NYC seeks to cap fees for yet-to-be announced outdoor dining program

New York City is expected to set a limit on fees for restaurants seeking to participate in its yet-to-be unveiled outdoor dining program, marking a significant victory for the restaurant industry.

The plan would place a cap on licensing fees as well as a structure for annual “consent fees,” the amount that restaurant owners would need to pay to rent city streets, according to multiple people privy to the discussions. They asked not to be named because they are not authorized to discuss private negotiations.

Mayor Eric Adams has pledged to establish a permanent outdoor dining program, promising to address complaints about unsightly and noisy sheds that sprouted when the city allowed free use of the streets and sidewalks as an emergency measure during the COVID-19 pandemic.

However, pushing for a lower fee structure has been a major sticking point for the City Council during its monthslong negotiations with the Adams administration on the legislation.

According to a person close to the discussions, the newly revised bill establishes four fee tiers based on the area’s median commercial rent. The highest two tiers will stretch from 125th Street in Harlem to the southern tip of Manhattan. Restaurant owners in the highest tier will be asked to pay $25 per square foot for roadway cafes and $31 per square foot for sidewalk cafes.

The lowest tier, which is set to cover at least 80% of the city, will be $5 per square foot for roadway cafes and $6 per square foot for sidewalk cafes.

Although outdoor dining sheds vary by size, the plan would mean that consent fees for a 144 square foot roadway cafe (or 8’ by 18’ parking spot) would start at $720 and level off at $3,600 in the priciest Manhattan neighborhoods.

In the past, annual consent fees associated with the city’s now defunct sidewalk dining program could add up to tens of thousands of dollars depending on square footage and location.

The question over how much business owners should pay to use public space has been one of the most vexing issues of the outdoor dining legislation. The restaurant industry has expressed concerns that smaller owners would not be able to participate if the fees were too high. There were also fears that the city would hand the decision over fees to a city agency, which could then have the authority to raise the amounts in the future.

According to public space advocates, the city’s policy on outdoor dining could have significant ramifications on how city officials view the value of public space, especially when it comes to street curbs typically used by cars at no cost.

Opponents of outdoor dining argued that the status quo amounted to a free giveaway to businesses, one that forced neighborhoods to absorb the problems of noise and trash.

The administration had initially proposed much higher fees for the highest tier but representatives for the City Council had argued that the program needed to prioritize affordability, according to one of the people involved in the negotiations.

In a statement to Gothamist, Council spokesperson Breeana Mulligan said legislators wanted to ensure equitable participation in outdoor dining.

“We have been centering affordability for our prized small businesses in these efforts, while ensuring that a permanent outdoor dining program for our city strikes the right balance for restaurants, neighborhoods, and all New Yorkers,” she said. “The Council continues to work with the administration and all stakeholders to advance affordable, equitable and successful outdoor dining across the five boroughs.”

“We’re committed to a permanent outdoor dining program that supports New York City's small businesses and communities," said Charles Lutvak, a spokesperson for the mayor’s office. "We are working closely with the Council on this legislation and optimistic we can get this done.”

Deciding whether roadway dining should run year round as opposed to seasonally has been another closely watched debate. A person close to the negotiations told Gothamist that the bill would establish a seasonal program for roadway dining but that the city may also launch a pilot program for a year-round option. Sidewalk dining, meanwhile, would remain a year-round program.

Opposition to outdoor dining in some neighborhoods continues to grow. A community board in Lower Manhattan recently voted in favor of restricting the number of outdoor dining sheds to no more than two per block.

This story has been updated to reflect the attribution for a statement from the City Council speaker's office and to include comment from the mayor's office.