Liberty Elm, One Year Later*

In 2009, the Daily Dose reported that Providence diner The Liberty Elm was in trouble. Local media had announced at the time that Liberty Elm was one of 1200 Rhode Island businesses facing closure over a sales tax issue. Elm owners and staff appealed for help, including advanced purchases of gift certificates, and I remember having to wait in a line of cash-clutching Elm lovers to get mine. Rather than giving up, the Elm got to work on some serious fundraising, publicity, and responsible arrangements to pay the money owed in installments. In February 2010, the Elm won the distinction of being added to the National Register of Historic Places. A few weeks later, after the Food Network’s Guy Fieri filmed an episode of “Diners, Drive-Ins and Dives” at the Elm, Elm owners and staff threw a kick-ass viewing party at now-gone venue Everyman, with fun live sets by Mark Cutler and Friends, The Killdevils and Lucky 57. These events, and an outpouring of support, should have made it easy as a slice of the Elm’s hot apple pie to turn things around, right? Not quite, says Liberty Elm owner Carol DeFeciani. She offered the Dose an exclusive scoop on how the Elm is doing today–and what the past two years have been like.

First of all, the media attention on the Elm’s situation in July 2009 generated in some pretty negative publicity for the diner. Readers of other news outlets — I like to think readers of the Daily Dose were not involved in this — expended energy calling and sending hate mail to Carol, calling her a “cheat” and “stupid” as well as accusing her of “stealing.” Carol acknowledges the diner’s mistakes at the time but contends that it was never the diner’s intention to not pay the tax. She is proud to this day of being able to save 10-12 jobs for Rhode Islanders – and extra props to her for doing so during a recession where much larger and seemingly more stable organizations were laying off workers. Carol contends that if the diner chose to lay off workers to pay its taxes, the State of Rhode Island would have paid an even larger amount in unemployment than she owed, all at a time when the state was already borrowing from the federal government to meet its unemployment obligations.

Second, the Liberty Elm paid dearly for the tax arrears. Carol informs me there were steep financial penalties and an exorbitant interest rate that continued to accrue during the duration of the payback period. It’s no secret that Rhode Island has a horrible business climate. A recent CNBC study ranked RI dead last in the nation for business friendliness. A frustrated Carol states, “All I can say is, walk a mile in my shoes and try to open, run and make a profit with a new business in Rhode Island.” She feels that the City of Providence compounds the problem. Her commercial property tax rate being raised once again, this time by Mayor Taveras, and she is being charged more in tangible taxes on the contents inside the diner, including original stools and countertop that have been part of the diner since 1947 — six decades before Carol bought, renovated, and opened the Liberty Elm. Carol is also taxed on what she calls the Elm’s “mish-mash of used furniture, some of which were donations, and the rest purchased from places like Salvation Army or yard sales.” She concludes, “There’s a reason why no jobs are being created here and small businesses can’t survive…I have had many people tell me to put the diner on a trailer and move it to North Carolina (or even just over the border to MA).” We’ve heard similar stories from business owners before. As sound as it was, I’m glad Carol didn’t take her friends’ advice to heart.

Last month, the Liberty Elm finished paying off every cent of back taxes to the State of Rhode Island, which totaled $25,000 including accrued interest and penalties. The Elm’s owners and staff worked extremely hard to accomplish this during a difficult economic time and under constant threat of closure from the state. I hope, when they handed over the last payment of about $7,500 on June 30, 2011, they took a moment to celebrate.

Looking back at the chain of events, Carol appears satisfied with the Elm’s current state, reporting:

“As we approach our fifth year in business, we are very close to the break-even point. New restaurants generally take five years to become profitable so, given the horrible economy we’ve experienced since opening in 2007, it’s sort of a miracle we’re still here.

I want to say that it isn’t due only to my hard work. Tink has held down the ship incredibly, and the dedicated staff have all done over and above what was required of them to keep us going. It was a group effort and, let’s not forget that the community supported us throughout. Without the combined effort of everyone (not to mention the appearance on Diners, Drive-Ins & Dives), we would’ve been gone long ago.”

On Sunday, the Liberty Elm was hopping. The “fresh daily” case pictured above was filled with intriguing-sounding goodies like peppermint chocolate chip muffins and orange chocolate chip cookies. Oranges transformed into fresh juice while drink-umbrella-topped dishes flew from the kitchen. Every seat and stool was taken, and a wait list was mandatory. Tourists who’d watched a re-airing of the Elm’s episode of “Diners, Drive-Ins and Dives” on Friday night joined the crowd of locals in tasting farm-fresh fare.

Although the hate messages, threats of closure, and a second break-in in December 2010 might be fresh in their minds, I think Carol and the staff are looking ahead to the future. And I hope it’s just like the present: full of sweet potato pancakes and greetings of “top o’ the morning!” against a backdrop of local artwork on the walls.

*Author’s correction: The title should have been, “Liberty Elm, Two Years Later.”