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This article was published 16/11/2016 (1803 days ago), so information in it may no longer be current.
The lease for the proposed 50,000 square-foot flagship Liquor Mart at True North Square was signed under the direction of the NDP government without a business case and has little chance of being profitable, says the acting CEO of Manitoba Liquor & Lotteries.
Details surrounding what would end up being Canada's largest liquor store were revealed Wednesday at a routine Crowns committee hearing, revealing the Crown corporation's hands may be tied on a deal that was signed under the former board, former CEO and former government.
Crown Services Minister Ron Schuler grew increasingly indignant during the meeting, as the acting CEO of the Crown corporation, Peter Hak, acknowledged the new board is on the hook for a lease offer that was signed without any market analysis, without hiring a consultant and it could cost the corporation as much as $9-million worth of tenant improvement costs.
There is no sign the Liquor Mart will produce a profit and no business case to outline how much it could end up costing the corporation, Hak said.
"I don’t think you would get the sales you need to make a 50,000 square-foot liquor store viable," Hak told the committee.
Hak has worked for the corporation since 1984 in various positions including vice president of gaming, director of finance and administration, and audit manager. He stepped up as CEO following the boards' decision to part ways with CEO John Stinson in October.
The proposed new Liquor Mart was announced with great flourish in February; as part of the $400-million True North Square downtown multi-purpose development, Liquor & Lotteries would set up shop in the retail podium of Tower 1.
Hak said it is standard practice for the Crown corporation to do a business case and to estimate the sales revenue a store could achieve before choosing a location. Hak admitted that the new board — whose members were appointed in May following the Tory victory in the provincial election — found no evidence the previous board had explored the viability of a large-scale liquor store in the downtown.
With few details available, Schuler is concerned about the extra costs of security, staffing and parking. In 2015-16, $583 million in revenue was turned over to the province.
"The 50,000 square-foot lease will harm the bottom line of Liquor & Lotteries and in the end that hurts the services that we want, that we need as a province," Schuler said after the meeting. "I am very concerned as the minister, I am very concerned as a government, what it would mean for us if this lease goes forward. If it is over three floors, it means we have to staff three floors. This is going to be a major, major impediment to Liquor & Lotteries."
There are already two Liquor Marts in the downtown area: one on Ellice Avenue and a second at cityplace on St. Mary Avenue.
The committee was told the legally-binding lease offer was signed under the Crown’s previous board and former CEO John Stinson in December of last year, under the direction of the former NDP government. After consulting with lawyers, Hak and Liquor & Lotteries chairwoman Polly Craik both said they are bound to the lease offer.
When asked by reporters if it was a done deal, Hak replied, "I am not a lawyer, but that is the advice we are getting."
NDP MLA James Allum denied the claim his government influenced the decision, reiterating the decision was made by the board.
"It was a concept with vision that was done to promote the downtown in Winnipeg, which we know makes for healthy cities," Allum said during a break from the committee meeting.
Craik said the board is currently reviewing the project and examining the options. However, she has not spoken to True North Sports & Entertainment, which owns the Winnipeg Jets and is the entertainment juggernaut behind the project.
"We do absolutely have a binding offer to lease, but that doesn't mean we can't be at the table at figuring out how we are going to work through that and figure out the result," she said.
The Crown corporation also announced in September it was shelving a $75-million plan to consolidate Manitoba Liquor & Lotteries’ five offices into a single location downtown.
Craik said at the time: "We feel we do not need a new head office. We’re looking after the taxpayers’ purse here. We will sell the Medical Arts Building. We certainly hope to recover what we put in. To date, we’ve put in $10.25 million; the assessed value is $11 million."
Schuler has repeatedly said his government will not politically interfere in the decisions of Crown corporations, but said after the meeting he "would like the corporation to take that lease and see what they can do."