Cleveland Heights caps excess ‘third party’ charges on pandemic food deliveries at 15%
CLEVELAND HEIGHTS, Ohio – In an effort to eliminate pandemic-related “price gouging” on restaurants and local customers, the city has capped food delivery charges and third-party pickup orders at 15%.
The limit was passed unanimously by council on Monday, April 19 after city officials learned that delivery services such as DoorDash and Uber Eats could charge up to 30% commission on top of regular prices for restaurants.
Councilor Mary Dunbar asked if it was better to leave the solution to the open market, as restaurateurs simply don’t use delivery services that have such superfluous payments for their customers.
Vice-president of the city council, Kahlil Seren, compared the “astronomical” delivery costs to stores illegally raising the prices of things like bottled water during emergencies and shortages.
“It takes advantage of the businesses and the conditions under which they currently operate,” Seren said of inflated delivery charges which in some cases exceed the already slim profit margins restaurants have to contend with due to reduced costs. number of seats and social distancing. and additional costs.
The ordinance itself further recognizes that “many restaurants have limited bargaining power to negotiate lower commission fees with third-party platforms due to the high demand and few alternatives for ordering and ordering services. online delivery ”.
Based on similar models adopted in Cleveland and Columbus, local legislation remains in effect for up to 90 days after the governor lifts the statewide health emergency declared in March 2020, when restaurants can return to the restaurant service without restriction, said City Law Director Bill Hanna. of the “sunset” provision.
In addition to “easing the financial burden on distressed restaurants during the public health emergency,” the Cleveland Heights ordinance also protects delivery drivers themselves from being accosted by these “third-party platforms” by because of the cap reducing corporate profits.
Dunbar also asked about the enforcement of the ordinance, which Hanna said would come through the police and the penal code as a first-degree offense.
“In other cities, a civil sanction ended up being struck down by a court, so it has to be a criminal sanction, with a number of results – not just a flood of tickets,” Hanna said.
Without much direct in-person discussion since the meeting schedule switched to virtual format last March, Councilor Davida Russell also contacted the city’s legal department with similar legislation, unaware that Seren was already working there.
“I can’t take myself the credit for writing it – I just got some feedback from business owners,” Seren said. “These are exorbitant prices that drastically reduce profits. And capping those fees still allows tech companies to make a profit. “
Responding to a question from City Councilor Mike Ungar, City Manager Susanna Niermann O’Neil said the Department of Economic Development had received complaints about the practice.
“This legislation shows that it is important to us as a city and that these excessive fees should not be charged,” added O’Neil.
Rescue Law Fund
In other news related to the pandemic, the council on Monday established a local budget recovery fund in order to comply with federal requirements that could qualify the city for up to $ 40 million in local economic assistance through the American Rescue Plan Act of 2021.
“Everyone saw the number,” O’Neil told the board. “But right now, we don’t have the criteria and guidelines on how we can spend it.”
This can be better explained within a month or so, said city finance director Amy Himmelein.
And in the meantime, “we have to create a fund so that there is a place for this money,” Hanna added.
Adopted last month, the $ 1.9 trillion economic stimulus package provides monetary relief “to deal with the continuing impact of COVID-19 on the economy, public health, state and local governments, individuals and businesses ”.
Of that amount, up to $ 350 billion remains allocated to state and local governments, as well as education, housing and transit needs.
From there, the Federal Funding Accountability and Transparency Act (FFATA) requires separate accountability, which the state typically requires for non-property tax funds.
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