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Economist testifies to benefits of proximity ban challenged by food trucks

Heather Cobun//Daily Record Legal Affairs Writer//September 29, 2017

Economist testifies to benefits of proximity ban challenged by food trucks

By Heather Cobun

//Daily Record Legal Affairs Writer

//September 29, 2017

Anirban Basu speaks Friday at the Maryland Association of Counties annual meeting in Ocean City. (The Daily Record / Bryan P. Sears)
Anirban Basu (The Daily Record / Bryan P. Sears)

An economist took the witness stand Friday as Baltimore city’s sole witness to defend its proximity ban on mobile vendors and faced lengthy cross-examination from attorneys representing the food truck operators challenging the ordinance.

Anirban Basu, chairman and CEO of Sage Policy Group Inc. and an expert in applied economics, concluded the rule is beneficial to the city and its long-term economic development.

But plaintiffs’ attorney Robert Frommer challenged the basis for Basu’s conclusions and criticized his lack of empirical data to prove food trucks compete with restaurants or that similar regulations in other cities impacted restaurants.

The plaintiffs, Joey Vanoni of Pizza di Joey and Nikki McGowan of Mindgrub Cafe, testified Thursday that the so-called “300-foot rule” which prohibits them from operating within 300 feet of a restaurant selling the same or similar type of food makes it difficult to operate in large portions of the city’s commercial districts. They claim the rule is “unconstitutional economic protectionism” designed to benefit brick-and-mortar restaurants.

The has countered the rule is not arbitrary and was put in place with the valid goal of encouraging economic development by benefiting restaurants which pay property taxes and generate jobs.

Basu said restaurateurs must invest four times as much money as a food truck operator and commit to a location for years while food trucks can move if a neighborhood changes.

“Not only are they risking more capital, they’re making a bigger bet on the city of Baltimore,” he said.

If the city’s goal is to maximize commercial activity and investment, Basu said it is logical to encourage restaurants to occupy commercial space and prevent food trucks from “siphoning business” away. If potential investors are concerned a competing food truck can park outside its doors, they might not want to start a business in Baltimore, he added.

Because of the lower operating expenses of a food truck, their owners are able to undercut the prices of restaurants, according to Basu, but competing restaurants face similar costs to operate.

But Baltimore City Circuit Judge Karen C. Friedman pointed out food trucks are typically only operating during weekday lunch hours while a restaurant can be open for lunch and dinner and on weekends. Basu said food trucks steal traffic from restaurants during one of their busiest times and have a “free ride” based on the reputation of the restaurants that drew the initial traffic.

“To me, that is not a satisfactory outcome and that is unfair competition,” he said.

Frommer, of the Institute for Justice, questioned Basu’s underlying research, which involved reviewing websites about food truck and restaurant businesses as well as news articles about regulations in other cities but failed to cite to any data analysis.

Basu admitted he did not look into what makes restaurants fail, the number of food truck licenses issued in the city nor the growth rate of brick-and-mortar businesses. He also did not conduct a prospective analysis of the rule’s effect.

Basu said he did not conduct any data analysis because he even for questions where data would be available, the undertaking would have been time-consuming and costly.

Frommer also indicated that some of the news articles Basu cited in his report about regulations in other cities did not reflect the current laws in those cities. Basu replied he was looking for quick sources to show other jurisdictions had seen fit to implement a proximity ban and did not look for the underlying legislation.

The parties delivered their closing arguments Friday afternoon and will submit proposed findings of fact and conclusions of law, after which Friedman will rule.

The case is Pizza di Joey LLC et al. v. Mayor and City Council of Baltimore, 24C16002852.

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