On Trumpets and the September Board Meeting
If you had the slightest notion that the board was in some disarray over what to do regarding Trumpets, attendees at the September board meeting were left with no doubt whatsoever.
After listening to our board struggle with the Trumpets issue, it might be helpful for me to repeat what is already known, but clearly not well understood. Even the City’s Business Licensing office expressed concern to me about what they viewed as the level of misinformation concerning the issue of securing a liquor license, based on a recent flurry of inquiries.
On the Liquor License.
Based on what I was able to confirm in a meeting with Margaret Glad, head of the City’s Business Licensing office, the City has agreed to grandfather SCACAI’s original liquor license for Trumpets without our having to pay a $30,000 origination fee to restart restaurant operations, although other periodic nominal fees will apply to anyone who will be actually operating the restaurant.
It’s important to understand that the granting of the license is a separate issue apart from how SCACAI determines it would like to run restaurant operations, whether that would be by contract management, lease, or self-management. Glad said the association may face other issues with the Community Development Department on land and property use matters, but she could not speak to those issues.
If someone other than SCACAI will operate the bar/restaurant, such as a lessee, Glad said it will be necessary for SCACAI to have their license to operate a bar/restaurant transferred to that lessee. Glad emphasized that the actual restaurant operator must hold the liquor license. That transfer, however, should pose no concern or problem for SCACAI as long as the association takes certain steps necessary to protect itself and their right to the license upon termination of lease agreement.
In a lease situation, if SCACAI does not wish to relinquish their future right to the liquor license, such as upon termination of the lease agreement, SCACAI must incorporate appropriate legal language in their contract that will state that the liquor license shall not be transferred to another property and shall not be retained by said lessee in the event of contract termination, or the cessation of restaurant operations. According to Glad, the agreement must specify that upon such event, said liquor license shall revert back to the ownership of the SCACAI. As the grantor of the license, the City will need to be appraised of the licensing provisions regarding such transfer back to SCACAI and provided with an executed copy of the contract in advance of the beginning of any new restaurant operations.
On Mike Dixon and the Credit Market.
In attempting to bolster his presentation and proposal for self-management, which was based on a number of assumptions, including an average dinner price of $25 per person, Mike Dixon offered his opinion that in today’s tight credit economy, no potential lessee would be sufficiently credit worthy to be able to enter into a contract for the operations of Trumpets. Whether and how much that credit market will change in the coming months is at best speculative.
The need for credit and the credit worthiness of a potential lessee are literally unknown. While Mr. Dixon’s assessment may prove accurate, based on recent developments, that should in no way deter our association from seeking to ascertain potential interest from qualified restaurant operators who may have a longer perspective and whose resource requirements and credit needs may be different than what Mike would like us to assume. One must assess whether the credit uncertainty Mike describes is actually a bona fide argument against our willingness to test the restaurant market for prospective operators to secure a qualified lessee.
Who is a Qualified Restaurant Operator?
It would be incorrect and a disservice to our community to assume that the five prospective operators seeking our business are truly qualified. Clearly some of those prospective operators may not be qualified at all by any reasonable standard while others may be only marginally qualified. I do not believe it is in our interest to attempt to negotiate a contract with candidates who are only marginally qualified. Nor do I believe it is in our interest to do so in the absence of information on the availability of candidates who are more qualified.
The problem faced by the board is that we simply do not know who might be out there that is both willing and able to meet our dining needs. The board’s inaction leads one to conclude that the board does not really want to learn any more than who any Peter, Paul or Mary is able to bring to our immediate attention. The only way the association will ever know whether there are qualified interested candidates is to go through a professional real-estate broker who will be directed to perform that very task.
One Argument Against Leasing.
One frequently heard argument against the leasing option is that SCACAI will not be able to provide prospective lessees with needed and relevant information on what to expect regarding terms and conditions of use. That's simply hogwash! Compared to what we had provided potential lessees in the last go-around, SCACAI can go a long way to satisfying virtually all of their information requirements.
The fact that our prior lessee, S&D Café V, may not have provided us with certain information is no defense or excuse for SCACAI in not developing a proposed bid sheet with as much relevant information as possible on our terms and conditions of use. Obviously, the restaurant opportunities available at Anthem will be markedly different in 2009 than they were when S&D began operating seven years ago in 2002. While not significant, and if memory serves me correctly, it is my impression that we even have restaurant income data for one year that supported the triggering of the revenue sharing provisions under that terminated lease agreement.
To those who are prone to make such an argument, the absence of a spec sheet on our terms and conditions of use is not due to lack of information as a result of the failure of S&D to fully comply with a records request, but to the failure of the board to perform.
On Gaming, Mike Dixon and the “Open to the Public” Issue.
Sadly, the board and the audience were once again subjected to misinformation on the issue of whether the availability of gaming in the restaurant would require, as stated by Mike Dixon, that the association would have to give public access to the entire recreation center building. That’s simply not true. While Mr. Dixon should know better, he seemed intent on spreading what is clearly wrong information about the impact that the availability of gaming at the Anthem Center would have on the association, perhaps with a view to swaying the opinion of his fellow board members against that option.
I talked with representatives of both the enforcement and licensing sections of the Nevada Gaming Commission here in Las Vegas. I was advised that the licensing section is their office that would make a determination on the issue that Mike Dixon had raised at the board meeting. According to Special Agent Kathleen A. Faust of that office, the gaming license jurisdiction of the NGC extends only to the area where the gaming machines are located and would not extend to other areas of the recreation center where she advised the jurisdiction of the gaming license does not apply.
As a result, Faust said that SCACAI may properly restrict or limit public access to areas of the recreation center that are used by members for personal, social or physical activities as the association deems appropriate. According to Faust, the only area covered by the gaming license that must be “open to the public” would be the restaurant/bar area where the machines are located for the days and hours that particular operation is in business. The same rules apply whether SCACAI or a lessee holds the liquor/gaming licenses. Any gaming license that is issued must be held by same party that holds the liquor license.
Whether Mr. Dixon had contacted the licensing section of the NGC or secured contrary information from a different source is unknown.
While there may be arguments to offer against making gaming available, the “open to the public” argument offered by Mr. Dixon is clearly not one of them.
When board members are unable to present information accurately, little wonder there is a measure of disappointment, even distrust among those who would like to have some faith in the workings of the board on matters of some importance to the community.
Other Proposals.
Mike Dixon was not alone in making a slide presentation promoting the cause for self-management for Trumpets. Shirley Cheri had her own version of a self-management proposal, complete with a different set of assumptions.
Not only did their two sets of assumptions vary widely, e.g., one’s labor cost figure was 75% greater than the other, some assumptions did not reflect standard restaurant operating hours, or even prior operating hours for the lessee of Trumpets. In other words, the assumptions appeared to be tailored to portray a more favorable outcome for self-management.
Apparently RMI, an entity actually in business to provide services, has yet to be asked to come up with their own projections of what it might cost to operate a restaurant since all payroll and associated operating costs would be processed through RMI. Whether board members acting on their own behalf are truly qualified to make those determinations has yet to be proven.
It would be helpful if the data and assumptions that are eventually developed fully reflect the following: all hours of operation, start-up costs, cost of food and liquor, meal costs, projected and required customer loads, full and part-time manning needs for both restaurant and banquet operations, all direct and indirect costs and applicable fringe benefits for a 7-day a week operation. Only then will the board have the kind of information they must have to make any sense out of any self-management proposal. To make a board decision based on incomplete or limited operating assumptions is to unnecessarily deceive oneself into making a bad decision.
And then, there was Carl Weinstein.
Carl Weinstein would have nothing to do with his two fellow board member’s self-management proposals. Carl, on the other hand, was aggressively promoting leasing as the only viable option the board should be considering. I believe Carl rightly asked the correct question when he asked why should the association accept the considerable responsibility and risk of operating a restaurant, especially when we have no real motivation or expertise to do so and when traditionally there are others who are eagerly disposed to commit their management skills and resources to doing so.
And Then, the Call for the Question.
So, what happened when Roz Berman asked whether there were any Trumpets related motions from members of the board? There was a noticeable period of silence. Tension was mounting and all eyes were on the board for some sign of leadership or even interest. Mike Dixon had already announced that he was not prepared to make a motion. After a moment, Carl spoke up and proposed that the board seek a lease agreement. Then, while waiting for a second to Carl's motion, there followed another awkward period of silence. With no second to his motion in sight, Carl’s motion failed. It was apparent that the board lacked consensus, some might say the backbone, on what to do. With no other motion before the board, the board moved on to other business.
A Rush to Judgment.
Anxious to do something, perhaps even preempting future options, the board is intent on going forward with plans to refurbish the existing restaurant facility ASAP. For reasons that are only modestly apparent, the board feels compelled to have the restaurant fully operational and redecorated in time for a planned New Year's eve event. If only the board had that same wherewithal to devote their energies to securing a proper restaurant operator rather than worrying about satisfying someone's perceived needs for an upcoming event that will occur on schedule and nicely without the board's added attention and efforts.
As a side note to an already incredible story, apparently the last party to utilize the kitchen failed to clean up and in the process made a great mess, necessitating another clean-up process of the facility and equipment.
Ron Johnson 3 October 2008