Ithaca, N.Y. — Danny Doyle gets a bill from New York State for $1,000 every January, just when cash flow at his restaurant the Fine Line Bistro is at its lowest.
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Doyle is not happy about paying the tax, but he’s done so for years knowing that the other restaurants in Ithaca have a similar relationship with the government.
That last part, however, is no longer true. In December, a new farm-to-bistro restaurant called Coltivare opened on South Cayuga Street. Though operated as a private LLC, the physical space of Coltivare is owned by the TC3 Foundation, which is a non-profit and exempt from some taxes.
More importantly, at least from Doyle’s perspective: Coltivare is not only exempt from taxes, but also the beneficiary of a $2.3 million grant from New York State.
That means Doyle is sending a big chunk of his income to the state, then watching the state turn around and fund a business fighting for the same market he is.
“It’s unbelievable,” Doyle says of the millions in government funding being directed to Coltivare. “That’s five years’ worth of my net growth.”
Some Ithaca restaurant owners, including the owner of the Boatyard Grill, think the state money for Coltivare will improve the overall culinary capacity of the area.
Others aren’t so optimistic.
“It’s not a level playing field when an operation like this is getting millions of dollars from the state and getting extra resources,” Doyle says.
Doyle ticked off the list of fees he pays the state — like the future unemployment tax assessment (that’s the one in January) and workers’ compensation — on top of sales tax and federal income tax and school district taxes.
“It’s frustrating that the state is providing (Coltivare) with so much money when the small restaurant doesn’t get much kickback at all,” he said.
2 — Coltivare: We are here to help, not hurt, Ithaca restaurants
Coltivare opened to much fanfare in December. There was a grand opening, celebrated by the Tompkins County Chamber of Commerce and attended by prominent city officials.
There’s good reason for the excitement, says Coltivare Director Denis Boucher, just as there’s good reason for the state to put millions of dollars in the restaurant.
Coltivare is part-business, part-educational training facility for Tompkins Cortland Community College students going into the food service and other industries.
As such, it will be training a new class of highly skilled restaurant workers for the Ithaca market — a supply sorely lacking locally, according to Boucher. The idea is that a better supply of workers will eventually prove to the benefit of restaurant owners across Tompkins County, not just for Coltivare.
“We are training the future culinarians for the area,” Boucher said.
The state grant, however, is not for educational purposes but for job creation. (Coltivare showed the state it would create about 50 jobs for the area and has done so, according to Boucher.) Boucher explained that the state grant will help turn Coltivare into a reality, which will in turn provide long-term benefits for the region.
“We need a viable restaurant for our students to practice in, which will in turn give the community more qualified labor for their needs,” he said.
Boucher said that meetings with Wegmans staff, the owner of AGAVA and Collegetown Bagels, and other restaurant owners demonstrated to TC3 that there was a need an improved labor supply for local restaurant workers.
Boucher acknowledged that restaurant owners like Doyle might be frustrated by Coltivare, which also received $2 million from a private donor and aims to seat 110 people.
“Yes, we are in competition with other restaurants, but at the same time we are training these culinarians,” Boucher said, “so in the short term it’s one thing, but in the long term we’re training people for their restaurants — we really have to look at the long term effect of what this is going to be for the area.”
3 — Explaining the structure of Coltivare
The business structure of Coltivare is atypical and complicated.
As Boucher explained, the restaurant is run as a for-profit operation. However, that for-profit operation is run out of the TC3 Foundation, which is a non-profit.
In more practical terms, this means that Coltivare’s inventory and space — “everything you see,” Boucher says — is owned by the TC3 Foundation. “We didn’t pay taxes on the actual equipment and furniture,” Boucher says.
Still, because it’s run as a for-profit, Coltivare’s daily operations are taxed as any LLC would be, according to Boucher.
“The products that are used in day-to-day business — the food, the beverages — are taxed much the same way any business would be,” Boucher says.
A further complication: Even though the restaurant is run to make money, profits are not paid out to the people who run the restaurant. Any profits would go to the foundation, which in turn would then decide on how to use the money (which may or may not be related to Coltivare).
4 — What do restaurant owners think?
The Ithaca Voice interviewed over a dozen Ithaca restaurant owners for this story. The vast majority said they did not want to speak on record, citing an array of reasons, particularly fear of bringing negative attention to their businesses.
Those who were willing to be quoted had mixed reactions: A few said they didn’t know enough to form an opinion either way; some spoke positively about Coltivare; others still agreed with Doyle, of Fine Line Bistro, that the state money was unfair.
“I don’t like it at all,” said Mike Brainard, owner of Rogan’s Corner near Ithaca College, who added that he will keep an open mind as Coltivare moves forward.
“There’s no private owner who could come in here and open that beautiful restaurant … and compete against those privately owned restaurants. It’s just awful.”
The owner of one Ithaca restaurant similar in size and offerings to Coltivare would only speak on the condition of anonymity.
“I put thousands of dollars of my money into my restaurant for all these years,” he said. “I’m the owner, I choose to do that — there were no tax breaks for me. Let’s make this an even playing field for everybody.”
At least two business owners, however, spoke positively of the potential impact of Coltivare.
“Obviously, every business wishes they got” millions in state funding, said Matthew Diamond, owner of Gorgers Subs and the Gorgers Taco Shack.
Ultimately, however, the injection of state money could “make things better for everybody,” Diamond said.
Similarly, Mark Campagnolo, owner of Ciao! and The Boatyard Grill, was a TC3 student “back in the cave days.” A proponent of the Coltivare project, Campagnolo says he wishes there was a program when he was just starting out similar to what Coltivare promises to create.
“There’s not many places in town where students can learn in a real-world environment and make a credit to their careers that way,” Campagnolo said. “Attracting good people in the area is very hard … what they have down there is really exceptional.”
Campagnolo says it’s understandable that some Ithaca restaurant owners would be upset about the funding for Coltivare, but thinks they’re missing “the big picture.”
“I can understand what they’re saying: Yeah, there’s more competition and all that,” he says. “But anybody who does a really good job will keep their own customers. I think there’s business to go around for everybody.”