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D.C. Nightclubs Facing a Long Shutdown Ask the City for Rent Relief

Eater logo Eater 6/3/2020 Tierney Plumb
a group of people on a stage in front of a crowd: Northeast’s cavernous Echostage is joining forces with more than a dozen nightclubs to ask for help © Photo by Kyle Gustafson / For The Washington Post via Getty Images Northeast’s cavernous Echostage is joining forces with more than a dozen nightclubs to ask for help

D.C. nightclub owners who can’t conduct business during the coronavirus crisis are banding together to try to save their industry. While restaurants and bars have begun to reopen with restrictions in place, clubs and music venues face months of further inactivity, leading them to reach out to city officials for help.

A group of 19 club owners representing the some of the District’s most popular dancing, drinking, and live music venues sent a letter to D.C. Mayor Muriel Bowser and every City Council member on Friday, May 29, asking for legislative measures to help them save their businesses. The letter asks the city to implement lease and rent protections that could help clubs buy time while they’re shut down. Without that, the club owners say, at least 80 percent of them will have to permanently close.

People who signed the letter include representatives from Sax, Echostage, U Street Music Hall, Flash, Eighteenth Street Lounge, and Heist, to name a few. The owners plan to launch a #SaveDCNightLife awareness campaign on social media soon. Eater has reached out to the mayor’s office to inquire if any potential legislation is being considered.

Clubs and performance venues contribute a huge share of the $7.1 billion in annual revenue that hospitality and entertainment spaces generate for the city, according to a recent nightlife economic impact report.

On March 15, the city banned mass gatherings of 250 people or more, shutting down large nightclubs and music venues a day before adding a “stay-at-home” order that kept restaurants and bars from hosting customers on-site.

The city is following reopening recommendations set by a ReOpen DC advisory group made up of experts representing different industries and cultural institutions. The reopening plan is split into four stages. Under Stage 1, which began Friday, May 29, restaurants and bars have reopened outdoor seating only. According to the ReOpen DC plan, bars and nightclubs are to remain closed until Stage 3, when the city’s COVID-19 figures show “sporadic transmission.” Bowser has said she’s “very concerned” that a wave of mass gatherings to protest police brutality and systemic racism in the aftermath of George Floyd’s death could lead to spikes in coronavirus cases.

When clubs begin reopening in Stage 3 of the advisory group’s plan, the recommendations call for hosting five people per 1,000 square feet without exceeding half capacity. It’s unclear how long it will take to move through the stages. Stage 4, the final phase of the plan, will represent a “new normal,” when there’s a vaccine or cure for the coronavirus in place. The letter says that could take eight to 16 months. Cautious estimates from experts put a vaccine 12 to 18 months away.

a group of people walking down the street: D.C. stalwart Eighteenth Street Lounge turns 25 this year. © Photo by Allison Shelley/For The Washington Post via Getty Images D.C. stalwart Eighteenth Street Lounge turns 25 this year.

While clubs are closed to limit risk to workers and patrons, overhead costs such as rent dues and insurance premiums will “set us so far into debt, we will not be able to reopen our businesses,” the letter says.

A pair of decades-old gay clubs closed in D.C. during the pandemic: Ziegfeld’s/Secrets near Nationals Park and leather bar DC Eagle in Northeast.

Farid Nouri, who owns Eighteenth Street Lounge, is one of the owners to sign the letter. The towering, multi-bar mainstay in Dupont Circle is known for Sunday night DJ parties on its patio. It remains relevant after 25 years.

“We started a grassroots movement to get the word out and petition for the city to hear our voice,” Nouri says. “The biggest cost we will have in our industry is rent.”

Alex Haje, owner of downtown’s Opera Ultra Lounge, mobilized the industry to speak out on a united front.

“All of us have been in this business a long time, and most times we compete. But [COVID-19 is] a blow to all of us. We want to see the industry come out on the other side,” Haje says.

One big ask is to amend lease agreements that carry personal guarantees, which enable landlords to go after business owners’ personal assets when a commercial property owes rent. That’s a “death sentence” in the current environment, the letter says.

The median rent for a D.C. club is around $30,000 per month, according to Haje, so paying to keep a space for another year could cost $360,000, and that’s without factoring in mounting insurance premiums.

“If there is no security or any kind of plan to keep us afloat without accruing debt, I don’t foresee this industry to be around in the next year,” Nouri says. “You will see bars and clubs closing one by one.”

U Street Music Hall owner and Will Eastman, who also signed the letter, told WAMU his 500-person underground venue on U Street is at risk of shuttering permanently by the fall without the ability to host live concerts inside.

“It’s not like everyone has crazy slush funds in their bank account. You don’t have investment wings,” says Nouri. “It’s tough for us to stay idle for God knows how many months before Phase 4 is implemented, minus a vaccine or miracle.”

Along with high-tech lighting and sound systems, 9-year-old Opera is known for over-the-top bottle service options. © Alex Haje/Opera Along with high-tech lighting and sound systems, 9-year-old Opera is known for over-the-top bottle service options.

To salvage an industry that’s running out of cash by the day, club owners are asking the city to consider adopting similar lease protection and rent relief measures that are already in place in New York City and are under consideration in California.

Last week, NYC Mayor Bill de Blasio signed two bills that would prohibit landlords from enforcing personal liability clauses in leases for commercial tenants that default from March through September of 2020.

“We’ve been here 25 years with the same guys who own the building,” Nouri says. “If we can’t stay with that kind of a relationship, a lot may not be able to stay.”

California’s legislation would protect hospitality tenants even more. They could pay no rent without facing eviction for a full year after the COVID-19 emergency ends. Late fees would be eradicated. They could renegotiate a lease if they have lost over 40 percent of their revenue over the two months after “shelter in place” orders went into effect, compared to the same time over the previous year. California SB 939 passed the Senate Judiciary Committee last week and heads to the Senate Appropriations Committee this month.

D.C. owners are asking for legislation to require landlords to accept a percentage of revenue as rental payment for nightlife businesses that cannot open, suggesting an 8 percent payout.

“We are not looking for handouts ... we need to come up with an agreement that spreads the risk and doesn’t hurt one of the sides,” Nouri says. “It doesn’t benefit anyone if these places start closing one by one.”

The letter also asks the city to set up an emergency fund to offset rental expenses for nightclubs, bars and public hall spaces included in the suggested Stage 4 opening category. That money could come from finding and tapping into “the rest of the funding the federal government has shorted [the city],” says Nouri.

Because nightlife establishments make up a “much smaller segment” of the liquor licenses in town, setting up rental relief “wouldn’t be an enormous amount of money” for D.C., Haje says.

Haje is hopeful the city will respond positively, especially since the mayor is pro-nightlife. Over a year ago, D.C. established a Commission on Nightlife and Culture to serve as an intermediary between nightlife establishments, residents, and the D.C. government.

There’s a lot to lose. The nightlife economy, which includes bars, restaurants, clubs, and music venues, employs 65,000 people and generates $562.3 million in tax revenue annually, according to the D.C. nightlife economic report. The biggest venue on the signed letter is 3,000-person Echostage, the cavernous Northeast club that hosts world-famous names like David Guetta and Tiësto. DJ Mag named it the No. 2 club in the world last year.

“D.C. nightlife is one of the best in the country. Now we are on the edge of seeing it go down the tubes,” says Nouri.

Nouri says Eighteenth Street Lounge easily sees 450 customers pass in and out on an average Friday night pre-COVID-19. But if it followed the recommendation of five people per 1,000 square feet for Stage 3, he would only be allowed to welcome 50 people at a time.

“That doesn’t make sense for any of us, who already operate on small margins and high overhead,” he says, adding “D.C. has one of the highest insurance liability rates for businesses.”

He’s already thinking potentially altering his venue to tone down the nightlife component, like opening with earlier hours. Complex magazine just did a deep dive on what the U.S. club scene may look like in the future. For Atlanta nightclub/restaurant Suite Lounge, which has already opened with limited capacity, employees wear masks and gloves and get temperature checks before working, with surfaces constantly sanitized.

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