Will Eddie Get Back The Cleary
Councillor Gignac will be laughing, since she did not like the deal in the first place. Hopefully she will also be crying when she reads the St. Clair College Minutes below and understands the consequences. Does she have the nerve to confront the Mayor over what could be a huge give-away of City propety if President Strasser is correct and to demand an explanation?
The Hilton who wanted the building but were ignored as a potential bidder for it may still get it at a huge doscount. The Casino people will be furious if it becomes a competitor after the Arena has become one.
Is the Francis Cleary deal disintegrating in front of our eyes?
It may be good for the Symphony, they will have a place to play, but Eddie may get back his so-called White Elephant, the Cleary, even after giving so much money to the College as well as part of the deal. Remember that the College not allowed to "flip" it. As I Blogged before:
- "We sure stopped St. Clair from flipping it and making a profit. All it means is that they could "sub-let it" and make a profit. And if the deal is a bad one for St. Clair----are they stuck? Nope, the City gets it back!"
More is coming out about why Eddie made his remarks about the Capitol recently and why President John Strasser of St. Clair is talking about his losses. Strasser has to be trying to get more money to save his neck since he could be accused of doing a dumb deal. Eddie is desperate to force paying Cleary users---Symphony, Light Opera etc-- to pay more rent so that he does not get the Cleary back or is forced to pay out more City money as a subsidy for the ARTS to save the deal to save his neck.
Read these excerpts from the St. Clair Board Minutes in June and September and decide for yourself what is going on. I was made aware of College issues since I was told that the St. Clair paper raised the issue of College losses over the Cleary and quantified them too:
- JUNE COLLEGE BOARD MINUTES:
"Financial Statements for the St. Clair Centre for the Arts..
The President explained that the Centre, in his report, would be broken down into seven areas and each of those areas examined for their purpose and contribution, revenue or otherwise.
What factors formed the financial parameters for the first year of taking over the facility as outlined in the deal with the City from the College’s perspective, asked the President?
It is obvious explained Dr. Strasser that five hundred students being housed in this facility would without a doubt cost the College money.
The deal was the purchase price of one dollar and two years to March 10, 2009 of up to $2.6M the City would pay half the wages for those on the payroll. The City provided capital of $423,000 in the first year to do with however we choose.
Another $423,000 will come to the College again in year four.
The City also provided a municipal tax waiver, based on a stipend of so many dollars per student per year, given to the City from the College. The consolidated statements indicate a revenue of $3M with a cost incurred of $4.3M amounting to a $1.1M loss.
However, there are items that do not come into account when you examine those numbers added the President.
The College decided to take 30% of the income that was generated by the students here (housed at the SCCA), based on grant and tuition from the academic sector to balance off the use of the fourth floor of the facility along with all the basement and three of five rooms on the fourth floor.
Three weeks out of each year, added the President, the theatre is devoted to the Performing Arts students to use for their production.
Any time the College uses the Centre the discount for meals or room rentals is noted. This will help in giving a realistic perspective of the use of the Centre.
The St. Clair Centre has provided the space to house programs such as Media Arts & Design.
The building itself is worth approximately $37M with the land value of $2.3M and between $4M-$7M in inventory...
The downside or areas of the St. Clair Centre that have been most daunting explained Dr. Strasser was the negative image the former Cleary Auditorium had and turning that around has been extremely challenging.
The work culture of some of the employees is deplorable and it is one of the hardest aspects of the catering side to “fix” noted the President. We predicted there would be a transition time. The College never anticipated it would be this difficult and/or daunting a task.
After reviewing the finances it now appears that there were items not included in the costs or that were put into other accounts that should have been noted by the City of Windsor.
These inaccuracies have only come to light since the take over and would never have been determined otherwise.
Looking ahead, Dr. Strasser referred to the image makeover of the Centre and how that is slowly becoming a reality.
The catering services are examining the potential of running the Windsor cafeteria services much like what has been done in Chatham to improve food service to the students and staff.
Our sales for inside events is increasing and could be increased five fold added the President.
The downside of catering in the city is the negative attitude of some downtown businesses that have the notion that the College is somehow subsidized in its catering venue and therefore perceived as unfair competition.
Should the College operate the Centre strictly as an educational institution, with some special revenue generating components, acquisition of the Centre would still be considered a great deal.
The Centre can be utilized to further increase our enrolment added Dr. Strasser. With the significant increase in salary costs arising from the anticipated unionization of part-time employees, the Centre may have to entertain the idea of curtailing its revenue generating efforts and devote itself strictly to academic interests with a few exceptions after the calendar year 2009.
However, any increase in enrolment comes with an increase costs in infrastructure.
The Theatre division, considering the impact on the community, in particular the Windsor Symphony, the Windsor Light Opera, etc., would have to be considered in any future scenario.
In reviewing the expenses for the Centre, the Chair questioned why the costs of heating/electrical aren’t charged to the academic side of the operation and Ms. Harris explained that the infrastructure charges have historically been charged against the facility.
Mr. Barsanti added that there is documentation that indicates the room usage as well as cost of food, etc. These are valid credits against the students housed in the SCCA added Ms. Harris. Ms. Livneh requested that the Board receive quarterly reports of the St. Clair Centre financials to which administration agreed that would be done. The motion was moved and carried and it was therefore RESOLVED THAT the Board receive this report from the President of the financial status of the St. Clair Centre for the Arts for information."
- SEPTEMBER COLLEGE BOARD MINUTES
"First Quarter Financials – St. Clair Centre for the ArtsDr. Strasser addressed this item and provided a handout to the Board which included the last two slides from his June 24th presentation and is attached as Item 5.3 to the Minutes.1st Slide: The President reminded the Board members, that at the meeting in June, he informed them that the following items were a significant part of the agenda for the coming months:
1) Complete the image makeover.
2) Assess the following components to decide which is making a profit and which is not:
(a) Inside events (banquets, weddings)
(c) Thames Campus kiosk
(d) Chrysler Theatre
(e) Downtown kiosk
3) Cafeteria at South Campus (SCCA staff catering as in Chatham).
4) Catering – DECISION – Benefits vs. costs
The President again reiterated his bottom line that the College would still have made a good decision in taking over the operations of this facility should they have to utilize it solely in an academic capacity.
As of this date, using the same parameters stated the President, the results are better than last year.
Dr. Strasser indicated that now, just as was stated in June, the unionization of the part time workers is still a major pothole in the road which will impact heavily on any of the above decisions.
In this part of his financial summary to the Board concerning the St. Clair Centre Dr. Strasser pointed to the 5 real questions that have yet to be answered.
1) Can each profit centre (banquet, catering, campus grill, Thames kiosk and Theatre) be profitable without the City subsidy?
* Answers necessary before next budget is in place
- City subsidy
- correct salary numbers assigned to appropriate area
2) What are the true operating costs of the Centre with no streams?
- We must identify the true costs of operating the Centre as an academic institution.
3) What role does St. Clair College have in a contribution to the Arts?
- Do we want to subsidize groups such as Windsor Light Opera, the Windsor Symphony, and Theatre Alive in support of the local arts community?
4) Where are the synergies in any University of Windsor/St. Clair College Downtown partnership?
5) What is the profit potential of other College food service areas under the St. Clair Centre for the Arts Management?
The Chair followed the presentation up with a question of the President as to when the College had to make its decision to which Dr. Strasser responded April 1, 2009."
Unfortunately, the latest Minutes have not yet been posted but the deadline for something to happen is in April 1.
What is going on is hard to tell just from reading Minutes. What I suspect is that the Mayor and the President may have to meet again over a Rotary lobster or a Tim Horton’s coffee to try and resolve this creating another urban legend like the first time.
There are some interesting facts that are set out in the Minutes:
- It seems as if the College is Asset rich but cash poor respecting the Cleary and its operations
- Something seems completely contrary. If you add up what the President says that the Cleary is worth, it is somewhere between $45-$50M. Yet, Councillor Gignac stated that “the city won't get a dime for an asset that's been valued at between $8 million and $16 million.” Not only that, it cost “the city about $3.8 million in capital improvements and employee salaries” in addition.
Now I don’t know about you, but I do not believe that the real estate in downtown Windsor has escalated that dramatically in such a short time. A difference of $30-$40M just does not make any sense. Someone needs to ask some tough questions about the City’s appraisal and what we have been told about values.
Was this was a good deal or not even if the City was supposedly losing $1 million a year? Has the City lost millions of dollars on this transaction because it was not put out for tender? If so, how did this happen and why? This is not something that should be swept under the rug. There is too much money at stake.
- “Mayor Eddie Francis reminded the councillor [Gignac] that the Cleary lost about $1.1 million last year and would continue to be a drain on taxpayers. "It's projected to lose more when the casino facility opens up."
Given the discrepancy with respect to value, the question of annual loss needs to be investigated as well. Was the Cleary run down so that there was a justification for getting rid of it? Could it have broken even or even made a profit given its importance to the local Arts community?
- The Mayor may well be justified in claiming that there was a loss considering that St. Clair is not making any money on it either it seems. Yet in June 2007, the St. Clair Board meetings stated:
"The President did take this opportunity to give the Board a Financial update as it pertains to the April revenues generated at the St. Clair Centre for the Arts, based on the catering and Chrysler Theatre revenues. The finance department, reported Dr. Strasser, originally projected profits of $20,000/month and the actual profits, as of the end of April, were $50,000."
We should note also that the Theatre is not being run away the old Cleary was before. We might just be comparing apples and oranges.
- It seems to me from what the President is saying that he has a lot to explain if the Cleary went from a profit position to a significant loss in such a short period of time. What due diligence did he undertake? I find it strange that he is discussing the “5 real questions that have yet to be answered.” Shouldn’t there be a sixth question: why weren’t these 5 real questions answered before the transaction was entered into?”
With all due respect to the President, it is not enough in my opinion for him to baldly assert “his bottom line that the College would still have made a good decision in taking over the operations of this facility.” If there are losses, then I do not understand his comment. If it refers strictly to capital appreciation of an asset from a low of $8M to about $50M, then he should be our border negotiator, not the Mayor. Mind you, someone would have to spend that kind of money for that asset and that might not be so easy to accomplish.
There is no doubt in my mind that we are beginning to see a very ugly situation between the College and the City developing developing:
It seems very clear that the College will make certain damaging allegations against the City that will require a financial response from the City:
- negative image the former Cleary Auditorium had and turning that around has been extremely challenging.
- The work culture of some of the employees is deplorable but the College never anticipated it would be this difficult and/or daunting a task.
- [And the most shocking of all] In the finances, items not were not included in the costs or were put into other accounts that should have been noted by the City of Windsor.
These inaccuracies have only come to light since the take over and would never have been determined otherwise.
Where this all leads, I have no idea other than it will cost taxpayers more money and will leave some very troubling questions to be answered.
Is Councillor Gignac up to the job?