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FIRST CAME HELL AND HIGH WATER. NOW, IT'S PURGATORY.
Bob Krummert
October 31, 2005
5 Min Read
Bob Krummert
In mid-October, Brennan appeared on behalf of the National Restaurant Association before the U.S. House of Representatives' Committee on Small Business. He told the committee that while the physical devastation was horrific, the damage to business and to restaurant operators' psyches was devastating, too.
"All of us left town expecting to return in two or three days and that our homes and businesses would be reasonably safe," Brennan said. "They're not. We have to rebuild our entire city, especially the hospitality industry."
He began by explaining that while two of his three restaurants--Red Fish Grill and Bacco--have reopened, it's still no picnic. Both places had to make do with limited menus, partial staffs and boiled-water restrictions. Brennan worked with the Louisiana Department of Health to draft modified health regulations for the reopening.
The biggest problem for Brennan and other operators lay in finding employees to staff the restaurants.
"Many of my employees have not come back to the city or have found employment elsewhere," Brennan explained. "The biggest short-term issue in this regard is finding adequate housing for restaurant employees, as 70 percent of the houses in New Orleans sustained water damage."
It's an unfortunate problem for restaurant owners, but why should Congress care about them, specifically? There is plenty of grief to go around post-Katrina. Brennan, who also serves as the chairman of the Ernest N. Morial New Orleans Exhibition Hall Authority, had an answer to this question. He told the committee that restaurants are actually a key factor in helping the region rebuild.
"Our 5,200 impacted restaurants employed about 67,000 people," he said. "The restaurant industry was the number one private employer in New Orleans before these hurricanes, directly employing 54,000 people, Indirectly, it employed another 20,000 people who supplied the industry with goods and service. Eating out was frequently the number one reason for visiting New Orleans. The city has a distinct cuisine that is a crucial part of its culture."
Overall, he said, travel and tourism is a $5 billion a year industry, accounting for more than 80,000 jobs in the state.
So what are the primary challenges right now? In addition to lack of employees-- restaurants are typically opening with 30 percent of their former staff--Brennan pinpointed three other areas of concern.
Lack of a customer base. "In my area, Orleans Parish is still not repopulated and other parishes are only partially inhabited. To build back up to our former number of approximately 3,400 restaurants, we will have to achieve a significant return of our population base."
Slow payment by insurance companies. "Many restaurateurs in the Gulf Coast region are having difficulties in getting their claims resolved and are even more concerned about whether affordable insurance can be obtained for the future."
Bringing tourists and conventions back. "The hospitality industry played a significant role in the New Orleans economy before Hurricane Katrina. Re-establishing tourism can play a significant role in our recovery."
After he laid out the problems, Brennan told the Small Business Committee how it could help the recovery move forward.
First: loosen the purse strings. Brennan asked that the Committee increase the program funding level for home disaster loans, business physical disaster loans and economic injury disaster loans provided through the Small Business Administration. He said fair deferrals or grace periods on disaster loans and repayments owed on previously existing SBA loans would help, too. He added that the paperwork required when applying for a SBA loan under disaster circumstances is "daunting." He asked Committee members for help in streamlining the process.
Brennan also addressed the need to lure tourists and meeting business back to New Orleans. "Two provisions would assist in facilitating travel and visitation in the disaster zone, and are intended to be provisional," Brennan said. "One is increasing the business meal deduction to 100 percent for expenditures in the hurricane disaster zone. The second is implementing a spousal travel deduction for business travel to the hurricane disaster zone."
Hey, these are two things that really would help operators get back on their feet. Thank God Brennan knew exactly what to ask for. And in fact, he asked for more. His other suggestions included such targeted and time-limited provisions as:
An employer deduction for costs associated with housing relocated employees.
A housing credit/allowance/voucher program for employees from the disaster zone.
A tax deduction/credit for costs associated with housing an evacuee/family in a home or business.
Temporary housing provided to Katrina-affected employees by their employers not treated as a taxable benefit.
Tax-exempt bond financing for rehabilitation/reconstruction/refinancing of business properties in the disaster zone combining elements of the Liberty Bond and Enterprise Zone Bond programs to assist all businesses within the targeted zone.
Leasehold improvements/restaurant depreciation.
Bonus depreciation.
Small business expensing.
Historic preservation/rehabilitation: allow a tax credit for qualified rehabilitation expenditures to encourage the retention of the unique character of the disaster zone properties.
Brennan closed his testimony this way: "Restaurateurs are entrepreneurs; we're active and busy people, and we're restless right now. A lot of people suggested I open a restaurant elsewhere, but I don't want to do that. I want to go home. This committee and Congress can help get New Orleans, the state of Louisiana and the entire Gulf Coast region back on its feet so that all of our residents, restaurateurs and other small businesses can go home again."
We haven't heard yet how many of Brennan's suggestions passed muster with the committee and the rest of Congress. But you can bet his fellow Louisiana restaurant operators are glad that Brennan told it like it was when he had the chance.
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