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Report regarding the expiration of Urgency Ordinance 1603-2020 temporarily capping commissions charged by third-party delivery and pick-up service platforms. (Katie Donner, Management Analyst I)
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RECOMMENDATION
Recommendation
Staff recommends that City Council receive a presentation and provide direction on potential options for legislation replacing Urgency Ordinance 1603-2020, which expires on August 27, 2023. Enacted during the COVID-19 pandemic, Urgency Ordinance 1603-2020 placed a temporary cap on commissions charged by third-party delivery and pick-up service platforms for restaurants. Options for Council to consider include:
1. Creating a tiered fee model for third-party delivery and pick-up service platforms that allows businesses to opt in for additional services offered, such as marketing or guaranteed customers or
2. Allowing the Urgency Ordinance to expire on August 27, 2023 and remove any further temporary restrictions on third-party commissions charged to local businesses.
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BACKGROUND
On August 26, 2020, City Council approved Urgency Ordinance 1603-2020 (Attachment 1) establishing a temporary cap on commissions charged by third-party food delivery and pick-up services affecting local restaurants during the COVID-19 pandemic. The ordinance placed a temporary cap on delivery service fees at fifteen percent (15%) and pick-up services at ten percent (10%) per order. The Urgency Ordinance will expire on August 27, 2023, 180 days after the City Council ended the local state of emergency.
Section 4 of the Urgency Ordinance states that Council shall review the ordinance prior to its expiration and determine if the extension of its provisions is necessary. On February 22, 2023, City Council discussed the expiration of the Urgency Ordinance and asked staff to engage the restaurant business community to get a sense of how the restaurants are still using third-party applications three years later, if there is appetite for a permanent c...
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