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2007-02-26_Supplemental Agenda Packet--Dossier de l'ordre du jour supplémentaire City of Saint John Common Council Meeting Monday, February 26, 2007 Location: Common Council Chamber Supplemental Agenda 13.1 Termination of Lease of City Arena for Summer Ice Programs City of Saint John Seance du conseil communal Le lundi 26 fevrier, 2007 Emplacement: Salle du conseil communal L'ordre du jour supplementaire 13.1 Resiliation du bail de location de I'arena municipal aux fins de programmes d'ete presentes a la patinoire. ITEM 1.1 REVISED RECOMMENDATION That the City: 1. terminate its arrangement with Pro Co Hockey Inc. for ice time and space because of non-payment by the Company for ice time and space at the Hilton Belyea Arena for the period of July-August 2006; 2. the Company be advised that ice time and space in any City arena is no longer available to it; 3. the City re-enter at the last rink used by the Company; 4. the City commence action against the Company to recover all monies owed from the Company to the City. REPORT TO COMMON COUNCIL February 15, 2007 \ ~' M & C 2007 His Worship Mayor Norm McFarlane And Members of Common Council: The City of Saint John y our Worship and Councillors: SUBJECT: Termination of Lease of City Arena for Summer Ice Pro2rams BACKGROUND Over the past 20 years, the City of Saint John has provided Summer/Fall Ice Programs at the Hurley Arena initially through a partnership arrangement and since 1999 through a contract. There is considerable community demand for this service. In the fall of 1999 the City, for the first time, issued a public proposal call to seek interest from potential partners on this business opportunity. The proposal requested that responders indicate the term desired, and suggested that the City would consider up to a five year term. Only one proposal was received. Yerxa Sports Clinics Inc. submitted a proposal for a five year term. The proposal was for the lease of the Stewart Hurley arena for the July - October period for the years 2000 through 2004 inclusive. This contract expired on October 15, 2004. The City once again called for proposals and received two submissions. Staff recommended the contract be awarded to Pro Co Hockey Inc. for a term of five (5) years. Through this agreement, the City was to receive $385,000 over a five year lease period. The agreement provided for increasing revenue each year from 2005 to 2009. This was an increase in revenue of$63,500 more than the previous operator for the same time period. Staff recommended that the City of Saint John enter into an agreement with Pro Co Hockey Inc. for lease of a City arena to provide summer ice programs for a period of five years commencing in 2005. However, in 2006 Pro Co Hockey Inc. has an outstanding balance owing the City $24,600. Mr. Savoy, Pro Co Hockey Inc., had indicated there were a number of issues with the City that led him this situation. All issues that were raised were addressed in a timely manner but Mr. Savoy refuses to accept the resolution. Staff has met with Mr. Savoy on a number of occasions to remedy the situation but have not made any progress. A letter was sent from the City Manager requesting payment of the outstanding balance. There was no response. On February 13, 2007, staff and the City manager met with Mr. Savoy and informed him that staff would be recommending cancellation of his license. At this time Mr. Savoy is not prepared to pay the outstanding balance and it is recommended that the agreement with PRO CO Hockey be terminated for non payment of rent. FINANCIAL During the first year of operations, 2005, Pro Co Hockey Inc. met all of its obligations to the City and paid the agreed amount of $71,000. However, midway through this past season, Pro Co Hockey Inc. got behind with its schedule of payments and as a result, owes $24,600 which represents non payment for part of July and all of August. Payments were structured in the contract as follows: June 15 June 30 July 15 July 31 August 15 August 31 Total for 2007 Amt paid Amount Past Due $10,000 $16,000 $10,000 $16,000 $10,000 $12,000 $74,000 $49.400 $24,600 The general terms and conditions for the contract are attached. RECOMMENDATION It is recommended that; 1. the City re-enter and re-possess the premises known as the Hilton Belyea Arena, located at 390 Lowell Street West in the City of Saint John from Pro Co Hockey Inc., for non payment of rent, and that the Mayor and Common Clerk be authorized to execute any necessary documentation with respect to the re-entry, and that; 2. the Commissioner of Finance be directed to take the necessary steps to collect the outstanding balance owing. Terrance Totten, C.A. City Manager Terms of Lease for Ice Arena 2005 - 2009 Between Pro Co Hockey Inc. (Lessee) and The City of Saint John (Lessor) · Lease of a City Arena (to be determined yearly) on an annual basis, inclusive on the dates shown, saving and excepting the Ice Plant Room, Maintenance Rooms, Ice Making Equipment, Office and Storage Rooms of Minor Hockey and Figure Skating. . Annual Duration July 3 - October 8, 2005 July 4 - October 8, 2006 July 2 - October 7,2007 July 7 - October 11, 2008 July 6 - October 10, 2009 . Operating Hours: 8:00 a.m. - 12:00 midnight (weekends) 8:00 a.m. - 1:00 a.m. (weekdays) · City of Saint John will be responsible for all maintenance and operating costs and will provide one employee during the hours of operation. · Pro Co Hockey Inc. shall provide proof of insurance with a minimum $2,000,000 limit with the City of Saint John named as additional insured. The policy shall include a cross liability clause and be maintained during the full term of this agreement. . Date of Commencement: April 1, 2005 . Date of Termination: October 15,2009 . Rent: 2005 $71,000 HST Inclusive 2006 $74,000 HST Inclusive 2007 $77,000 HST Inclusive 2008 $80,000 HST Inclusive 2009 $83,000 HST Inclusive 2005 Payment Schedule: 2006 June 15 June 30 July 15 July 31 August 15 August 31 June 15 June 30 July 15 July 31 August 15 August 31 June 15 June 30 July 15 July 31 August 15 August 31 June 15 June 30 July 15 July 31 August 15 August 31 June 15 June 30 July 15 July 31 August 15 August 31 2007 2008 2009 $10,000 $15,000 $10,000 $15,000 $10,000 $11,000 $10,000 $16,000 $10,000 $16,000 $10,000 $12,000 $10,000 $17,000 $10,000 $17,000 $10,000 $13,000 $10,000 $18,000 $10,000 $18,000 $10,000 $14,000 $10,000 $19,000 $10,000 $19,000 $10,000 $15,000 · In event of a breakdown, the City shall make reasonable effort to make another rink available and if unable to do so, a refund would be made pro-rated based on the hours of non-operation at the rate of$65.00 per hour. · The Lessee and the Lessee's customers/students must comply with normal Arena rules and regulations used by the City during the regular season. · City staff will maintain the ice and operate the arena to the same standard as during the regular season. · The City agrees not to Lease another City Arena for Ice Related Programs during the period of June 1 - September 30, for the years 2000, 2001, 2002, 2003 and 2004. · The Lessee shall determine the amount and pay to the proper authority, when applicable, all fees, charges or royalties properly due. All charges or royalties are the sole responsibility of the Lessee. · The agreement may be terminated by the City without notice, in the event that Pro Co Hockey Inc. is in default of any of the terms and conditions set forth herein.