Removing the Regulatory Roadblocks
Removing the Regulatory Roadblocks
By Scott Bushnell
Originally published in August, 2006; Vol. 24, No. 8; Innkeeping Magazine, Professional Association of Innkeepers International
Back in the mid-90’s when Marilyn and I bought The Lafayette Inn in Easton, PA., the inn was categorized as a Boarding House (there was no B & B category then) in our residentially-zoned neighborhood. We were allowed to offer coffee and a pastry, and only if requested by the guest! We fudged a little and offered a continental breakfast, but often wondered if we were the only bed and breakfast inn in the country that was really only a bed inn…no breakfast. When we started to develop our five year exit strategy, we recognized this shortcoming as a roadblock, or at least a speed bump, in the sales process of our inn and opted to make the change.
We applied for a variance to the newly-designated B & B category. The hearing was scheduled, and, as required by law, all neighbors within 100 feet of our property lines were sent the notice and offered the opportunity to support, or fight, the variance request. Little did we know, a grumpy neighbor took the city’s notice and typed his own comments on the bottom of the page, made scores of copies, and passed them out to the entire neighborhood. He claimed property values would drop, rats would abound, and there would be parking problems on our already congested streets. Wow!...all these problems because we wanted to serve quiche instead of donuts to our guests?
The grumpy neighbor’s plan backfired. Dozens of neighbors showed up, alright, but in favor of The Lafayette Inn’s request for breakfast privileges. To this day, I come to tears when I remember the dozens of friends and neighbors that showed up to support our effort and to protest the use of the city letterhead, with the grump’s personal comments at the bottom. We unanimously received the zoning board’s approval, and, after the grump appealed to the courts, we again received approval. He had 30 days to appeal again, but didn’t. The Lafayette Inn was allowed to finally offer a full breakfast, and catering privileges, and one of the roadblocks to our ultimate sale was removed.
Why tell our personal story? It took over a year to get through the legal process to make it easier to sell our inn…a sale that was still YEARS away. My advice is to begin the process of removing ALL of these potential regulatory speed bumps and roadblocks that could delay or even trash getting to settlement.
There could be a number of concerns to rectify to ensure a smooth ride during the due diligence process once a buyer has been found. Here is a handy checklist to prompt your investigation into the wide variety of regulatory details. This checklist can be used by buyers as well as sellers:
Zoning Compliance and Issues:
Current zoning status:__________________________________________
Current variances (are they grandfathered upon sale? _________________ ____________________________________________________________
Check with the Department of Public Works to see if sidewalk, curbs, or dead trees along the street are at issue. ____________________________
Health Codes and Requirements:
Restaurant: __________________________________________________
Kitchen (Commercial/NSF requirements met?): _____________________
ServSafe (National Restaurant Association’s training program) certificates posted? _______________________________________________________
Spa: _______________________________________________________
Hot tub: ____________________________________________________
Environmental Concerns:
Underground Tanks? _________________________________________________
Radon? ___________________________________________________________
Wetlands Restrictions? ________________________________________________
Asbestos? _________________________________________________________
Fire Codes and Regulations:
Egress Alternatives? _____________Fire-rated doors?________________
Sprinklers: __________________________________________________
Exit Lights
Common areas _________________________________________
Guest rooms ___________________________________________
Fire extinguishers
Each floor?_________ Kitchen? _________Utility room?_______
Smoke detectors? ______________ Guest rooms? _____________
Alarms tied to alarm service/fire department? _________________
Licenses/Taxes:
Local lodging tax liabilities? ____________________________________
Local occupancy permit on hand? __________________________
State sales tax liabilities? _______________________________________
State occupancy permit on hand? __________________________
Alcohol license/taxes up to date? _________________________________
Americans with Disabilities Act (ADA):
Guest room accessible? ________________________________________
Ramps, parking accessible? _____________________________________
Curb cuts, sidewalks OK? ______________________________________
Previous ADA complaints filed? _________________________________
Historical/Preservation Requirement_______________________________
Local/Neighborhood Covenants___________________________________
Your personal relationships with the local officials will help immeasurably as you inquire with each department for advice or approvals. It is suggested to ask for their help and advice in a non-confrontational manner. Each inspector often has those priorities within the codes which are more meaningful to him and it can be a relationship of give and take as you discuss alternatives to meet those important requirements.
Back to our story…Upon approval by the zoning board and court, we took our proposed commercial kitchen plans, with equipment cut sheets to show NSF, samples of finishes like the counter-tops and tile, electrical blueprint, and sat in one meeting with the building inspector, fire chief, and health inspector. We got advice as they reviewed the plans, and, at no additional modification costs to us, were able to amend the plans to fit their needs. Since we were looking for a small under-counter freezer, and had trouble finding a commercial one, the health inspector gave us approval to install a residential one as long as we hung a thermometer in it. After installation, the three departmental officials walked in for inspection, saw the kitchen was installed as planned, signed off without incident, and had a cup of coffee while we Monday-morning-quarterbacked the Super Bowl. When we sold, getting approvals for the buyers from all the same officials was a simple manner, such as ensuring the new owners were ServSafe certified.
Regulatory concerns are headaches, for sure, as they usually take time and money to resolve. But removing these speed bumps and roadblocks long before the due diligence work begins will make the journey much smoother and direct.
(Copyright, Scott Bushnell, 2006, All Rights Reserved)