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Hogeys Sports Bar pursues legal action against Town

August 11, 2016   ·   0 Comments

In a move that shocked many local residents, on March 10 the Town of Orangeville locked employees and owners out of Hogeys Sports Bar without warning. The action occurred while owner Gerry Hogenhout says he was under the impression he was involved in ongoing negotiations regarding his 21-year lease and property taxes.

Along with housing former local catering company Catering Designs, Hogeys was known for being more than just an arena-based restaurant. The company’s community group, Hogeys Social Club, was responsible for spearheading several charitable functions that benefitted local residents. The most popular of those was the Annual Chili Cookoff, which featured local dignitaries, celebrities, and community members facing off against one another to raise funds to help local kids in need.

“Hogeys was really an asset that belonged to the taxpayers as much as it belonged to me,” said Mr. Hogenhout. “I really think it’s important for people to understand just what exactly happened with us.”

A lawsuit filed this week alleges the Town is responsible for not just damages due to the loss of investments Mr. Hogenhout put into the facility over the years, but as well for the destruction of a business that had been eight years in the making.

Outlined in the 21-year rental agreement, Hogeys Sports Bar Limited (HSBL) would be required to pay the Town a percentage of their sales annually, in lieu of rent. Within that portion of the agreement, a clause states HSBL would be responsible for a minimum amount, regardless of sales, annually.

The plaintiff’s statement of claim says Mr. Hogenhout chose to pay quarterly, rather than annually, to ensure payments were made and minimize any potential shortfalls. The minimum amount HSBL was to pay for 2015 was $25,000, and at the end of the year, he had paid the Town $19,392.55, resulting in a year-end shortfall of $5,607.45.

“Both parties recognized the shortfall, and I was prepared to take the steps to fulfill our requirement,” Mr. Hogenhout explained in an interview. “I had been negotiating a proposed new lease with Mayor Jeremy Williams for the past few months, and he had indicated I should not make a lump sum payment, as the 2015 arrears could possibly be worked into the new lease agreement.”

Although HSBL was only eight years into their lease, discussions around renegotiating the lease were being held to help deal with a property tax issue. As per the rental agreement, the Town of Orangeville would be responsible for paying the property taxes for the space used for Hogeys. In order to provide a proper assessment, the Town was required to report to the Municipal Property Assessment Corporation (MPAC) that they had leased the space out commercially.

“The Town never reported that the space was leased to a commercial business, so when MPAC did their re-assessment, it’s my understanding the Town received a $130,000 tax bill,” said Mr. Hogenhout. “Then the Town gave it to me, even though our lease clearly outlined the property taxes were their responsibility.”

When he received the property tax bill, Mr. Hogenhout suggested to Mayor Williams that they look into renegotiating the lease agreement to be more beneficial for the Town. His proposal included a suggestion that it become a Town facility, since it did play host to many community events, which would remove it from the assessment rolls.

“Hogeys does a lot for the Town and for the Community, so the idea really made sense to me,” he said.

Mr. Hogenhout says it wasn’t until he received the amount owing in arrears on January 21 that things started to go downhill. As far as he had been aware, negotiations between Mayor Williams and the rest of Council regarding the proposal were going well.

“Jeremy was the biggest support of Hogeys, and he was doing everything possible to help,” he said. “I trusted that things were going well, and I would be looped in when I needed to be.”

Despite the amount in arrears from 2015, he says the Town had already received rent for the first quarter of 2016, which he had paid in advance as per usual, even though negotiations were ongoing.

He maintains that it wasn’t until early March that he found out things weren’t going as well as had been hoped. On March 8, he reached out to Mayor Williams for an update on the negotiations, and during a phone conversation found that Council had rejected the proposal.

On March 9th, Mr. Hogenhout sent an email to Mayor Williams, expressing his disappointment with what had happened, and informing the Mayor he would be providing the Town with a cheque for the amount owed.

The next morning, however, staff arrived to find that the locks had been changed on the doors, and a notice was posted stating the business was in arrears.

“We were in absolute shock,” Mr. Hogenhout said. “One of the things that really bothered me was that it was the Town’s CAO, Ed Brennan, who changed the locks. We believe he was instructed to do so by Council, but the CAO is not supposed to do that.”

When he contacted Mr. Brennan about the lockout and inquired as to why the Town did not take the payment out of the rent he had already paid for 2016 if the funds were needed that day, Mr. Brennan said he was not aware rent had been paid in advance.

“In my opinion, this happened because our new CAO is not experienced in the position,” Mr. Hogenhout said. “At budget meetings, our Council always argues that we pay such high salaries to Town Staff to attract the best, most experienced applicants, but then hired a CAO with literally no prior experience in the position.”

He added that he felt if the Town had pursued hiring a replacement to former CAO Rick Schwarzer who had experience, this situation would never have arisen.

The aftermath of what happened has affected more than just HSBL and the Hogeys Social Club. It also drove out another local business owner, Wade Plewes, who owned Catering Designs.

“Wade left town,” said Mr. Hogenhout. “What happened destroyed Catering Designs as well. It really impacted the employees, it impacted Wade, and it impacted myself and Richard Menard, my partner for the social club.”

He added that he had made massive financial investments in the facility, including a two-level steel structure to accommodate  golf simulators, as well as an outdoor licensed patio. All told, the investments into the facility had cost over $50,000.

“The Town told me I would be allowed access to remove my belongings and the enhancements if I paid a fee of $5000,” he said. “But all of these structures are useless to me now – they were custom-built for that facility.”

However, he noted these are now a benefit to the Town.

“What they did destroyed a business I spent eight years building, and affected the reputation of not just myself, but Hogeys, and the social club,” he said. “In the aftermath, there were people who treated me differently because I was believed to be at fault. I just want to set the record straight.”

An exit clause in the original lease said that if certain conditions were met, the Town could buy HSBL out of the agreement for $50,000. Due to the circumstances of what occurred, Mr. Hogenhout says he believes the Town’s actions have activated the clause.

“It’s a very sad end to something that was growing and that the entire town was really getting behind.”

         

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