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Habitat Magazine Business of Management 2021

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The Backyard Restaurants Are Coming. What’s a Co-op to Do?

New York City

Co-op and condo boards, outdoor restaurants, pest control, liquor license.

A backyard restaurant can depress nearby apartment values by 20% or more.

May 11, 2021

As New York City continues to open up, restaurants are using every inch of available outdoor space to attract customers. The rear apartments in one co-op face a backyard that a restaurant wants to turn into a dining area. Residents in those apartments are worried about noise, odors, vermin and light pollution – as well as the impact on property values. What, a shareholder asks Brick Underground, can residents of such a co-op or condo do?

Options, it turns out, are limited. "A restaurant is always a concern,” says Deanna Kory, a broker with Corcoran. “Buyers don’t love living close by because of the noise and vermin, and it is not great for a building from a quality-of-life perspective. It’s OK if it’s an established place, but the value of a similar apartment without a restaurant could be as much as 15 to 20% higher, or more. The lower the floor, and if the windows face the restaurant, the more the apartment value is negatively impacted." 

This is likely to be a source of anxiety for more New Yorkers than ever, given the number of restaurants that opened new outdoor seating areas over the past year in response to pandemic restrictions on indoor dining. And while this change has helped to save a number of businesses, there are certain drawbacks. 

"Unfortunately, vermin are often associated with food establishments," says Gil Bloom, president of Standard Pest Management. "While proper restaurants have assorted health codes to adhere to, the outdoor dining concept is unstructured and without guidance."

Shareholders and unit-owners may have the opportunity to state their concerns at the hearing for the restaurant's liquor license, a legal requirement for new establishments that will serve alcohol. 

"If the restaurant requires a variance or needs a liquor license to operate as proposed, you could look into attending the city hearing at which the variance or liquor license application is being discussed and state your objections," says Jeffrey Reich, a partner at the law firm Schwartz Sladkus Reich Greenberg Atlas. "This information and some support may be obtained from the local community board or council person, but if the restaurant may operate 'as of right,' there is little that can be done." 

Note that the State Liquor Authority is now holding all meetings remotely via webcast; according to a spokesperson, members of the public can submit written letters in support or opposition to pending applications. These letters will be reviewed by SLA members before they make a determination on licensing applications. 

If the restaurant is approved, boards can take steps to reduce the risk of pests. "The first step in defending your exterior is sanitation,” Bloom says, “followed by exterior pest exclusion with rodent-proof door sweeps and screens."

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