents are true and accurate and that the application meets all statutory requirements. This program is only intended toward retail vendors. The application forms and instruction manual may be downloaded from the SLA’s website.

Scandal and the SLA are longtime cousins. Earlier this year newspaper accounts (The New York Times, April 8, 2009; CBS News, April 8, 2009, & NY Daily News, April 10, 2009) reported that some SLA employees were fast-tracking liquor licenses in exchange for gratuities from licensing lawyers. The SLA Harlem Office was raided and all 24 employees at the bureau were questioned about this alleged bribery scheme. This is not a first time the SLA history has been suspected of corruption. Last winter, two SLA commissioners were allegedly reported to have voted in favor of Cipriani’s license renewal due to pressure from an aide to Governor Paterson. In the 1960s, a scandal revealed that the then chairman of the SLA, Martin C. Epstein, together with a former state Republican chairman, had allegedly received more the $40,000 in bribes paid by the Playboy Club.

This article is a general summary of a number issues pertaining to obtaining a liquor license, and is intended only as an overview. However complicated, lengthy, and expensive the process might seem, prospective licensees take heart. Given the proper determination and adequate legal guidance, it an eminently doable task, and one with rich rewards.

Comprehending Commercial Kitchens

July 18th, 2009 No comments

By Steve Rappaport

Setting up a commercial kitchen can be a daunting task, especially for a new restaurateur. Managing the installation of equipment, acquisition of permits, and adherence to laws, can give any prospective restaurant owner a headache. In an attempt to help ease the process, below is a general overview of, and guide to setting up a commercial kitchen.

According to the New York City Building Code, all commercial cooking equipment that, through their use, produces smoke or grease-laden vapors must be accompanied with an independent exhaust system. An exhaust system has a few basic components.

First there is the hood, which is an enclosure or canopy installed above certain cooking equipment to collect fumes, sprays, smokes, or dusts. Hoods are classified into two types by the New York City Mechanical Code. A Type I hood serves cooking appliances that produce grease or smoke, such as griddles, fryers, boilers, ovens, ranges, and wok ranges. A Type II hood serves cooking or dishwashing appliances that produce heat or steam, but not grease or smoke. These appliances include steamers, kettles, pasta cookers, and dishwashing machines. Different regulations apply to the two hood types. Most of the equipment we discuss will pertain to cooking appliances in the Type I hood category.

The size of a hood will vary depending on the appliance for which it is installed. For example, the inside lower-edge of a canopy-type commercial cooking hood must extend a horizontal distance of at least 6 inches beyond the cooking surface edge, on all open sides. Vertically, the front lower lip of the hood must be no more than 4 feet above the cooking surface. Noncanopy-type hoods, on the other hand, must be positioned no more than 3 feet above the cooking surface and the edge of the hood must be set back no more than 1 foot from the edge of the cooking surface. For more information regarding kitchen hood installation, consult Section 507 (Commercial Kitchen Hoods) in Chapter 5 of the New York City Mechanical Code, found at http://www2.iccsafe.org/states/newyorkcity/Mechanical/Mech-Frameset.html.

The next element of an exhaust system is the duct system. The duct system is essentially a series of ducts that run from the kitchen and lead directly to the exterior of the building, for the purpose of removing smoke and grease-laden vapors from the cooking space. There are many rules that govern the installation and maintenance of ventilation ducts, commonly called black iron.

One such rule dictates the exhaust air flow rate of a duct depending on the type of cooking done and the size of the hood. For example, for a wall-mounted canopy hood serving an extra-heavy-duty cooking appliance, the net exhaust airflow must be at least 550 cubic feet per minute (CFM) per linear foot of hood. For a wall-mounted canopy hood serving a heavy-duty cooking appliance, the minimum net exhaust airflow is 400 CFM per linear foot of hood. For a medium-duty cooking appliance, the minimum net exhaust airflow for a wall-mounted canopy hood is 300 CFM per foot of hood, and for a light-duty cooking appliance, it is 200 CFM per linear foot of hood. More information regarding these rules for different types of hoods can be found in Section 507.13 (Capacity of hoods) in Chapter 5 of the New York City Mechanical Code, found at the link provided above. Additional laws can also be found in Section 506 (Commercial Kitchen Hood Ventilation System Ducts and Exhaust Equipment) in Chapter 5 of the Mechanical Code, in Section 802 (Vents) in Chapter 8 of the Mechanical Code, and in Section 503 (Venting of Equipment) in Chapter 5 of the New York City Fuel and Gas Code, found at http://www2.iccsafe.org/states/newyorkcity/FuelGas/FuelGas-Frameset.html.

One essential question often asked by prospective restaurant tenants is where venting should be installed, and where it should terminate. The answer to this question will differ in accordance with the type of venting required by the equipment used (see Table 503.4 in Chapter 5 of the Fuel and Gas Code). For example, Type L vents, suitable for listed combination gas and oil-burning equipment, which should comprise most cooking equipment of the Type I hood category, must terminate no less than 2 feet above the highest point of the roof penetration and no less than 2 feet above any portion of a building within 10 feet.

It is important to remember that along with any exhaust system, one must also have a makeup air system. Fixed air supply openings must be installed to provide makeup air for air exhausted through the exhaust system. General rules for makeup air can be found in Section 508 (Commercial Kitchen Makeup Air) in Chapter 5 of the Mechanical Code.

The third feature of an exhaust system are grease removal devices. Grease removal devices can take many forms, including grease filters and residue traps in grease ducts. There are a multitude of laws that regulate the clearances, cleanouts, and termination locations of grease ducts, many of which can be found again in Section 506 in Chapter 5 of the Mechanical Code.

Should all of these regulations and codes seem overwhelming, there is no need to worry. Companies that provide exhaust system installation services should be fully aware and up-to-date with all existing laws and guidelines. The information provided in this article is not intended to be all-inclusive, and is only meant to enlighten readers on the general arrangement of a commercial kitchen. It would be helpful for prospective restaurant tenants to ask their real estate brokers for recommendations on any such service companies, as it is likely the broker has worked with restaurant tenants before, and knows which companies are reliable. Additionally, as restaurateurs will often find the law advises them to follow the system manufacturer’s instructions, it will be ever more important for them to find an experienced, dependable company to install their commercial kitchen exhaust system.

Possible further additions, and sometimes alternatives, to exhaust systems include different types of pollution control units and filters, such as electrostatic precipitators, wet or air scrubbers, charcoal filters, and other systems of filtration. For more information on how to keep the environment of a commercial kitchen clean, restaurant owners should speak with a representative from the company they ultimately choose, and discuss which options would work best for them.

All the exhaust equipment we’ve discussed thus far has dealt with the upkeep of the cooking space environment, and with fire prevention. But commercial kitchens also need to have a system in place in case a fire occurs. Here’s where the last piece of the puzzle, the fire suppression system, comes in.

Fire suppression systems, or ANSUL systems as they have come to be known, are handled by the New York City Fire Department and, less directly, by the New York City Department of Buildings.

In order to obtain an approval from the Fire Department for new fire suppression system installations, a New York State Licensed Professional Engineer or Registered Architect must draw up complete plans of the installation. The plans, signed and sealed by the Licensed Professional Engineer or Registered Architect, must be filed with the NYC Department of Buildings and the NYC Fire Department— specifically, with the Department’s Technology Management Rangehood Inspection Group. The plans will be reviewed by the Technology Management Rangehood Inspection Group Plan Examiner to ensure they comply with all requirements.

A Licensed Master Fire Suppression Piping Contractor must then install the fire suppression system, conduct a performance test of the installed system in front of a Fire Department Rangehood Inspector (the fee for which is $285 per system), and service the system.

Most Licensed Master Fire Suppression Piping Contractors can provide “turnkey” service, which means they can arrange for the preparation, signing, sealing, and filing of the system plans in addition to installing, testing, and servicing the system.

Licensed Master Fire Suppression Piping Contractors are only authorized to service systems made by certain manufacturers, so it is important to check that a contractor is authorized to perform work on the system planned for installation. A list of Licensed Master Fire Suppression Piping Contractors provided by the Fire Department can be found on pages 5 to 7 of the document at http://www.nyc.gov/html/fdny/pdf/fire_prevention/range_hood.pdf.

After the performance test is conducted by the Fire Department, and is found satisfactory, the Department will issue a Fire Department Approval Letter, and will tag the system remote manual pull station. The Fire Department tag must remain on the pull station for further inspections by the Fire Department, which will occur on an annual basis. Permits are reissued after each inspection, provided that the system continues to meet the legal requirements. The fee for this annual inspection is $70 per system. The annual inspection is performed to make certain that the system is properly maintained, that components of the exhaust system are regularly cleaned (at least once every three months), and that the fire suppression system is inspected semi-annually by a qualified company.

Hopefully this article has provided a broad overview of the process involved in setting up a commercial kitchen. While it may seem difficult, it is far from impossible. Many restaurant owners seeking a new store often require that venting be previously installed in the building, in an effort to save money and time. However, those willing to invest by installing an exhaust system themselves can profit in the long run, as they would be paying less for an unimproved space. It is ultimately a judgment call, to be decided on a case-by-case basis.