The Fraser Valley Metropolitan Recreation District (District) is taking a hard look at the Foundry Cinema and Bowl (Foundry) as a viable community amenity and business model that may fit their mission and vision. The District would like to invite interested community members to come to the September 18th Board Meeting to learn more about the steps the District has taken to evaluate this opportunity and to gather community input.
The District was approached in the spring by the owner of the Foundry with an idea a little outside the box. The proposal was to convey the business to the District and included a lease/purchase option for the real estate and/or a business lease.
The owner of the Foundry, Mark Unicume, and his business consultant Scott Marohnic, have been exploring alternatives for the business so they could focus on other aspects of their real estate and development company. “We have talked to people up and down Highway 40. Trying to find a business that is looking for this type of “one off” business is challenging.” According to Marohnic, similar chains look at 2nd or 3rd-tier markets, and, Grand County is too small for most of them to take a serious look.
Grand County has approximately 15,000 year-round residents and this type of business needs 50,000 full time residents before national or even regional chains will look at it as a viable acquisition. Marohnic said, “We have looked at restaurant operators, theater operators, amenity operators and several other entrepreneurs that showed interest. We have had several interested parties but none would pull the trigger on it.”
The Foundry Cinema & Bowl is a 16,000 square foot, one-story retail entertainment center that includes an eight-lane bowling alley, two-screen movie theater, gaming arcade, concession stand with a limited 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.
According to Marohnic, “We have shown a profit every year” and added, “we had a good run at it, but, it doesn’t fit the portfolio at this time – we need to focus on our core business.” He told the Winter Park Times ‘this is a community asset and we want it to be in good hands.”
District Board President Roger Hedlund said they have looked at the proposal and the options presented. “It seems to make sense, and, if the community support is there, this could 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.”
The District mission is to provide recreational experiences for our residents and guests through innovative, quality programs and facilities that promote health and wellness. The District vision is to connect people to amazing experiences.
Currently the District owns and operates the Grand Park Community Recreation Center, Pole Creek Golf Club, the Fraser Valley Sports Complex and the IceBox Ice Rink. Experienced in the field of recreation, the District has proven their ability to successfully manage large recreational facilities.
With any business venture you have inherent risks, but the model, according to Scott Ledin, Director of Parks, Recreation & Golf, is solid and the financials have shown a profit each year of operation.
Ledin said, “I think this is a very interesting opportunity and we are taking a thorough approach to review the business operations, facilities and staffing needs.”
The District has maintained a solid working relationship with the Foundry through programming adult and youth bowling clinics and youth field trips. They are experienced in the management of many adult and youth sports leagues The District also operates a year-round restaurant, Bistro 28 at Pole Creek, and already has a food and beverage department, plus, the district has a knowledgeable maintenance team and some seasonal staff that could supplement the needs of the operation throughout the year.
According to Ledin, “When the idea came to light, we put together a diverse team of staff and administrators to look at the business and try to identify the risks and benefits of the opportunity.” We went through a process using the Enterprise Risk Management framework and have discussed each and every concern. Adding, ”We believe this could be a good fit if we can secure a financial agreement that makes sense for the District and our community.”
There are several options on the table for lease and/or outright purchase. The District is currently reviewing these options with counsel, local banking professionals and the investment banking firm of George K Baum, who underwrote the District’s GO Bonds in 2008 as well as the refunding of the bonds in 2013 and 2015, saving taxpayers over $1,000,000 in future interest payments.
District Board Member, Al White, said, “We need to protect our community, if this went south. Another consideration as a public entity is that any agreement would have to be subject to annual appropriations language. That would basically give us an out.”
The Board has discussed that long-term lease appropriations would allow the District to acquire the property over time, without depleting reserves, but could have a negative impact on future District credit.
The Foundry is also open to the outright sale of the real estate and FF&E. In fact, according to Marohnic, this would be their preference.
White said, “I feel like the Foundry is an important recreation opportunity for our community and key piece of the experience for guests and locals.” White lamented, “The results indicate a potential for a modest profit, if not a significant profit, but I have concerns – we don’t know much about the operations of bowling and movie theaters. If we can find a way to make it work without losing focus on the things we do well, it could be a win-win for our community.”
Ledin said, “The risk analysis we have completed has been thorough, but there are still variables. I think some of the options presented create an interesting cash flow opportunity for the District.”. This opportunity could help address future recreational needs of the District.
Hedlund stated, “The board is willing to do the due diligence to see if it is a good fit. We are not going in with blinders on. This could be a win-win the community and the rec district. The Foundry could possibly become a profit center, but we are going to take the steps to examine the risk factors and are going to move forward cautiously. We want to hear from the community.”
The next Fraser Valley Metropolitan Recreation District Board meeting will be held in the Grand Park Community Recreation Center, Tuesday, September 18th at 5:30pm and is open to the public.