With the lease for the Minnehaha Bay restaurant facility set to expire in a couple of months, the town will be renewing at a loss for another five-year term after a split decision and much debate.
A special meeting of council was called by Mayor Joanne Savage on Tuesday, July 30, to address the lease currently held by a franchisee of Twigg’s Coffee Roasters. The owner of the Twigg’s franchise, according to the mayor, is looking for a new franchisee and requires the lease agreement terms in order to finalize any negotiations. A memorandum from Stephan Poulin, Director Economic Development and Community Services, revealed that the current lease agreement runs out October 31, that the annual rent was $20K a year, equating to $7.13 per square foot, and it is a “gross lease” – including heat, hydro, snow removal, repairs and maintenance all paid by the town. Cost recovery for the location was estimated at $34,000 a year, leaving an annual loss of $14K assumed by taxpayers.
The Twiggs franchise was requesting a further 10-year lease under the same terms and conditions. As a comparison, Poulin added that market rent in Sturgeon Falls is $13-$16 per square foot for similar commercial space, and they were negotiating to bring Twiggs to a lease rate of $12 per square foot, recommending council approve those terms for a five-year lease, renewable for a further 5 years.
Mayor Savage revealed that Twigg’s franchiser Ms. Twigg contacted her personally, appealing for more favourable terms. “The reason I called a special meeting is that it’s time sensitive… Twiggs has someone interested in taking over the operation… They need to estimate what their lease would be for financing – the sooner this is done to make sure we don’t lose a franchisee.” She added that the proposed increase from $7.13 to $12/sq.ft. would represent a 70% increase and potentially put the business at risk.
Alisa Craddock, Director of Corporate Services, clarified that the $14K loss was just for utilities and billable expenses, and did not take into account other in-kind services. “We cover all the building expenses, utilities, maintenance… Our public Works do the plowing and maintenance… We clean lightbulbs and fans – the whole 9 yards.”
Mayor Savage and Coun. Denis Senecal suggested that the increase should be phased in over the next five years, with Senecal saying, “Give them a chance to start up the business… Last time we had a hard time finding a tenant.”
Coun. Norm Roberge at first opposed the suggestion, saying “Personally I find the municipality shouldn’t provide a building at below cost to a commercial venture where there’s 6 or 7 other similar operations in town that pay commercial tax; we’re creating an unfair business proposal… The municipality absorbs all the maintenance cost… $12 is the low end of the average rate in the community… cannot support anything under the $12.” Councillors Chris Fisher, Dan Roveda and Rolly Larabie agreed with that position. “This council has been preaching we don’t want to give unfair competitive edge… here we’re going to subsidize a business,” deplored Roveda.