The City of Peterborough is weighing a considerable modification to its downtown patio program, a scheme that has provided businesses the opportunity to extend their outdoor seating onto municipal property. The proposed change revolves around an increase in the required liability insurance coverage for these establishments. Initiated during the pandemic, this program has proved advantageous for local businesses, allowing them to utilize sidewalks and parking spaces for additional seating.
Current Program and Proposed Changes
The downtown patio program, which was a lifeline during the pandemic, has enabled downtown Peterborough businesses to significantly increase their customer capacity by expanding seating areas onto city-owned property. Currently, the program requires participating businesses, especially those serving alcohol, to provide proof of $2 million in general liability insurance coverage along with a $300 patio license fee. However, city staff have proposed a new recommendation aimed at increasing this liability insurance requirement to $5 million for those businesses serving alcohol. This recommendation has been submitted for review by the city council, which, in the previous year, had rejected a similar proposal due to concerns about its potential impact on smaller businesses and those that do not serve alcohol.
Council’s Previous Decision and Concerns
Last year, Peterborough’s city council made the decision to vote against increasing the liability insurance coverage to $5 million for all businesses seeking patio licenses, a move driven by the potential detrimental effects on smaller patios and businesses that do not serve alcohol. The council’s concerns were strongly supported by the Peterborough Downtown Business Improvement Area (DBIA), which emphasized that many smaller businesses would find it challenging to meet the higher insurance requirement. Consequently, following this decision, city staff were directed to explore a “tiered approach” that could better accommodate different types of patios.
In response, city staff have returned with a comprehensive report presenting three distinct options for the upcoming 2025 season. These options offer varying insurance coverage and permit fee structures, ensuring a balanced consideration of businesses’ diverse needs.
Option 1: Maintaining the Status Quo
The first option on the table suggests maintaining the current insurance requirement of $2 million for all businesses while increasing the patio permit fee to $400, an increment of $100 from the existing fee. While this option would likely present a more straightforward and administratively simple framework, supporting downtown business growth and potentially attracting investment, tourism, and culture, it carries certain risks. Specifically, should there be any claims against the municipality that exceed the $2 million insurance limit, the municipality would bear the financial costs involved.
Despite the increased risk, this option has the advantage of being easy to administer. It does not deter businesses from participating in the downtown patio program, especially those smaller operations which might struggle with a higher insurance requirement. Thus, it ensures the continuity of the business-friendly environment in downtown Peterborough while addressing logistical issues in the short term.
Option 2: Staff Recommendation
City staff have recommended the second option, which outlines a more balanced approach by increasing the liability insurance requirement to $5 million for alcohol-serving businesses while keeping it at the current $2 million for unlicensed ones. The patio permit fee under this plan would be set at $400. This recommendation seeks to equate risk management considerations with the social benefits derived from the patio program. By raising the insurance requirement for establishments serving alcohol, the city aims to address the increased risk associated with the consumption of alcohol on city-owned property.
However, this option might have some implications for alcohol-serving businesses as it could potentially deter a section of them from participating due to the heightened insurance requirement. According to the report, of the alcohol-serving businesses holding patio permits in 2024, only three would meet the proposed $5 million insurance minimum. Consequently, the reduced participation could impact the vibrancy and social benefits that come from a bustling downtown area, contributing to a greater sense of safety and community for both visitors and residents.
Option 3: Tiered Fees and Insurance
The third option proposes a more complex and nuanced structure, with different insurance requirements akin to the second option but introducing varying permit fees based on the size of the patio. Specifically, it suggests that smaller, bistro-style patios featuring one or two tables with four seats each would incur a fee of $300. In contrast, larger patios would be subject to a higher fee of $500. While this approach seeks to balance the interests of both small and large businesses, it would require a significant amount of staff resources to operate effectively.
The introduction of a tiered fee system based on patio size adds a layer of complexity to the process, potentially leading to confusion among applicants. Additional staff resources would be needed to determine the appropriate permit costs and insurance requirements on a case-by-case basis. This could also result in delayed permit approval processes if the applications submitted contained any errors. Despite these challenges, this option is fairer to businesses of varying sizes, as it adjusts costs more equitably in accordance with each business’s scale and potential revenue from the patio expansions.
Implications and Future Considerations
Implementing the recommended plan that city staff have put forward—increasing insurance for licensed businesses to $5 million while keeping it at $2 million for unlicensed ones—could offer a balanced approach. Such a move addresses the need for more stringent risk management given the higher risks associated with serving alcohol on city-owned lands, and simultaneously considers the social benefits derived from the downtown patio program. Still, the report underscores the inherent risks the city would assume by not opting for a universal $5 million insurance requirement. In such cases where claims exceed the $2 million coverage, the municipality would bear the financial costs involved.
In addition to these considerations, the report highlights that the number of patio permits issued in 2024 was impacted by downtown road construction. Road resurfacing work is planned for 2025 along Hunter Street West and the café district between George and Aylmer streets, necessitating lane closures to support the patio program and increase pedestrian space. Staff commitment to reopening lanes and ensuring business compliance and success post-construction remains essential.
Next Steps
The City of Peterborough is considering a significant alteration to its downtown patio program, a scheme that has enabled businesses to expand their outdoor seating onto public land. The main proposed change involves an increase in the necessary liability insurance coverage for these businesses. This program was started during the pandemic and has been beneficial for local businesses, allowing them to use sidewalks and parking spaces for additional seating, thereby attracting more customers and providing a safer outdoor dining experience. The program’s success has been evident, but the city feels the need to enhance its regulations to ensure greater protection for all parties involved. These modifications aim to balance the interests of businesses and municipal concerns, maintaining the program while adding measures that safeguard public property and the city itself from potential liabilities. These changes could have a significant impact on how businesses operate their outdoor spaces, potentially affecting their insurance costs and operational logistics.
