Hail Pelts Down On No Plan B

The largest hail storm so far this year may have been pelting down causing Council to speak louder but it was hard to tell which was louder - was it the noise from the hail or the anger some Council members had after learning a recently approved food services contract for Mosaic Place came with a “hidden” $150,000 start-up cost to the City.

The issue before Council was to approve $150,000 up front money to allow Spectra Venue Management Limited to re-stock Mosaic Place with food and beverages plus get staff into place.

Spectra had been awarded the food and beverage contract for Mosaic Place in late June which effectively brought the food and beverage services in-house from the previous contractor Compass Group.

The bid awarded the food and beverage service contract to Spectra from July 1, 2021 to September 2024. Profits generated or losses incurred would belong to the City of Moose Jaw.

During their June 28th Council meeting discussion surrounding awarding the contract to Spectra was based upon perceived improved food and beverage quality as well as service and no mention was made of the $150,000 start up costs to re-stock Mosaic Place.

The monies would be repayable by December 31, 2021. Sales up to December 31, 2021 are expected to be sufficient to recover the start-up costs and have a nil or positive effect on the 2021 subsidy.

Explaining the request city manager Jim Puffalt emphasized the benefits of going in-house for food and beverage services. He went on to state Spectra Venue Management Services were hired to manage Mosaic Place and not fund it - this included the areas of food and beverage services as well.

“We certainly believe there is a greater upside to having food and beverage in-house. We think we can enhance customer experience. We think we can have excellent service and in the end that increases the bottom line,” Puffalt said then going on to ask for the start-up funding.

“They have requested some start-up funds and in normal years we would not have a COVID issue and not having any revenue generated for the year. What this does is allow the company to get started on food and beverage. Get the start-up costs put together,” he said.

Puffalt stated that under the three year contract signed with Spectra, and not the long-term contract Spectra had wanted, the City was responsible for the start-up costs.

The need for $150,000 was something which did not sit well with some members of Council.

Councillor Jamey Logan was not happy with having to pay the start-up costs. Something not revealed when Council selected Spectra’s bid in June. It was something he did not like, but given the need to have the food and beverage services functional for tenants the City was stuck paying it.

Councillor Logan said given the City received all profits he could support the request even if he did not like it.

Acting Mayor (Councillor) Dawn Luhning said she had problems granting the funding because Council seemed to be kept in the dark.

“On initial look at this report I wasn’t overly pleased with this recommendation we have to provide more funding to Mosaic Place for the food and beverage because my usual thought was if they bid on this service which they did, they should have the money to do it,” Acting Mayor Luhning said.

She asked about what happens if the $150,000 was not repaid by December 31st.

“There is no guarantee of course that the funds will be repaid by December 31st,” Puffalt said but if it did happen a report would be brought back to Council.

“Based upon projections it should be able to be recovered,” he said.

Councillor Crystsal Froese said she questioned the request and wondered what request might be coming next from Spectra. But despite this she said she would vote in favour of the request with the hockey season on the horizon.

“We subsidize Mosaic Place almost $900,000 and as Councillor Logan said this was not in their proposal that they needed funding. That was one of the reasons I wanted them to come forward and give us a report and projection as to what is coming next,” Councillor Froese said.

“I think this (the $150,000 request) should have been included or we should have had an update as to what is coming…you know Compass group (the former food and beverage provider) did not ask us for any of this kind of thing. Even being on the (now defunct Downtown Facility and Field House) board they (Compass Group) were not asking us for seed funding for these kinds of things,” she said.

Councillor Kim Robinson though had a different idea and that because the City does receive any profits or is responsible for losses that the start-up funding should be provided.

“I thought about this to and thought about why do we have to put it all up front? But in essence this is the City of Moose Jaw food and beverage and that is why we are putting up some start up funds. My understanding is we get the profit so we have to put up the initial funds. So to that regard I am OK with this,” Councillor Robinson said.

The problem of what would happen if Council decided to vote no and deny the request came front row center when Councillor Logan asked what was Spectra’s Plan B if Council said no?

The question and the two responses are in the video link below.

Ryan MacIvor general manager for Mosaic Place and Spectra’s manager in Moose Jaw said there was no Plan B and there was no other way to do it.

“As the timing of hiring the staff, prepping the building to bring it to order there is no inventory of food and beverage on site. With respect to the building having to hiring on the food and beverage staff, the part-time staff, the training that will go into that to work through that there is no revenue streams at the beginning of the process to go through that…..the products….so as we go into the beginning of the hockey season we need that up front capital to get those items ready and to prepare it to advance,” MacIvor said.

It was an answer Councillor Logan did not approve of.

“This is baffling how do you not have a Plan B? How do you take a tendering process, accept a tender and wonder how you are going to pay your employees? I don’t understand this blows me away. Absolutely we have a gun held to our head we are going to have to fund this and get our money paid back, I get that, but this is not good business. Moving forward we need to be better informed quite frankly,” he said.

Puffalt said Council’s decision not to go into a long term contract with Spectra for food and beverage services resulted in

“I would remind Council it was your decision. And a good one that we don’t go into a long-term contract with Spectra Venue Management on this. They had fund up front when it was a long term contract and in the short term they were not willing to put that up in a three year deal…it is just reminder to Council. We certainly apologize how it came back to you. It is absolutely our food and beverage. Spectra Venue Management is not their food and beverage. It is the City of Moose Jaw food and beverage at Mosaic Place,” Puffalt said.

In a vote of 5 - 1, with Acting Mayor Luhning voting against the motion Council agreed to the $150,000 start-up funding request.