The Fraser Valley Metropolitan Recreation District (FVMRD) Board has voted to move forward with a (4) Four Year Lease agreement with the Foundry Cinema and Bowl in Fraser, Colorado.
FVMRD Board and staff have been in negotiations with the Foundry Cinema and Bowl representatives and owner, Mark Unicume since last spring when Unicume Colorado decided that the business was “not a good fit” for their portfolio. According to Scott Marohnic, Business Consultant for Unicume, “We have shown a profit every year” and added, “we had a good run at it, but, we need to focus on our core business.” Marohnic told the Winter Park Times ‘this is a community asset and we know it will be in good hands.”
The Foundry Cinema & Bowl is a 16,000 square foot family entertainment center that includes an eight-lane bowling alley, two-screen movie theater, gaming arcade, concession stand with a restaurant and full bar.
The developer, Unicume Colorado, constructed the facility in 2011 and sold the property to the business currently operated by U 9200 Entertainment/The Foundry, who acquired the 0.84-acre site and completed the final facility improvements and build-out prior to opening on July 1, 2012.
FVMRD will officially take over the management of the facility next week and Scott Ledin, Director of Parks, Recreation and Golf for the District said, “We are going to spend much of our time in the next couple of months observing the operation and learning the ins and outs of the systems and equipment.” Ledin said, “We want to get a better handle on what we can do with this type facility.”
Ledin said, “The risk analysis we have completed has been thorough, but there are still variables.” There is a non-disclosure agreement regarding the operations financials but Ledin said, “I think the facility will create a cash flow opportunity for the District.” This opportunity could help address future recreational needs of the district.
The FVMRD is entering into a lease structure that states:
The owners of U 9200 Entertainment (Landlord) will convey the business to the FVMRD with the FVMRD leasing back the real estate. The Lease Term will be four years beginning February 11, 2019 and run through February 10, 2023 w/ option to extend under mutually agreed upon terms. The rent payment will be set at $25,000 per month with no annual escalations.
FVMRD Triple Net Lease says that FVMRD assumes all responsibility for operating expenses except for capital expenses as defined in the agreement.
FVMRD has the option to purchase at a price not to exceed $4,250,000 any time prior to August 10, 2022, six months prior to lease termination. If the operation is owned or leased by the FVMRD, the Recreation District would not be required to pay property taxes. Ledin said, “Part of the legal process was to present the lease agreement information to town and county government officials.”
The lease agreement requires a thorough inspection of Bowling, Theater and Mechanical equipment by landlord to certify that all are in good working order and the FVMRD has developed a ‘Foundry Task Force’ consisting of Food and Beverage, Maintenance, Administrative and Marketing, staff to watch and learn. “We are excited,” said Ledin, “There’s been a lot of work that has gone into this agreement.”
In our conversation Ledin said we believe we can streamline the efficiency and offerings of this amenity. “We are looking at this enterprise endeavour similar to Pole Creek Golf Course” said Ledin, “We want to have a 100% cost recovery at the very least. Ledin added, “The Master Plan includes language for the district to identify additional revenue sources and this looks like a good fit.”
The FVMRD team has done a thorough business analysis looking at industry trends and the condition of facility and the equipment. Ledin said, “If I thought this would cost the district money, I wouldn’t have supported the idea.”
Jack Dicola, Attorney for Unicume Colorado / U 9200 Entertainment said, “If you can’t operate as an enterprise you get to back out.”
District Board President Roger Hedlund said we looked at every angle as presented. “It seems to make sense, and, I believe this will be good for our district.” Hedlund added “I think it fits the mission and vision of the District. The Foundry definitely connects people to amazing experiences.”
Not all board members were in favor, Al White, said “This is a great private entity and should remain a private entity” lamenting, “I don’t want the district to lose focus on what we do well.” This operation may apply excessive pressure on the FVMRD staff and White feels “the risk may outweigh reward.”
Foundry owners will continue to provide support through the transition. The FVMRD will officially assume responsibility on Monday and will spend the next couple of months observing the operation. According to Ledin there are no plans to make any immediate changes to the business plan. “We have much to learn.”