Boston Mayor Michelle Wu issued a report in October that envisions a “thriving downtown where current and new residents, workers, and visitors can come together to live, work, and play in new and exciting ways.” Wu said “we really need to mix things up downtown” and outlined in the report an ambitious and much-needed plan to provide subsidies, broaden restrictive zoning definitions, and market all that Boston has to offer.
Another idea not covered by the report would measurably improve the economic vitality of downtown Boston for new entrepreneurs and existing businesses: The city should get out of the way.
Excessive regulation in Massachusetts has reached a tipping point where state and local government red tape has created barriers to entry that hinder innovation and unfairly discriminate against entrepreneurs who cannot afford an army of lawyers and lobbyists to open for business.
Consider the example of restaurants in the city of Boston:\
▪ It takes up to 92 regulatory steps, 22 forms, and 14 city agencies within an average span of 260 days, at an average cost in city fees of $5,554, to open a restaurant in Boston.
▪ City agencies regulate far beyond basic public safety interests, like food, fire, and alcohol. Today, if a restaurant owner wants a pool table, they need permission from the government. Want a TV for customers to watch the Patriots or Bruins game? Better hope the government official responsible for entertainment licenses agrees.
▪ Agencies regulate the specific model of equipment in the kitchen and determine hours of operation. One Boston restauranteur described the licensing process as causing “confusion, fear, loss of inspiration, and frustration” for owners.
There is a better way.
Instead of a stifling tangle of red tape for new or expanding businesses in downtown Boston, the city has the opportunity to experiment with a bold approach to encourage free enterprise and set an example for other cities. Just as the Legislature introduced the statutory concept of “comprehensive permits” to speed construction of affordable housing, Boston could create a new administrative approach for “comprehensive commercial permits” to consolidate, simplify, and accelerate the local permitting process.
Here’s how it would work: Boston could create a pilot project to adopt an administrative overlay district for its downtown that creates an alternative for new and expanding businesses based on risk management rather than regulation. For example, restaurant owners who prefer to endure the existing arduous path to opening their doors of course could continue to apply as before. But restauranteurs could elect an alternative path of administrative review that boils down all required permitting to three areas: fire safety, food safety, and alcohol safety. All other areas currently covered by regulation and permit would be replaced by one comprehensive requirement for liability insurance including coverage for noise nuisance.
Instead of applying for multiple permits beyond fire, food, and alcohol safety — for pool tables, televisions, and the like — entrepreneurs would merely need to provide proof of adequate liability insurance. If a business is a good risk, liability insurance can be purchased at a reasonable price. If a business is seen by insurance companies as a moderate risk — for example, if a TV falls off the wall and hits a patron, and there would be a claim for any harm resulting from the incident — insurance will be attainable at a higher cost. And businesses that are a poor risk will be unable to procure insurance and will face instead the regulatory hurdles that now confront all businesses in Boston. The risk-based alternative to regulation would create incentives for owners to maintain well-run and responsible venues and provide an accessible path for entrepreneurship that does not discriminate against underrepresented owners.
Dining is the backbone of the city’s nightlife and our chefs deserve better. Replacing regulations with risk management to encourage free enterprise is worth a try. If we do, downtown Boston could really get cooking.
Dan Winslow is the president of the New England Legal Foundation. Will Sampson is a research assistant at the New England Legal Foundation and a student at the College of the Holy Cross.