Depot Street Garage Proposal accepted by the Town of Bennington, 2/11/2019

TOWN OF BENNINGTON
MEMORANDUM

To: Select Board

From: Daniel Monks

Re: UPDATED – Staff Review of Proposals for Depot Street Garage

Date: February 11, 2019

The Town of Bennington sought proposals for the lease or purchase of the Depot Street Garage. Proposals were initially due by August 6, 2018, but the deadline was extended to January 7, 2019. The Town received three proposals, but one of the proposals was withdrawn and one was deemed non-responsive.

Please find below the Town staffs review.

SC Spirits LLC – REVISED

Offer: Purchase for $80,000.

Proposed Use: Craft Distillery and Tasting Room.

Staff Comments:  $1,000,000 + investment ($700,000+ in building renovations and $300,000+ in equipment purchase) is proposed. The timeline for completion of the project is aggressive and work will begin immediately upon acquisition. Financing has been secured. Buyer is seeking a grant to complete improvements once a Certificate of Occupancy is granted for the property.

Recommendation:
Town staff recommends that the Select Board authorize Town staff and Town counsel to negotiate and execute a Purchase and Sale Agreement with SC Spirits. The short timeline for completion of the project* the high level of investment, and the firm financial commitment make the SC Spirits proposal compelling.

Town Garage Disposition

Respondent:    SC Spirits LLC

1 . General Information
Name of responding entity, legal structure, state of incorporation. address, name(s) of project principal(s), with title and address, and name and contact information of proposal representative.

2. Statement of Intent
Describe generally the proposed use of the building and property. All aspects of the use should be outlined.

SC Spirits would like to acquire the Depot Street garage for the purpose of establishing a craft distillery with tasting room.

The craft distilling market is growing rapidly (CAGR of 26% through 2022 according to research firm Technavio). SC Spirits would produce and market premium spirits, leveraging Vermont’s reputation for natural, organic products and proximity to the major population centers of New York and Boston.

The property would be renovated into an attractive distillery and tasting room. The tasting room would provide a focal point for tourism in Bennington downtown.

The preliminary layout of the building is attached. Full consideration of liquor licensing requirements, state code, fire code, water source, along with distribution logistics have been made. The layout is subject to change during further consultation with local, state and federal agencies.

3. Explanation of Target Market and/or Community Need
Describe in detail the projected market or community beneficiaries of the project. Include target numbers and the plan to reach those numbers.

There are two target markets for SC Spirits products.

First, the tasting room would target tourists who come to Vermont for its winter sports, fall foliage and other attractions. Many of these tourists pass by the Bennington downtown area en route to other destinations. The distillery would offer a unique and interesting attraction to attract more of these tourists to Bennington’s historic downtown. Many tourists would then also dine at one of Bennington’s downtown restaurants or shop in the local stores. The operation of the tasting room would be a small but high margin component of the overall operation of the distillery.

The primary sales channel for the distillery will be through traditional distributors, particularly in Massachusetts and New York. Tourists familiar with the products from visiting the distillery in person will bring demand with them to their home’s back in the New York City and Boston areas. So, attracting visitors to the tasting room will be a critical part of the marketing plan for SC Spirits.

4. Description of Proposed Facility Operation
Describe in detail the proposed operational structure of the facility, including whether the facility will be open to the public, hours of operation, and staffing.

The distillery would be open to the public and operating 7am-4pm for production, The tasting room would be open Thursday-Sunday from 11 am to 1pm.

Initially the distillery would offer samples of spirits available for retail sale. Eventually, small appetizers may also be available.

Retail selections would include house made spirits, merchandize reflecting Vermont, Bennington and the brand, and other locally sourced products.

5. Facility and Site Renovations and Design 
Describe in detail the planned renovations and improvements to the site and buildings, including interior and exterior, with plans and graphic representation.

We expect to invest approximately $1,000,000 in capital improvements to the facility.

 

-Remove and replace existing roof with standing seam.
-Remove stucco: choose to paint blocks, finish with metal or concrete siding.
-Windows: remove and replace with insulated versions consistent with the existing style to maintain the same look.
-Over head doors: replace with modern, insulated glass doors to match windows and complement roof colors.
-Remove drop ceiling and restore trusses and hardware.
-Install modern lighting and large ceiling fans.
-Section off production and tasting area keeping production viewable.
-Remove and replace floor with polished concrete with radiant heat.
-Install signage with style to match the buildings original built era.
-Install a 500 gallon copper still and related equipment. Describe in detail the financial structure of the proposed project, including financing and grants, and provide financial projections of operational costs and income,

Both the exterior and the interior tasting room of the distillery would be made into an attractive retail facility.

6. Financial Pro Forma
Describe in detail the financial structure of the proposed project, including financing and grants, and provide financial projections of operational costs and income.

Pro Forma Cash Flow 2019  2020  2021 2022
Q1  Q2 Q3  Q4
Fixed Expenses $242,500 $242,500 $242,500 $242,500      $0       $0       $0
Head                1                 1                1                 1                1                 1                 1
Others               0                 0                1                 1                2                3                 5
Compensation $20,000 $20,000 $32,000 $32,000 $180,000 $230,000 $330,000
MESC Operating $10,000   $10,000  $40,000 $60,000 $100,000
Cases Produced/Sold               0                0          100           200        1,000        2,000        4,000
Gross Profit -$262,500 -$262,500 -$262,900 -$241,300 $40,000 $218,000 $542,000

 

Project Timeline
Describe in detail the projected project timeline including property acquisition, facility design and engineering, construction, occupancy and start-up.

Significant milestones include:

1.Legal entity formed (done)
2.Receive federal and state permits (expected by May 2019)
3.Renovate facility to begin distilling and bottling (complete by June 2019)
4.Produce first cases of vodka and gin (August 2019)
5.Finish renovations for tasting room (August 2019)
6.Scale to 200 cases/month by end of year
7.Goal is 5000+ cases/year by 2020

We have committed financing and would expect to start working on renovations as soon as possible.

It is worth noting that we will be purchasing leading industry equipment. We are deciding between two highly reputable companies, both of whom are committed to see their product be used to the best of its ability. Their guidance throughout the project timeline will only enhance and expedite our end goal. We will be continuing to build on our distilling education at recommended institutes, one being at Cornell University. Both companies come and Install the equipment and stay for first run. If more guidance is needed both companies have consultants, and we are prepared to invest in them to come for more on-site training if needed. All efforts will be made getting a worthy product to market.

8. Other Proposal Details
Provide any additional details/supportive information which the respondent deems important.

Acknowledging the Town of Bennington’s deep interest in growth, SC Spirits amends it offer for the purchase of 107 Depot Street:

1.Purchase price increase to $80,000.

2. Include a right of first refusal to the Town of Bennington for the property without expiration.

3, The offer is subject to a grant from the Town of Bennington for $72,000 to SC Spirits, payable upon issuance of a Certificate of Occupancy for the property.