In NKY River Cities, Optimism Meets Deep Worries for Main Street
Editor's note: A lot of businesses in our community are severely impacted by the new restrictions placed on society amid the governments' response(s) to novel coronavirus/COVID-19. We know that this article only documents a few, but that there are many others experiencing similar, or worse circumstances. The River City News is also a small, indepedently-owned business and our thoughts are with the community at-large and our fellow small businesses as we all navigate this crisis together.
Note: This article has been updated to include comments form the CEO of Longnecks, which closed its three restaurant and bar locations in Northern Kentucky.
Written by Michael Monks, editor & publisher
The arrival of novel coronavirus/COVID-19 has brought mostly to a halt the nascent urban renaissance taking place in Northern Kentucky's river cities.
The global pandemic has killed nearly 10,000 people across the world and infected nearly a quarter million. Kenton County saw its first case confirmed on Wednesday, a 66-year old woman who is now in isolation at the Fort Thomas campus of St. Elizabeth Healthcare.
In order to slow the virus, government officials have sought to limit social gatherings, calling for social distancing of at least six-feet.
The cancellation of major events like the NCAA men's basketball tournament, which would have started in earnest on Thursday, and the postponement of the Kentucky Derby has displayed the seriousness of these wishes.
But with that has come orders from the governor of Kentucky to stop in-person dining and drinking at the state's restaurants and bars, which are now limited only to carryout and delivery services.
With no end in sight to the restrictions, some river city restaurants - and now other businesses like barber shops and hair salons - are concerned about how they will weather this storm.
"The whole thing I'm struggling with largely is, there's no timeline. There is no way to plan without a timeline," said Paul Weckman, who, with his wife, Emily Wolff, operates four restaurants in Covington. Two, Otto's and Frida, are well-established destinations in Mainstrasse Village. A third, Larry's, opened only months ago. The fourth, the Standard, which is set to open inside an historic auto mechanic spot on Fifth Street, was close to opening its doors.
Weckman said that he had to furlough all of his employees.
"It's an unbelievable punch in the gut as someone who started in tight times and grabbed a spot where we were relatively strong," he said. "We thought it was best to cease operations entirely."
Some restaurants that previously thrived on their dine-in experience have sought to keep some income flowing by turning to carryout service.
Libby's Southern Comfort, on Eighth Street in Covington, has drawn crowds for months to enjoy its fried chicken.
Owner Brad Wainscott said that he had to lay off 90 percent of the staff at Libby's.
"Since they are letting us do carryout, we're trying to pay for the bills we have laying here," said Wainscott, whose family is well-known for the landmark Greyhound Tavern in Ft. Mitchell.
Customers are still able to pick up food, but the concern remains that tighter restrictions could be on the way, as has been the case in other places around the world.
"I'm hopeful that there will be some type of assistance, but if they are going to close it down, I think we will be OK," Wainscott said. "We'll have to shut it down, and there will be no payroll, and we won't be paying anybody, and we'll have to find a good place for the perishable items to go."
Already, Libby's has donated some items to La Soupe, a Cincinnati-based service that turns discarded foods into proper meals for those in need.
The magnitude of the threat of COVID-19 to the cities' economy, in addition to the health threat, is not lost on City Hall.
Covington City Manager David Johnston is also concerned about the state of downtown's economy amid the coronavirus outbreak, as lights go out and traffic slows. There are thirty-five confirmed cases of coronavirus/COVID-19 in Kentucky, including the one in Kenton County, Gov. Beshear announced Wednesday.
"Our local economy is precarious because of the strong presence of our small businesses and this is going to affect that," Johnston said. "Our downtown in particular is made up of small entrepreneurs, small businessmen and women, who don't really have that large a margin in their business, so something like this is painful."
Johnston said that City Hall is looking for ways that it can help. After all, generous incentives from the city have helped many of these small businesses open through forgivable loans, facade improvement grants, or commercial rent subsidies.
"It's not just business," Johnston said. "We also have empathy for the employees of those businesses. So, we're hoping that there is federal legislation and state legislation that will provide more direction than there is today in how to respond economically."
The federal government is weighing options, with one possible component being to send cash directly to the public. The federal Small Business Administration is offering low-interest loans. The states are working to ease restrictions on access to unemployment benefits.
The hardest question to answer, though, is: how long will this last?
Some projections push the peak of coronavirus to late summer.
And will the tight communal restrictions, including Wednesday's announcement from the Diocese of Covington that masses are suspended, be maintained throughout?
The virus, the uncertainty, and the significant Wall Street drop are, to some, reminiscent of the financial collapse of the late 2000s that triggered the Great Recession.
"I lived through 2008," said Robert Yoder, economic development manager at the City of Dayton, another government that has boosted its main street business count through generous incentives. "I think it could be a short-term hiccup, and some businesses will close. But, I think the market is good. The building stock is good."
Yoder, who has also served in an economic development capacity for the City of Silver Grove and for Southbank Partners, said if the situation worsens, it could take a year or two to recover. It all depends on how long this lasts, he said.
"That's what happened in 2008. We had some businesses close, and it was a year or two before we had new businesses open up," he said. "It's a resilient downtown economy. There may be a hiccup for a short period of time, and some stress. But I think, long term, the trends are still positive."
Yoder was supporting some of the newer businesses in Dayton on Wednesday, including Unataza Coffee, and Kate's Catering, which has seen its catering business impacted, and has turned to offering pick-up meals.
"I went and got coffee at Unataza, and she's very happy at how well the community is supporting her," Yoder said. "Right now, she's in good spirits. I went to Kate's Catering for lunch and got her meat loaf, mashed potatoes, and broccoli. She says she's selling out of stuff."
Tepid optimism is still around.
"Everybody is wary about what's happening but right now, people are in good spirits and pleasantly happy," Yoder said.
Wainscott, at Libby's, said that people have been generous to him, too.
"Our landlord, he's very nice, he came down last night and talked to me and said if you can't pay the rent, I understand, don't worry about," he said. "I hope we're not in that type of position not to, but even our banker stopped by and said, if you need a line of credit, it's there."
Since turning to carryout, Wainscott said that he has seen a good business.
"We did a good carryout last night," he said. Libby's was offering a short promotion that included a roll of toilet paper with each order, a nod to the lack of bath tissue on grocery store shelves as buyers try to keep their homes stocked with supplies amid the uncertainty. "Everybody was being extremely nice and polite. I think everybody is in this together and somehow roll with the punches."
In the meantime, many questions remain, though planning is underway.
"Your local government and the City of Covington is empathetic for you on what the impact of this crazy pandemic is having on our routine," said Johnston, the Covington city manager. "We are looking at how we can help you. It may not be optimal to what you're looking for but it's what we can legally do."
Johnston said that more information on that would come out over the next weeks, after legal review.
"We are also encouraged to hear the federal government has finally decided to take some proactive steps. We have to see those final bills that are before them to deal with," Johnston said. "A lot of that will hopefully provide relief to our small business owners. But we are all in this together, and we're going to see what we can do to help each other out. That's what communities do in tough times, and this is one of those times."
Johnston said that City Hall has concerns about its own coffers, too. At the dawn of the downtown renaissance, the city had just emerged from a near brush with insolvency. The city's fiscal health is better now, with the top concern in Covington and other Kentucky cities being consistent increases in mandatory pension contributions. With a drop in payroll tax revenue, the city could be in a weaker position.
"Fifty-one percent of our general fund revenue for this current fiscal year was projected to come from payroll taxes, and if there are no jobs, there are no payroll taxes being paid. So, that will show some impact to us," Johnston said. The fiscal year ends at the end of June, and budgeting for the next fiscal year, which starts July 1, is underway. "We are going to make some assumptions that will show a reduced revenue stream from payroll taxes."
Johnston is hoping that the Kentucky General Assembly, which is in the final quarter of its sixty day legislative session in Frankfort, will ease the city's burden on pensions.
He noted that Senator Chris McDaniel, a Republican from Taylor Mill, has introduced a bill that would cap the pension contribution increases at its current rate. "That would provide us with necessary relief immediately," Johnston said. "All the cities in the Commonwealth would welcome that action."
But, until that happens, "we're talking about another twelve percent increase in our pension liability," Johnston said.
Meanwhile, in Frankfort, where Gov. Beshear offers daily briefings on the latest coronavirus information, including the current number of Kentuckians afflicted, and any new societal restrictions to increase social distancing, arguments continue between legislators about whether the legislature should even remain in session. After all, people are encouraged not to congregate. There are 100 state representatives and 38 senators.
As of Thursday, business was proceeding as planned. According to statehouse reports, even committees will continue to meet to discuss legislation.
Earlier this week, State Rep. Rachel Roberts, a Democrat from Newport who was sworn in only after winning a special election in late February, said that she believed the General Assembly should only convene to discuss coronavirus-related legislation. Gov. Beshear also supports that notion, along with adopting a two-year budget, which is mandated by the state constitution.
"I'm a small business owner, my phone's been blowing up for a few days," Roberts said. She operates the Yoga Bar in addition to serving as a legislator. Roberts supports waiving restrictions for unemployment, as Gov. Beshear has announced. "Most small businesses are not eligible for unemployment, so we need to figure out measures for small business owners," Roberts said.
Nonessential personnel is being kept out of the Capitol as legislation proceeds. "The White House is saying not to convene in groups of ten, so we have a duty to model the behavior we need to be seeing in our communities right now," Roberts said. "We need to take extraordinary measures while dealing with essential items."
Meanwhile, cities and business organizations are encouraging consumers to continue to support local restaurants through pick-up and delivery. The City of Newport sent out an email on Wednesday with a list of restaurants there that are still operating. The City of Bellevue is maintaining a list of city restaurants and their status amid the virus.
Yoder said that Dayton is bringing back its "#I8inDayton" promotional hashtag, asking people to post photos on social media when they purchase carry-out from one of the city's restaurants. Some prizes will be given out, Yoder said.
"The city will do all it can do," Yoder said. "I'm already sending information out to (business owners), making sure they know about the state's small business tax credit for those that bought new equipment this year. That's an underutilized tax credit that many businesses can use."
Like Johnston in Covington, Yoder is watching Washington, D.C. and Frankfort for some answers for small businesses impacted by coronavirus.
"We're not even a week into the shutdown yet, so I know there's still a lot of stuff in the air," he said.
Johnston said that most small business incentives, like those backed by federal funds given to the city, will remain available on the other side of the outbreak. Some programs, though, are backed by revenue from the city's downtown tax increment finance (TIF) district.
"It is our payroll that is going to be impacted," he said. "If we see a lot of layoffs in the TIF district, you'll see less revenue for our TIF fund and a lot of our TIF programs are funded through TIF funds."
Covington's downtown growth is poised to continue, with several projects in the construction phase. Near Libby's, on Eighth Street, a new Cat Cafe (where guests can sip coffee and then enter a separate room to engage with kittens) and another new restaurant, Zapata, saw their openings near. Next to Hotel Covington, its operators are expanding to offer larger rooms and what has been promoted as a "distillery experience." In the Roebling Point business district, near the Ohio and Licking rivers, work on an open-air entertainment spot is underway. In Mainstrasse Village, the Standard, a forthcoming restaurant in an historic car mechanic shop on Fifth Street, awaits its opening day.
"Covington is flourishing," said Wainscott, the owner of Libby's, noting the forthcoming businesses and the Duveneck Square apartments, which are full of tenants. "I think when this (coronavirus) thing is over, Covington will continue to expand, and make it a better place for people to come and feel safe."
Wainscott said that downtown is diversifying in its offerings and people will return. "There are a lot of businesses down here that give people an opportunity to come to the city, and there are different types of small businesses that appear to everybody," he said. "I think, the virus right now, it's affected so many different people in different ways."
Jeanne Schroer, president and CEO of the Catalytic Fund, which has played an integral role in the acquisition of real estate for the purpose of residential development and business occupancy, is also optimistic that the fundamentals of the local economy will remain strong.
"The urban renaissance did not occur overnight and it will not go away overnight," she said. "The quality projects that were developed in the river cities over the last ten years or so came about because of the fact that the cities have excellent real estate fundamentals that aligned with a strong underlying demand for urban product. And this movement has been and continues to be supported by strong public private partnerships and the community at large.
"Past real estate crises were caused by imbalances in underlying demand versus supply as well as too much or too little capital availability. This is not the case today. Demand, supply and capital all seem to be in balance and once this health crisis passes, I would expect activity to restore."
But, Schroer said, she is concerned about some of the smaller, locally-owned businesses.
"It's one thing to build product but it's another thing to take the risk to start a business in an emerging market," she said. "I sincerely hope our local restaurants, bars, shops, and services can get the relief and support they need to weather this interruption because they are really the backbone of our urban renaissance."
The renaissance is darker now with so many lights off at night, and with a growing list of businesses asked to close.
There are no parties at Hotel Covington or Braxton Brewing Company, two early anchors of downtown Covington's burgeoning revival. At the Mutual Building, an historic former commercial property that housed its namesake insurance company, lights remain on in the upper floors where residents live. But downstairs, the Hannaford, a popular corner cocktail lounge, is shuttered. And on Wednesday, per order of the governor, its neighbor, Cutman Barbershop, also turned out the lights for now.
"It's scary in a way, the unknown," said Robin Jack, a barber at Cutman. "I feel like this will get a lot worse before it gets better. This is just the first part of a longer situation."
Jack said that his phone started to ring when the announcement came on Tuesday that barber shops would have to close, too, as part of the government's strategy to limit people's proximity to one another and to slow the quickly spreading respiratory virus.
He cut the hair of his last client just before locking the doors at 5 p.m. Wednesday.
Jack worries for Covington's nascent renaissance.
"It's gonna take a massive hit. The rejuvenation down here that's been going so well is going to take a step back," he said. "It's gonna be a ghost town again. Small businesses will close because of it.
"It couldn't have come at a worse time."
The suburban restaurants are obviously feeling the same direct impact. Longnecks Sports Grill shuttered its three locations in Wilder, Hebron, and Union, laying off more than one hundred employees.
"We have experienced hurricanes (Ike, in 2008, which had strong wind impacts in the Ohio Valley), a fire shut down our Wilder location for five months, we've been robbed," said CEO Eric Anthonissen. "We thought we saw it all and then comes the pandemic."
With its sports-oriented business model, Longnecks was already poised to take hit with the cancellation of major events like the NCAA Tournament. But on Sunday, when Ohio Governor Mike Dewine ordered the closure of restaurants and bars, limiting them to carryout and delivery only, Anthonissen knew that Kentucky would likely not be far behind.
He was right. Gov. Beshear made the same order the following day. He and his father, Gary Anthonissen, who owns the restaurants, determined that they could not make their financial numbers work through carryout alone, so they made the decision to lay off their entire staff and close all locations down.
"Fortunately, our finances are in order so well that we could sit this out but we hope it's just a two-week shutdown," Eric Anthonissen said. He estimates that the business has already lost roughly a quarter milion dollars. "We lost a lot from the moment they talked about getting rid of March Madness."
"We're just trying to make sure our staff is taken care of, to make sure everyone gets signed up for unemployment, which has been no easy task whatsoever," he said.
"My dad is sinking a lot of his own money paying bills around here to make sure it stays," Anthonissen said. They have been busy cancelling accounts, turning off DirectTV, and locking up. "If this goes on five months, Longnecks will be good. It won't be easy. We'll have a place for our staff to come back to, but we're clearly hoping it's just two weeks."
Weckman, owner of those four Mainstrasse restaurants, said that he still has faith in the community and that "we will come out of this together."
But serious worry remains.
"I'm hopeful that the guidance is there to allow all small businesses affected by this to emerge from this when it's over in the same relative position they were when this started," he said. "I know that is idealistic. We need to see massive steps taken at the state and federal level to help small businesses with cash flow, relief in rent, bills, loans, and providing for their employees."
Weckman believes that, "We need to get this to a spot where can freeze time right now where we can focus on this pandemic. We don't need to be fighting multiple wars all over the place.
"I don't know how that happens."
He knows that he wants to see money put directly in the hands of his furloughed employees.
"This pandemic will go away and all of our people will need to be in the position to emerge from this with hope and vigor and with optimism, and it would beat them down by not being able to pay their bills and to focus on debt collectors, and how they're going to put food on the table," Weckman said. "We'll have a broken spirit, too."
His optimism is bolstered by the very industry he and his family have built their lives in: hospitality.
"I know the people in this industry. We will come back from this. If there's a group of people in the world, it's the hospitality business and all the affiliated businesses,' Weckman said. "We all have the same grit that it's going to take, and the sun will come out again.
"I'd like my folks to be able to preserve their energy to come out swinging for the fences when this this is over and to not have any more lack of trust in their government and the systems that are supposed to be there not to be taken from us in times like this."
Written by Michael Monks, editor & publisher
Top photo: The Standard in Covington (RCN)