Town proposes buying out Norcross to close down Hornets
Nest
Posted September
10, 2012
A report on tonight's council agenda is recommending council approve a
revision to the food and beverage operating contract that would pay
Councillor Richard Norcross $50,000 plus interest to buy-out the
exclusive rights he holds on alcohol sales at the New Tecumseth
Recreation Centre (NTRC).
This would include closing down the Hornets Nest Bar and Grill he
operates on the second floor. However, Mr. Norcross would continue to
hold the concession and vending rights inside the facility, in exchange
for paying the Town 10 per cent of gross sales as rent considerations.
The terms run for two five year renewal periods. Additionally, the Town
would include funds in the 2013 budget to add equipment in the
concession booth to expand the menu including burger sales.
The $50,000 plus interest payments, to be paid out in five annual
installments beginning in June 2013 is to "purchase the rights to the
Restaurant currently included in the Lease Agreement for the remaining
two additional five year terms," according to the report signed by
CAO/in house counsel Terri Caron; parks and recreation manager Ray
Osmond; and manager of finance Mark Sirr.
That space would then "be used for other revenue generating purposes
including as a community room, banquet hall, special events,
programming space etc.; That the Town offer catering licences to
qualified businesses holding the necessary qualifications to operate
the professional kitchen equipment in the facility should members of
the public wish to engage a professional caterer for an event; and That
the facility also be available for events that do not require the use
of the professional kitchen equipment including such functions as Jack
and Jills, birthday parties etc where the permit holder supplies the
food and beverages in the manner they wish."
Closing the restaurant component is an unexpected development that has
not been discussed at the council table, or at least not in a public
forum. It was not a topic broached during the 2012 budget deliberations
last winter. However, if the recommendation is approved, it would
eliminate one of the key issues opponents of closing Alliston Memorial
Arena have stated as a reason why it needs to remain open. And that was
the exclusive rights Mr. Norcross holds on liquor sales at the NTRC.
The report to council notes that the the Advisory Services division of
the Town's audit firm Grant Thornton was engaged for a valuation of the
Hornet's Nest Restaurant and determined "the en bloc fair market value
of the operations of the Tenant as at April 30, 2012 to be
approximately $120,000 to $150,000 at the Valuation Date using the
debt-free capitalized cash flow approach."
The report suggests the revised lease will better meet the changing
conditions at the NTRC, particularly since the fitness centre has taken
over the community room space, which has not been replaced.
According to the report:
Staff are of the opinion that the facility does not require
a restaurant service to be included as a component of the facility and
believe that there are more opportunities to meet the needs of the
public and user groups as well as generate additional revenue in the
facility if the restaurant space is reallocated as proposed.
The restaurant space can be used to accommodate a number of
different needs including the functions of a community room, banquet
hall, special events, programming space etc.
Community groups, members of the public, user groups etc
will not be restricted in the provision of bar services and can make
whatever catering and special occasion permit arrangements that best
suit their needs and purposes.
The Town can continue to introduce new uses in the facility
in the reclaimed space to further cross programming and maximization of
revenue objectives.
"Circumstances have changed significantly in the five years that have
passed since the original Lease Agreement was approved. The operations
of the NTRC are currently in a state of transition from primarily a
hockey and soccer facility to an expanding multi-use facility that
demands additional space for programming and community uses. The use of
available space within the NTRC must be re-examined and where
appropriate space must be redesignated for more appropriate uses to
maximize the potential use and revenue generation of the facility,"
according to the report.
"In addition, the current restriction in the existing Lease Agreement
granting the Tenant the exclusive right to provide restaurant and
concession services in the NTRC, and specifically the exclusive right
to provide bar services for all licenced functions in the facility
(with the exception of 5 special occasion permit functions to be
identified annually by the Town) as well as catering services in the
NTRC, has become problematic and is restricting the Town's flexibility
in accommodating the needs of its user groups and public generally."
