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City business licensing destroys small businesses: Part One -- Logan Square Kitchen
As he stood in Logan Square Kitchen (LSK), 2333 N. Milwaukee Ave., Mayor Rahm Emanuel announced, on Apr. 17, that a new ordinance would streamline business licensing, making it faster and easier for businesses to be legally operational in Chicago. On May 16, Zina Murray, Logan Square Kitchen's owner, announced that she will close her doors on June 28.
Ironically, it appears that there is no "streamlining" for the small artisan food entrepreneurs who rent LSK space. They are getting no relief from the Shared Kitchen Ordinance (SKO) which went into effect on Sept. 11, 2011. What used to take LSK one to two weeks to get a new client licensed jumped to one to three months plus multiple trips to City Hall, under the SKO.
On Apr. 17 Emanuel stated that the number of required licenses were being cut 60% from 117 to 49 and that would save businesses money and time. “Getting a business started in Chicago too often requires navigating a maze of rules and red tape. This complexity favors those with the money and connections to hire insiders that can show them the way, leaving small businesses to fend for themselves."
According to a City Hall press release about the ordinance, "The proposal (new ordinance) also gives city government the flexibility to act as more of a partner to new and emerging businesses, like Logan Square Kitchen, by authorizing the city to provide novel businesses with a temporary permit that allows them to get up and running while the city figures out how best to license them."
"It should come as no surprise that we must close. LSK is collateral damage from choices that City employees make each day—people that have lost the ability to connect their actions with the consequences they cause. In all the many, many meetings I’ve had in City Hall in the past three years, there’s a question no one ever asks. “Is it good for our City?,” says Murray.
"It’s a sad time when our government kills the very things that can heal our City. Logan Square Kitchen was designed to heal the local economy, environment and food system all at once. It was an innovative, bold idea that never had its chance. The Dept. of Business Affairs and Consumer Protection (BACP) began hammering nails in its coffin before we even opened our doors in 2009 and hasn’t stopped. Unfortunately, we see no end to regulatory burdens, which will continue to block our ability to grow a healthy business."
BACP's Jennifer Lipford countered Murray's statement with:
"We are sorry to hear that an innovative, neighborhood business such as Logan Square Kitchen is closing. From Day 1, BACP worked with Logan Square kitchen to properly license their facility - just as other businesses with the same activities require - and even helped them with their state liquor license. BACP has not had any issues with LSK or issued any citations since assisting them through the permitting process. The City wants to help businesses while also ensuring that they are safe, sanitary, and operating legally. This is why we now have an emerging business permit to help new business models get up and running while we determine how to license and regulate."
"As many times as I've heard these statements of deep denial, I'm blown away every time. I imagine that BACP Commissioner Rosemary Krimbel approved this statement for release. And you can see her standing behind the Mayor in the video of the press conference at our place (she's the blond in the black jacket.) So how does she reconcile this statement with the statements the Mayor made, as she nods away? About 9 minutes in to the video, the Mayor describes how the proliferation of licenses and burdensome process has "small businesses focused on City Hall and not on their customer. And that is wrong." As I said yesterday, we are BACP's collateral damage. Yet here we are, staring at BACP's statement that my experience is required and BACP conduct was normal.
The Mayor said he believes that "small businesses are the lifeblood of economic activity and job creation" in Chicago. Unfortunately, too many of us leave too much blood on the 8th floor of City Hall.
Here's the real problem that the BACP statement illustrates. The same people and culture are still in place. Many BACP bureaucrats said NO to LSK to relieve themselves of the responsibility of YES. And plenty more watched silently while we twisted in the wind. We are all responsible for our conduct. And our conduct defines our character. We must hold our public servants accountable for their actions-- otherwise we give tacit approval to their behavior, and on it goes.
In the green world, we would describe BACP's behavior as unsustainable-- it is destroying the resources upon which it depends. It's a pretty short walk from vital business activity to the salaries, benefits and pensions of our public servants. BACP, your choices have consequences, and the LSK closure is the tip of the iceberg. I hope you can begin to connect the dots, cause we don't get out of this mess unless we work together."
Murray's challenges with the city began before she and her husband Nick purchased the building, even though they went through all the steps they were told to go through. "Over and over we heard, 'you did everything right.' See the Alderman before building purchase. All City Departments approved us through Green Building Permit Program. Go to BACP in advance of applying for license, completely disclosing the business model."
Then they spent three months talking about what licenses they needed. They followed all the directions. Then they were told that they "misrepresented" their business. That was followed by being told that they couldn't get their license because they failed the “furniture inspection.” They corrected that and received their Liquor License contingent on having parking places.
When they tried to locate parking spaces, not all were agreed on by Zoning so they could not meet that requirement. Zoning told them that they could not hear their appeal, they had to appeal under liquor licensing. But, they could not appeal there because they were already approved and appeals are only recognized if there is a denial.
For 18 months they were wrapped in red tape including 20 health inspections. "Enduring intimidation and harassment, the resources we set aside to ramp up the business were instead used to pay lawyers and our mortgage while we were denied the right to operate," Murray explained.
Despite all of that, they opened an impressively sustainable, green space, which received Gold Leed certification. They have assisted several businesses in becoming viable businesses. Their various holiday markets brought vendors and customers from far and wide…but no more.