Over the past few weeks, some of Colorado’s most renowned restaurateurs have lamented the difficult economic and regulatory hurdles of operating their businesses. Notable changes are afoot for well-respected restaurateurs like Juan Padro, Alex Seidel, Jen Jasinski, Beth Gruitch, Dana Rodriguez and Tommy Lee who all told The Colorado Sun they are looking for greener pastures to operate their businesses.
Most notably, Troy Guard announced last week he and his wife will be moving to Houston because growing his business in Colorado has just become too difficult and expensive. He certainly isn’t moving for the weather. Guard and Grace at 1801 California Street will remain open, and his business will still be headquartered here, but future expansion will be in Texas.
The restaurant business is difficult, to say the least. Margins for the best-run owner-operated restaurants are below 10%. As the owner of Sage Hospitality, which runs 50 restaurants, bars, coffee shops and entertainment venues across America, including 20 in Colorado, I can tell you our margins here have dropped by as much as 20% over the past decade.
Restaurants, along with great retail, arts, entertainment, and sports teams generate excellent jobs and provide significant tax revenues to our cities and state. These businesses make the fabric of our community interesting and attractive.
A vibrant world-class city has a thriving small business sector that showcases the unique local characteristics of the community. Collectively they are the special sauce that ultimately attracts employers and visitors, generating tax dollars that keep our state economically healthy.
Over the past ten years, however, local and state elected officials have made operating a small business in Denver more difficult and expensive. Well-intentioned legislation has created a hostile economic environment for small businesses to thrive.
For example, a new 2021 law — Energize Denver — will cost the owners of large Denver properties — restaurants, hotels, commercial real estate, and apartment buildings — tens of thousands of dollars to comply with every year, all in an effort to minimally reduce greenhouse gas emissions from older Denver buildings. Denver’s City Council should at a minimum modify Energize Denver to make its implementation practical and economical in a manner that doesn’t destroy small businesses.
That same year, the state piled on with House Bill 1286 which requires businesses to audit the energy efficiency of any large buildings to meet target goals for greenhouse gas emission reduction. The Colorado Department of Public Health and Environment implemented the new performance standards with Regulation Number 28.
Meanwhile, the minimum wage is approaching $19 an hour in Denver, and employers must now fund the state-mandated paid family leave program, splitting the almost 1% payroll tax with employees.
And commercial property taxes are soaring with property valuations reaching record highs across the state at the exact time two-year assessments were conducted. Even with the state’s efforts to reduce property taxes, businesses are hurting. Our assessed values have increased by as much as 40% over the past few years. Our state legislature should use the upcoming special session to reach a balanced compromise that protects K-12, higher education, and health care while making our community affordable for homeowners and small businesses.
These state and local regulations make Colorado meaningfully less competitive. It’s time for our state and local elected officials to take note of how these policies are adversely impacting small businesses while also making eating out unaffordable for many of our citizens.
A few weeks ago, money management firm TIAA announced the elimination of 1,000 jobs in Denver, moving them to Frisco, Texas, and breaking a downtown lease two years early. Another sign that Colorado is becoming a less attractive place for companies to do business.
I moved to Denver in 1984 to start a business. Denver was facing one of the city’s worst economic times, with an economy primarily reliant on the oil and gas industry. With oil prices plummeting we faced serious problems. There was significant out-migration, office vacancies approached 40%, and in 1987 unemployment was 9.1%.
These numbers were daunting, but Coloradans pulled together to turn the tide. Gov. Roy Romer, Mayor Federico Peña, and countless civic and business leaders rolled up their sleeves to create change. There was a bold vision for what was possible, and change happened. Our economy kicked into high gear and for nearly three decades we thrived.
A recent CNBC study ranked Colorado 23rd for quality of life, 39th for cost of doing business, 32nd for business friendliness, and 46th for cost of living. Metrics showing our state’s poor rankings in these categories were unimaginable just a decade ago. If those data points aren’t enough of a wake-up call to our elected and community leaders, perhaps the departure and closure of small businesses that make the fabric of our community so special will be that call.
Today we have a choice. We can continue down the road of a draconian regulatory and legislative environment or learn from our mistakes and take action to reverse course. I’m an optimist and believe if we come together, we can make meaningful changes that will once again make Colorado the best place to work, live and play.
Walter Isenberg is CEO and Co-Founder of Sage Hospitality Group. Sage which celebrated 40 years in business this year, is headquartered in downtown Denver, employs more than 2,000 people in Colorado, and more than 6,000 nationally.
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