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John Wray

It’s still hard out here on bars and restaurants

I continue to worry about our once-thriving hospitality industry.

Hundreds of Texas bars and restaurants are scrambling to change how they operate, maneuvering through loopholes that will allow them to reopen after being closed by Gov. Greg Abbott’s latest shutdown targeting bars.

Abbott has shut bars down twice since the coronavirus pandemic emerged in Texas. The first time bars were swept up in a total lockdown of statewide businesses. But the second time, on June 26, Abbott singled bars out while allowing virtually every other kind of business in Texas to stay open.

But other operations such as restaurants that sell a lot of booze, wineries and breweries were ensnared in the same order and also forced to close because alcohol sales exceeded 51% of total revenue, meaning they were classified as bars.

“Generally everyone has a common sense understanding: ‘What is a bar? And what is a restaurant?’ I think that 51% rule is so broad that it actually picks up or encompasses businesses that we would normally think of as really being restaurants,” said State Rep. John Wray, R-Waxahachie, one of more than 65 lawmakers who signed a letter asking Abbott to update his order’s definition of a restaurant.

Wray gave the example of a burger restaurant, where a patron might buy a burger and two beers. Oftentimes, the beer will cost more than the food, but that doesn’t make the restaurant a bar, he said.

Emily Williams Knight, Texas Restaurant Association president, estimates that about 1,500 restaurants ranging from steak houses to coffee shops that sell wine were “inadvertently” forced to close when Abbott shut down bars, translating to about 35,000 lost jobs in the state.

The Texas Alcoholic Beverage Commission responded to outcry from the service industry with new guidance in a July 30 notice allowing businesses to either demonstrate that they recently had less than 51% alcohol sales or use alcohol sales projections and apply for a Food and Beverage Certificate, documentation that allows them to reopen as a restaurant.

The certificate workaround requires the business to have a permanent kitchen. It allows bars and restaurants to use projected sales numbers instead of requiring past sales to determine if alcohol sales exceed food sales.

The TABC received more than 600 requests from existing businesses for Food and Beverage Certificates since Abbott’s order took place and granted about 300, according to commission spokesperson Chris Porter. Almost 90 businesses have also requested to update their alcohol sales numbers in an effort to reopen.

The Texas restaurant industry is already struggling, with Knight projecting that up to 30% of restaurants in the state could go out of business.

For those forced to shut down due to the bar order, it can be a death sentence and business owners see these changes as their last hope.

[…]

Breweries also found themselves forced to shut down by Abbott’s order, with two-thirds of Texas craft brewery owners predicting that their businesses could close permanently by the end of the year under the current closures, according to a July survey by the Texas Craft Brewers Guild.

Hopsquad Brewing Co., an Austin brewery, reopened as a restaurant using a Food and Beverage Certificate with an onsite food truck serving as its kitchen, General Manager Greg Henny said.

He was lucky, because the brewery already had a food truck on site, Henry said. But he thinks breweries and wineries should have their own classification separate from bars, because they operate differently.

Henny said the guidance from the TABC has been confusing and harmful to breweries. To help other businesses survive the pandemic, the agency allowed “retail and manufacturing businesses” to serve and sell alcohol in a patio or outdoor area that wasn’t part of its original designated premises, which some brewery owners took as being able to reopen.

However, the TABC later released a clarification saying that businesses with more than 51% alcohol sales were not eligible.

“The circumstances are constantly changing as a result of which way the winds are blowing with [the TABC],” he said. “It makes us feel frustrated. We’re fighting tooth and nail just to stay open, and we’ve shown time and time again that we can operate safely,” he said.

State Rep. Matt Krause, R-Fort Worth, and Texas Legislative Tourism Caucus chairman led the efforts behind the letter sent to Abbott asking for an updated restaurant definition.

“You’ve got a lot of these establishments — these restaurants — that are kind of in limbo just because of how much alcohol they sell,” he said. “Restaurants that have already been decimated by the first initial shutdowns with the pandemic [and] by some people’s reluctance to want to come in and eat.”

I’ve beaten this drum before, and I continue to believe that to-go food and drink rules should be as liberal as possible, the 51% rule should be greatly relaxed, all avenues for outdoor seating should be explored, craft breweries and wineries and distilleries should get a break. But let’s be real, the problem won’t be truly solved until we get the damn virus under control, and that means taking mask wearing and social distancing seriously. It would be nice if we had a functional, non-evil federal government that tried to do something to help, but that ain’t happening till January, and we don’t have that kind of time. It would also be nice to get a rescue bill for bars and restaurants passed – there are some bipartisan proposals out there – but, well, see the previous point. We have to hold on for now.

And lord knows, that ain’t easy.

Bars that offer food service are scraping by with booze to-go operations. Their counterparts without kitchens, bound by state rules, can do little but watch their coffers wither.

“We’re all looking at our bank accounts like you would at the life bar in a video game,” said Michael Neff, owner of the Cottonmouth Club downtown. “All of us are just watching that life bar everyday trying to predict how long we have until it disappears.”

The industry had barely got its legs back following the limited reopening that went into effect on May 22 when on June 26 Gov. Greg Abbott ordered the state’s roughly 5,500 bars closed indefinitely. Bar owners, feeling they have been targeted, have decried what they describe as a lack of support from leaders as they square off with the coronavirus. Some have gone as far as filing suit against Abbott seeking to have the closure order overturned.

“Financially it’s just the worst you can imagine,” said Scott Repass, owner of Poison Girl in Montrose.

To be clear, Repass said, he agrees that people should not be drinking in bars right now. But he said there’s little difference between what would be happening at bars if they were open and what continues to happen at cafes and restaurants.

“If you shut down a bar, people are just going to go to a restaurant with a bar,” he said. “There’s just no logic to it, that that is safer than a bar operating at 25 percent capacity. We feel like we were scapegoated.”

I don’t agree with that. Clearly, many more people can be packed into a bar than a restaurant. Again, I’m up for drinks to go and outdoor seating, and maybe bars at 25% capacity with social distancing once we’ve got the numbers down some more, but the bars needed to be closed. Maybe if we’d stayed closed a little longer we wouldn’t have had to close them again, but it was right to close them. All that said, I do agree with this:

Lindsay Rae Burleson, who opened Two Headed Dog with her business partner before the pandemic hit, has been working since March at a Houston distillery making hand sanitizer to make ends meet.

The bar’s fate is uncertain, she said. Government-backed loans have run out, and she decided not to renew her insurance, which would require a substantial downpayment on Aug. 1.

Losing the bar for good would strap her with a debt so large, “it doesn’t even feel like a real number.”

“I worked nine years to get this bar,” the longtime bartender said. “I put everything I had in. I haven’t got a cent of salary, yet.”

Artisan bars and neighborhood ice boxes are part of Houston’s fabric, she said. But now the city is barreling toward a reality in which only the chains may survive.

“That’s not a city I want to live in,” she said. “That’s not a city I want to be a tourist at.”

We’ve gotta beat the virus. We can’t have our nice things until we do. Tell the Senate to pass that $3 trillion bill the House passed back in May to ease people’s financial burden until then, and then work on a bill specifically to help bars and restaurants. It’s a whole lot easier if we let it be.

Where do we stand with the anti-Texas Central bills?

They’re in the House, and we’ll see what happens from there.

The four bills before the House Transportation Committee represented some of opponents’ latest efforts to stop the project in its track. But project supporters and Texas Central Partners executives told the committee that some of the bills were unusually anti-free market for Republican-backed legislation in Texas.

“’A better business environment than Texas’ is not a phrase that I’m used to saying, but that’s what this bill contemplates and it’s not how we do things here,” Texas Rail Advocates executive director Chris Lippincott said about House Bill 2104.

That legislation would require any private companies building high-speed rail lines to file a bond that would cover the cost of reverting all land bought for the project back to its previous use if train service ever stops. Texas Central leaders said such a requirement would be so costly that it would deter potential investors from putting money into the rail line.

“The project would never get built,” Texas Central president Tim Keith said.

The bills debated this week were left pending in the House transportation committee. They are among more than 20 pieces of legislation filed by 10 lawmakers in both chambers aimed at the project. But with just a few weeks left in the session, no bill that could fatally disrupt ongoing development of the rail line has passed either chamber. And legislators have so far had little traction with bills or maneuvers that would prohibit the company from using eminent domain to acquire land needed for the project.

[…]

Another bill before the House committee, House Bill 2163, would require that the bullet train tracks running through Dallas, Ellis, Waller and Harris counties be built on columns that are 40 feet high. Much of the rural opposition is rooted in fears that the train tracks will divide existing properties and form a barrier restricting the movements of people, livestock and other animals. They also say it will restrict development spilling over from the state’s major metro areas.

“The best way to protect growth and development in that area is for this train to be elevated on pylons on a viaduct,” said the bill’s author, state Rep. John Wray, R-Waxahachie.

Company officials said they can’t yet commit to building the track at 40 feet for such long distances because the project is still going through environmental review. But Keith said 60 percent of the tracks will be on viaducts. And he told Wray that expected population growth is a factor when the company considers where to raise the tracks on viaducts instead of earthen berms.

One tweak to state law pushed by opponents of the project is not currently drawing Texas Central’s opposition. House Bill 2172 would prevent legislators from spending state funds to plan, build, maintain or operate a privately owned high-speed rail line. That is the companion legislation to Senate Bill 977, which the upper chamber passed last month. Both bills have wording similar to a provision in the Senate’s proposed budget.

“As we’ve repeatedly stated, this is being built without state money,” Keith said. “The bill is consistent with our plan of finance.”

See here for the background on the Senate bills that had been passed out of committee. In addition to SB977, two more bills were subsequently passed by the full Senate, SB979 and SB975. The House bills mentioned in this story, all of which were left pending in committee on Thursday, would need to be passed out of committee today as that’s the deadline for any bill to receive final consideration. I’ll keep an eye on that and check back later. All things considered, so far things don’t look too bad for Texas Central, but as we know with the Lege, it ain’t over till sine die.

Here come the anti-Texas Central bills

From the inbox:

[Tuesday], a group of key state lawmakers filed a slate of legislation to push back against Texas Central Railway’s controversial proposal to construct a high-speed rail line between Dallas and Houston. Senators Birdwell (R-Granbury), Creighton (R-Conroe), Kolkhorst (R-Brenham), Perry (R-Lubbock), and Schwertner (R-Georgetown) joined with Representatives Ashby (R-Lufkin), Bell (R-Magnolia), Cook (R-Corsicana), Schubert (R-Caldwell), and Wray (R-Waxahachie) to file a total of 18 bills addressing a number of concerns ranging from protecting landowners threatened by eminent domain abuse to ensuring the state isn’t later forced to bail out the private project with taxpayer dollars.

[…]

The following bills were filed this morning:

SB 973 by Creighton/HB 2168 by Bell (Railroad Determination Before Surveys) – prohibits a private high-speed rail entity from entering private property to conduct a survey unless the Texas Department of Transportation (TxDOT) first determines that the surveying entity is, in fact, a railroad.

SB 974 by Creighton/HB 2181 by Cook (Option Contract Protection) – voids any high-speed rail option contracts held by a high-speed rail entity upon a bankruptcy initiated by or against the entity.

SB 975 by Birdwell/HB 2169 by Schubert (Security Requirements) – provides a framework of minimum security requirements to be followed during the construction and operation of a private high-speed rail line. Requires the high-speed rail authority to coordinate security efforts with state and local law enforcement, as well as disaster response agencies.

SB 977 by Schwertner/HB 2172 by Ashby (No Taxpayer Bailout) – prohibits the legislature from appropriating new funds, or allowing state agencies to utilize existing funds, to pay any costs related to the construction, maintenance, or operation of a private high-speed rail in Texas.

SB 978 by Schwertner/HB 2104 Bell (Property Restoration Bond) – requires a private high-speed rail entity to file a bond with the Texas Department of Transportation (TxDOT) sufficient to restore property used for the rail service to the property’s original conditions if the service ceases operation.

SB 979 by Schwertner/HB 2179 by Cook (Right of Repurchase for Non-HSR Use) – prohibits an entity that operates or plans to operate a high-speed rail from using property acquired for purposes other than high-speed rail. If the high-speed rail authority doesn’t use the property for that specific purpose, the original landowner must be given the opportunity to repurchase the land.

SB 980 by Schwertner/HB 2167 by Schubert (Put Texas First) – prohibits any state money from being used for any purpose related to a privately owned high-speed rail, unless the state acquires and maintains a lien in order to secure the repayment of state funds. Requires that the state’s lien be superior to all other liens, effectively making Texas a priority creditor.

SB 981 by Kolkhorst/HB 2162 by Wray (Interoperability) – requires an entity constructing a high-speed rail line in Texas to demonstrate compatibility with more than one type of train technology.

SB 982 by Perry/HB 2173 by Ashby (High-Speed Rail Feasibility Study) – upon request of a legislator, the Texas Department of Transportation (TxDOT) must generate a feasibility study of a proposed high-speed rail project. The study must indicate whether the project is for a public use, whether it will be financially viable, and what impact of the project will have on local communities.

The full press release is here, and a Chron story about it is here. I was expecting some bills to be filed for the purpose of throwing sand in TCR’s gears, but this was more than I expected. Still, the basic dynamics of this fight have not changed as far as I can tell. The legislators leading it are primarily rural – even the ones who are based in suburban areas represent a lot of rural turf as well – and there are only so many of them. I’ve yet to see any legislator from a big urban area sign on to this. Which is not to say that at least some of them won’t go along with their rural colleagues, especially the urban Republicans, but that’s the ground on which this battle will be fought and won. If these legislators can convince enough of their urban colleagues to join them, then TCR is in a world of hurt. If not – if TCR can hold on to the urbanites – then it can survive the session and maybe get to a point where actual construction begins. Getting one or more of Greg Abbott, Dan Patrick, Joe Straus, and Ken Paxton to pick a side would help that faction greatly as well. Keep an eye on these bills as the committee hearings get off the ground. The DMN has more.