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Struggling restaurant industry is offered a lifeline by Mass. lawmakers

The Boston Globe logo The Boston Globe 7/24/2020 Jon Chesto
a person standing in front of a building: Greek Street counter owners Jody Adams, and Jonathan Mendez, photographed in 2019. Adams says rent is the number one issue facing restaurants during the pandemic. © Suzanne Kreiter/Globe staff Greek Street counter owners Jody Adams, and Jonathan Mendez, photographed in 2019. Adams says rent is the number one issue facing restaurants during the pandemic.

Restaurant owners have sought financial help from the state for months as they struggle through the COVID-19 pandemic. On Friday, the lifeline came into view.

The Massachusetts House is proposing to create a new “Distressed Restaurant Trust Fund,” financed in part from proceeds from legalized sports betting. The measure was included in an economic development bill that emerged from a budget-writing committee on Friday. The measure also would legalize sports betting, estimating it would yield $50 million in new gaming revenues.

The bill provides for directing 30 percent of new sports-betting revenue to the restaurant fund. That translates to $15 million a year, assuming the Senate approves this language. The money would be doled out in one-time grants, up to $15,000 per restaurant, to address the financial impact of COVID-19, and could be used to cover rent, payroll, and insurance, among other expenses.

In March, restaurants were told, almost overnight, to close operations except for takeout and delivery. They were allowed to reopen in June but with limits on seating capacity.

The creation of a distressed restaurant fund has been championed by the Massachusetts Restaurant Association as well as Massachusetts Restaurants United, a new organization formed by independent owners in the early days of the pandemic. Both groups said they welcomed the assistance but also hope that the funding sources aren’t limited to sports-betting taxes.

“We certainly appreciate the Legislature understands that there is one industry … that really has been harmed the most and they feel the need to assist us,” said Bob Luz, chief executive of the MRA. However, he questioned whether sports betting would generate enough money to make a significant difference in keeping many restaurants from closing.

Spokespeople for the MRU, meanwhile, said they are asking the Legislature to keep the door open for some federal assistance to be directed to the new fund, too.

MRU member Jody Adams, a local chef and a partner in seven restaurants, said paying rent is the most pressing issue for many establishments, even with the state’s current moratorium on evictions extended through Oct. 17.

“It’s this huge nut, and it doesn’t go away,” Adams said. “If you don’t pay your rent, you can lose your business.”

Luz has predicted that 3,600 of the state’s 16,000 restaurants won’t survive the pandemic, based on reports from two large food distributors. But Adams said she expects far more restaurants to close than that, without significant state or federal assistance.

The Legislature has taken other steps to help. Early in the spring, lawmakers allowed restaurants to sell beer and wine to go, and expanded that to mixed drinks this month. The House has approved a cap on delivery fees charged by third parties such as Grubhub and Uber Eats, as well as a waiver on charging interest on any delayed meals taxes during the pandemic. The Senate still needs to act on those changes.

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