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HomeMy WebLinkAboutPD-111-88 DN: 111-88 TOWN OF NEWCASTLE /r J i REPORT j- ��, Res. # 5/s 9 By-Law # PELTING: General Purpose and Administration Committee DATE: Monday, May 16, 1988 REPORT #: PD-111-88 FILE #: DEV 77-19 SUBJECT: PROPOSED EXPANSION - PHASE II ARMSTRONG PLAZA, ORONO FILE: DEV 77-19 RECOMMENDATIONS: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report PD-111-88 be received; and 2. THAT the applicant be advised that the Report by Malone Given Parsons Ltd. in respect of the proposed Phase II expansion to the Armstrong Plaza, satisfies the requirements of the Site Plan Agreement between Armstrong Stores Limited and the Corporation of the Town of Newcastle; and 3. THAT the existing Site Plan Agreement is to be amended to the effect that a Market Analysis, to be completed by a party agreeable to the Town and the Owner, indicating the potential impact of any further expansion on competing commercial development in Orono and the surrounding area will be required before Building Permits will be available for Phase III. Said Building Permits will not be available for Phase III until the said Market Analysis indicates that there is sufficient residual market to support Phase III. . . .2 REPORT 0O. ; PD-I11-88 PAGE 2 _______________________________________________________________________________ BACKGROUND AND COMMENT: In Feburazy of this year, Staff were approached with respect to the issuance of a Building Permit for the proposed expansion of the Armstrong Plaza in Orono. At that time, the applicant's agent was advised that pursuant to the Site Plan Agreement between the Town and the Owner, prior to issuance of any building permits for expansion, the Owner was required to undertake a Market Analysis by a party agreeable to the Town and the owner indicating the potential impact of the proposed expansion on competing commercial development in Orono and the surrounding area. Furthermore, building permits would out be available ooleao said market Analysis indicated that there was sufficient residual market to support Phase II. Following thereon, Town Staff were approached by Malone Given Parsons with respect to the Town's requirement for undertaking this Study. As o ceaoIt of these earlier dioouooiouo' it became evident that their approach to a Market Analysis would not be satisfactory to Town Staff ioaomoob as originally, an evaluation of the impact of relocating the L.C.B.O. store from downtown Orono to this site was not giving due consideration to the greater issue contemplated by the Site Plan Agreement and that was the further development of a competing commercial node at the location of the Armstrong Store and the possible impacts | | of such commercial node upon the existing downtown Orono. It is Staff's � opinion that the intent of the Site Plan Agreement was to have an analysis of developing a commercial centre in competition with the downtown area. One only | has to review the Durham Regional official Plan policies with respect to its | intention relative to competing commercial centres wherein it is required that a development of a new centre will not unduly impact existing centres. ! In consideration of the Site Plan approval, issued in 1983, a Development Agreement was completed, acknowledging that the Owner may erect, upon the � subject lands, o shopping centre with a total gross floor area not to exceed � 5110 square metres. Staff would confirm that the Site Plan drawings illustrated a total building area of 3,593 square metres upon full completion. | � REPORT 00. : PD-I1I-88 PAGE 3 _______________________________________________________________________________ The initial phase of development within which the IG& store is located comprises a total of 692 square metres. In consideration of the requirements of the Site Plan Agreement as previously noted, a Report was prepared by Malone Given garonua Limited in consideration of the Orono Plaza, L,C.B.O. relocation proposal. Staff upon reviewing said Report, would confirm for the Committee's information that the conclusions as arrived are positive in nature and the impact of this relocation could be very positive for the bOoiueao community of Orono. As noted within the Report, the neutral concern is not whether there is a market for the L.C.B.O. in its new location, but rather with the issue of potential impact resulting from the relocation of the L^C.B.0. outlet. In reviewing the potential for the relocation, the Report considers the benefits to the downtown that could be expected as a zeaoIt of the relocation that might offset the short term impacts resulting directly from the move out of the downtown. The substantial benefits in this regard as noted are: I. the nature of the new L^C.8.O. accommodations and whether they will enable the Corporation to approve its selection and thereby improve service to local residents, but more importantly, provide a superior facility to what currently exist that will better attract new booiueaoeo � or recapture old bouiueaaea previously lost because of the limited ' selection provided in the current store; 2. the volume of xuevv" traffic into Orono that might be generated by the L.C.B.O. in its new location; 3. the degree to which the new boaiueoa that is attracted into Town by the improved L.C.B.0. in its new location percolates into the downtown area; 4. the establishment of a new tenant in the existing L.C.8.O. store premises. In consideration of said Report and upon reviewing the content and nuuoIooiono as noted, it is Staff's opinion that the provisions of the Site Plan Agreement have been fulfilled pertaining to Phase II development. To that end, Staff attach a copy of the Impact &oaIyoio for Committee's information. In consideration of the ooigoe nature of the application to relocate an | | existing premise for downtown 0zoun to the Armstrong Plaza, Staff would respectfully submit that a further Market Analysis be required Bciuc to the ^ ^ ^4 REPORT NO. : PD-11I-88 PAGE 4 _______________________________________________________________________________ issuance of a Building Permit for the next stage of development i.e. Phase III. As previously noted the maximum floor area permitted under the terms of the Site Plan Agreement is not achieved through the development of Phase II as proposed. By doing so, it is Staff's opinion the integrity and intent of the provision within the Site DIao Agreement requiring due consideration on competing commercial development in Orono and the surrounding area in maintained. Accordingly and in consideration of the above' Staff has prepared a draft amendment to the Site Plan Agreement as described within the recommendations of said report, requiring the submission of a Market &oaIyoig prior to the development of any further phase. Respectfully submitted, Recommended for presentation to the Committee / _ ----------- __ ---±-- ----------------- L.D. Tay Lawrence Kotoeff Deputy Director of Planning Chief Admi iotcative Officer � / LDT*jiD « *Attach. May 5, 1988 | CC: R.W. 8royuoon Architect & [oouoItiog Engineer 74 Simooe Street South � | Suite 302 | OS8AW&, Ontario � LI8 4Q6 | � ' FUTURE RETAIL- 13 95 m2 ft'—. tln.siob 17050 FS!.iuxE"aoot.7ioK���s - S 1.411 r _ c. c.� .l i s• .c'•E \ _� ..1 4r 7 J � ` i i t 1 1 f I 1 1 I r-. `� •� 14. � A 1c ra ext access f,j17o5 road I ltr. 0 a ' � 1 �SVU�LT p�vEUCUi AMENDING DEVELOPMENT AGREEMENT MADE (in quintriplicate) this day of 1988 BETWEEN: ARMSTRONG STORES LIMITED, hereinafter called the "OWNER" OF THE FIRST PART - and - THE CORPORATION OF THE TOWN OF NEWCASTLE, hereinafter called the "TOWN" OF THE SECOND PART WITNESSETH THAT: WHEREAS the Owners warrant that they are the registered Owners of those lands described in Schedule "A", attached hereto, and hereinafter referred as the "said lands"; AND WHEREAS the Town and the Owners have executed a Development Agreement which was duly executed and registered in the Registry Office, for the Land Registry Division of Newcastle (No. 10) as Instrument Number 100965; AND WHEREAS the Town and Owners have executed an Amending Development Agreement which was duly executed and registered in the Registry Office, for the Land Registry Division of Newcastle (No. 10) as Instrument Number 111005; AND WHEREAS the Council of the Town of Newcastle has resolved to approve an amendment to the aforesaid Agreement; AND WHEREAS the parties hereto agree to amend the said Development Agreement; NOW THEREFORE, in consideration of the mutual agreements, covenants and promises contained herein, the parties hereto agree as follows: i 1. Paragraph No. 25 of the Development Agreement between the Corporation of the Town of Newcastle and Armstrong Stores Limited registered in the Registry Office for the Land Registry Division of Newcastle (No. 10) as Instrument Number 100965, is hereby amended by adding the following new Paragraph immediately following the words "to support Phase II". L.R.: 05.05.88 - 2 - "The Owner further agrees that a Market Analysis, to be completed by a party agreeable to the Town and the Owner, indicating the potential impact of the proposed expansion on competing commercial development in Orono and the surrounding area will be required before building permits will be available for Phase III. No building permits will be available for Phase III until the said Market Analysis indicates that there is sufficient residual market to support Phase III". IN WITNESS WHEREOF the parties hereto have hereunto set their hands and seals and/or corporate seals by the hands of their proper signing officers duly authorized in that behalf. SIGNED, SEALED AND DELIVERED ) ARMSTRONG STORES LIMITED THE CORPORATION OF THE TOWN OF NEWCASTLE MAYOR CLERK L.R.: 05.05.88 i THIS IS SCHEDULE "A" to the Agreement which has been authorized and approved by By-law No. of the Town of Newcastle, enacted and passed the day of 1988. LEGAL DESCRIPTION OF SAID LANDS ALL AND SINGULAR that certain parcel or tract of land and premises, situate, lying and being in the Town of Newcastle in the Regional Municipality of Durham (formerly in the Village of Orono in the County of Durham) in the Province of Ontario and being composed of Lot Eleven (11), Rear Range, Block 1 on the East side of Mill Street according to a plan of the said Village of Orono made by C.G. Hanning, P.L.S., and part of Township Lot Twenty-Eight (28) in the Fifth Concession in the Geographic Township of Clarke, lying East of Blocks Y, 1, 2 and 3, Hanning's Plan, the boundaries of the said parcel being more particularly described as follows: PREMISING that the Easterly limit of said Lot 28 has a bearing of North 18 degrees, 13 minutes 30 seconds West and relating all bearings herein thereto; COMMENCING at an iron bar marking the North-westerly angle of said Town Lot 11; THENCE North 88 degrees 12 minutes 30 seconds East along the Northerly limit of said Lot 11 a distance of one-hundred and sixty-two and thirty-six one-hundredths feet (162.361) to an iron bar marking the North-easterly angle thereof; THENCE North 0 degrees 46 minutes West along the rear of Blocks 2 and 3 and intervening streets a distance of two hundred and twenty-six and eighty-five one-hundredths feet (226.851) to an iron bar planted in the Easterly limit of Lot 14, Rear Range, Block 3, at the point of intersection with a fence running Easterly; THENCE South 89 degrees 35 minutes 30 seconds East along the said fence, a distance of three hundred and sixty-nine and seven-tenths feet (369.71) to an iron bar planted at the point of intersection with the Easterly limit of said Township Lot 28 THENCE South 18 degrees 13 minutes 30 seconds East along the last mentioned limit (being also the Westerly limit of King's Highway Number 115 and 35) a distance of six hundred and eighty and eighty-five one-hundredths feet (680.851) to an iron bar planted at the point of intersection with a fence running westerly; THENCE South 86 degrees 52 minutes West, along the said fence a distance of five hundred and ninety-one and five-tenths feet (591.51) to an iron bar planted in the Easterly limit of a street Southerly adjacent to Block Y according to the said Hanning's Plan of the Village of Orono; THENCE North 1 degree 33 minutes East along the Easterly limits of said street i and Blocks Y and 1, and intervening street a distance of three hundred and seventy-nine and two one-hundredths feet (379.021) to an iron bar marking the South-easterly angle of said Town Lot 11; THENCE North 89 degrees 27 minutes West along the Southerly limit of said Town Lot 11 and along a fence a distance of one hundred and sixty and fifty-six one- hundredths feet (160.561) to an iron bar marking the South-Westerly angle thereof; THENCE North 0 degrees 46 minutes West along the Westerly limit of said Lot 11 a distance of sixty-nine and four-tenths feet (69.41) more or less to the POINT OF COMMENCEMENT. i L.R.: 05.05.88 PAGE 2 OF' SCHEDULE "A" The hereinabove described lands, containing by admeasurement, 7.65 acres be the same more or less are shown on a map or plan made by M.D. Brown, Ontario Land surveyor, which said plan is dated April 4th, 1966, a copy of which is attached to Instrument No. N30250. - AND - ALL AND SINGULAR that certain parcel or tract of land and premises situate, lying and being in the Town of Newcastle in the Regional Municipality of Durham (formerly in the Village of Orono) and being that part of Lot Number 28, in the Fifth Concession of the Geographic Township of Clarke known as Village Lot Number 11 on the east side of Mill Street in the West Range of Block 1, according to the plan of the Village of Orono made by C.G. Hanning, P.L.S. and on file in the Registry Office for the Registry Division of Newcastle (No. 10) . Being the lands described in Instrument No. 100965. IN WITNESS WHEREOF the parties hereto have hereunto set their hands and seals and/or corporate seals by the hands of their proper signing officers duly authorized in that behalf. SIGNED, SEALED AND DELIVERED ) ARMSTRONG STORES LIMITED THE CORPORATION OF THE TOWN OF NEWCASTLE MAYOR CLERK L.R.: 05.05.88 I DATED: 1988 BETWEEN: ARMSTRONG STORES LIMITED - and - THE CORPORATION OF THE TOWN OF NEWCASTLE AMENDING DEVELOPMENT AGREEMENT The Corporation of the Town of Newcastle Planning Department Municipal offices HAMPTON, Ontario LOB 1J0 FILE: DEV 77-19 L.R.: 05.05.88 �GJ RECEIVF'nAD-r) 1 3 48 ORONO PLAZA L.C.B.O. RELOCATION IMPACT ANALYSIS Prepared for: R.W. Bruynson 74 Simcoe Street South Suite 302 Oshawa, Ontario, L1H 4G6 Prepared by: Malone Given Parsons Ltd. 255 Yorkland Blvd. , Suite 200 Willowdale, Ontario, M2J 1S3 Telephone No: 416 499-2929 Telecopier No: 416 499-7553 April 1988 I i I CGS T A B L E O F C O N T E N T S Page 1. 0 INTRODUCTION 1. 1 Objectives 2 . 0 RETAIL ATTRIBUTES OF THE ORONO PLAZA SITE 2 . 1 Site Location and Access 2 . 2 Site Exposure 2 . 3 The IGA Store Experience 3 . 0 CURRENT LCBO SITUATION 4 . 0 POSITIVE IMPACTS DERIVED FROM LCBO RELOCATION TO ORONO PLAZA 4 . 1 Improved Selection and Service 4 . 2 New Traffic Attracted to Orono 4 . 3 Potential Downtown Spin-Offs from New LCBO 4 . 4 Replacement Tenant for Present LCBO Store Premises I 5. 0 CONCLUSIONS i i i 1 1. 0 INTRODUCTION In 1983 , the owner of the IGA supermarket in the Village of Orono entered into a site plan agreement with the Town of Newcastle with the intention of constructing a new IGA store and, subsequently, expanding the development to include other outlets at a later date. The site plan agreement contains a clause that obliges the developer, Armstrong Stores Ltd. , to complete a market analysis indicating the potential impact of the proposed expansion on competing commercial development in Orono and the surrounding area and that there is a residual market sufficient to support the expansion before a building permit can be issued for Phase II. The developer has negotiated a leasing arrangement with the LCBO whereby he would build an expansion of 4, 000 square feet to enable the LCBO to relocate from their current premises in downtown Orono which are inefficient and no longer meet the LCBO' s requirements. Accordingly, Malone Given Parsons has been retained to conduct the study required under the site plan agreement. The issue of whether there is sufficient residual market for the new LOBO outlet is a moot point as the government runs these stores partly as a service and not necessarily with the same requirement of profitability that private retail operators must achieve. Nevertheless, the level of service, selection and revenues are important and the existing store is inadequate in these areas. The new LCBO will have 1250 additional square feet of floor area and will be on one level with adequate parking and, consequently, the store will be able to provide better selection and service. The central concern, therefore, is not with whether there is a market for the LCBO in its new location but rather with the issue of potential impact resulting from the relocation of the LOBO outlet. There is an obvious short-term impact as the current LCBO I store premises will be vacant until a new tenant materializes. 2 More importantly, however, in the medium to long term the impact of this relocation could be very positive for the business community of Orono. 1. 1 Objectives The study objective is to determine the potential impact, if any, on 'competing commercial development' in downtown Orono particularly. I i i I I 3 2. 0 RETAIL ATTRIBUTES OF THE ORONO PLAZA SITE From the broad perspective of the municipality of Orono, despite their numerous exits from Highway 35/115, the highway is essentially a by-pass route that allows travellers to pass Orono without necessarily realizing its existence. Apart from the standard set of highway signs, Orono is essentially invisible to the majority of travellers and a high proportion can travel past the Village without seeing something that would induce them to stop. Highway 35/115 has a considerable number of highway commercial establishments between Orono and Highway 401 that cater to the restaurant, souvenir and automotive needs of the traffic and the existence of a village such as Orono does not represent any particular attraction or inducement to interrupt their journey. This is consistent with the experience of many municipalities and business communities around which by-pass roads have been developed: The concentrations of commercial activity have been oriented to the old routes and are poorly placed to attract customers from the new arterials. Downtown Orono has been the victim of this process and now relies on the local trade area to survive rather than the through-traffic that once provided an additional source of business. The Orono Plaza represents a reaction to these new circumstances and is part of a natural entrepreneurial process designed to recapture a portion of the through-traffic market that at one time contributed more to the commercial activity of the village. Although this process is driven by the profit motive, it does benefit the village as whole and the rest of the business community in particular as it has the effect of drawing traffic off the by-pass route and at least providing the rest of the businesses an opportunity to attract trade to their individual establishments. I i i /V 6-) 4 2.1 Site Location and Access The Orono Plaza, as shown on Map 2 . 1, is located adjacent to and visible from Highway 35/115 in the northern portion of the Village between Old Cemetery Road and Piggott Ave. The site is approximately three tenths of a kilometre from the downtown. Access is from Mill St. which connects Highway 35/115 to Main St. (Regional Road #17) at the north end of the downtown section. Access to and from the site within the Village is unencumbered and parking on the site is ample without any need for additional spaces off-site. Access from Highway 35/115 is complicated by the fact that the highway is, at this point, four lanes and divided. South- bound traffic can exit at the Taunton Rd. (Regional Road #4) , Mill St. , Station Rd. and Main St. North-bound traffic can exit at Clarke Concession Rd. #5, Tamblyn Rd. , and Taunton Rd. . Traffic exiting from either direction onto any of the Main St. , Concession Rd. #5, or Station St. exits must pass through the downtown area in order to arrive at the Orono Plaza site. 2.2 Site Exposure The traffic volumes on Highway 35/115 on segments of the highway north of Orono, next to the Orono Plaza site and south of Orono are depicted in Table 2 . 1. The three points, A, B, and C respectively, are shown on Map 2 . 1. According to the Ministry of Transportation and Communications' statistics, the average annual daily traffic passing the Orono Plaza site (Point B on Map 2 . 1) on highway 35/115 in 1987 was 12 , 900 vehicles. This equates to 4 .7 million vehicles per year. The summer average daily traffic count for the same section of Highway 35/115 was 16, 641 (July 1st to August 31st) . Point B gives the best representation of the traffic that is by-passing Orono although some small portion of this traffic might be intending to exit the highway once it has passed the Village. It is this by-pass n a �A A 40 6 ON 27 26 �Mv10S � ��—� iWtlIYN qL i TAwDLYN Afl I / j ra SITE LOCATION ORONO� ONTARIO li F0 Y.1� col MAP 2.1 Ix �M 3 . j = u HI S T. = I �\ (� E. ST - ;oh © ORONO PLAZA KT0 \N ST ` c0aa _ST. • r IcSS jr4 C � J N Dq Si. L col, u� t 4�(P NG L.. I V ( PREPARED FOR : R.W. BRUYNSON O R O N O PREPARED BY , MAL-ONE GIVEN PARSONS i 5 Table 2 .1 - Highway 35/115 Traffic Volumes at Orono AADT* SADT** 1985 1987 1987 Point- A 13 , 000 14 , 500 18, 700 Difference A/B 2 , 200 1, 600 2 , 059 Point B 10, 800 12 , 900 16, 641 Difference B/C 1, 100 1, 700 2 , 193 Point C 11, 900 14, 600 18 , 834 - * Average Annual Daily Traffic I 6 traffic that represents the untapped market for Orono. 2 . 3 The IGA Store Experience The Orono Plaza currently consists of a 6, 500 square foot IGA food store that relocated to the site in 1984 from its previous location in downtown Orono. The original IGA was a marginal operation in the downtown site with gross sales of approximately $1. 5 million in 1983 . The store suffered from its small floor area of about 2, 700 s. f. , limited parking and poor visibility - all three critical to a successful retail operation. After having relocated to the Orono Plaza site with a larger store of approximately 6,500 s. f. , ample parking, easy access and good visibility, gross sales increased by 147 percent the first year and have averaged a fourteen percent annual increase since then. The IGA was, for its last months in its original downtown location, operating in the red with the real possibility of being forced to close in the near future. The relocation had the effect of enabling the only major food store in Orono to remain in business and, as the original premises were occupied by a new tenant, the local tax base was elevated by the effect of the new IGA store. The Orono Plaza site, as a result of. the experience of the IGA store, has a demonstrated record of success with respect to retailing. I I i I I 7 3 . 0 CURRENT LCBO STORE SITUATION The LCBO store in downtown Orono has a gross floor area of 2 , 750 s. f. split between two levels and with two entrances; one on Main St. and the other to a rear parking lot. Because of the cramped space, the need for stairs between the two levels and the need for two entrances, a relatively high proportion of the store is taken up in unproductive space. Selection is, therefore, minimal. The store' s sales of $1, 015, 000 for 1987/1988 are below that considered satisfactory by the LOBO. As a matter of policy, the LOBO does not advertise and relies on their location and visibility to attract customers. A major difficulty with the Orono store is its lack of visibility and the fact that the local market, which is aware of the location, is not sufficiently large to sustain an acceptable sales volume on its own. Expanding the existing store would not solve the fundamental problems of lack of visibility and a local market that is too small . The current situation with the LCBO store must be regarded as unstable as the corporation can .be expected to seek ways and means of improving its profitability ratios. Our understanding is that a withdrawal from the Orono market entirely is not likely. However, remaining in the present location with its poor accommodations and visibility is not likely either. It is- reasonable to assume that any relocation will be to a site with better visibility regardless of the type of accommodation and this almost certainly means a move out of the downtown. It is our belief that this removal is simply a matter of time and the basic consequent impacts in the downtown exist regardless of the new location. The real question is whether there are benefits to the downtown that can be expected as a result of the relocation that might off-set the short term impacts resulting directly from the move out of the downtown. The substantial considerations in this regard are: I CV(G-) 8 1) The nature of the new LCBO accommodations and whether they will enable the Corporation to improve its selection and thereby improve service to local residents but, more importantly, provide a superior facility to what currently exists that will better attract new business or recapture old business previously lost because of the limited selection provided in the current store. 2) The volume of 'new' traffic into Orono that might be generated by the LCBO in its new location. 3) The degree to which the new business that is attracted into town by the improved LCBO in its new location percolates into the downtown area. 4) The establishment of a new tenant in the existing LCBO store premises. I I I i 9 4. 0 POSITIVE IMPACTS DERIVED FROM LCBO RELOCATION TO ORONO PLAZA 4. 1 Improved Selection and Service According to the LOBO, the proposed premises will have the result that i . . . service levels at the new store will be vastly improved as a result of the move. The new location with its larger size, excellent parking facilities and close proximity to the new IGA store, will provide increased convenience for its customers. Also, the staff will be able to take part in some of the new initiatives in merchandising which have brought a vibrant shopping environment to LCBO customers in other parts of the province. ' 4.2 New Traffic Attracted to Orono It can be assumed that the customers now patronizing the existing LCBO store will also patronize the new store. The existing store has 76, 835 transactions per year based on 1987/1988 LOBO figures. The current clientele falls into two major groups: a) Customers that have come on a single-purpose trip to make a purchase at the LOBO store, who do so and leave. b) Customers that have come to Orono in order to do more than one thing but including a purchase at the LCBO store as the reason they chose to visit Orono rather than somewhere else. In terms of ' impact' , the interest here is the portion of the second group that: 1) Had a purchase at the LOBO as the reason they made the trip, and 2) Had not intended to make any other purchase or commercial transaction during their trip but because they visited the downtown LCBO location i I 10 and saw an item or were reminded of some other need because they were downtown, they made a transaction as a result. This latter group does not include those who would have remembered or thought of some other need while on the trip regardless of where the LCBO happened to be within the Village because transactions derived from. such thoughts are independent of the LCBO ' s location. The secondary transaction is only of interest here if it is triggered by the fact that the individual is downtown specifically because that is where the LCBO store is located. Only these 'downtown impulse' transactions will be lost as a result of the LCBO being relocated outside of the downtown. The proportion of the customers conducting the 76, 835 transactions at the downtown LCBO store that also complete 'downtown impulse ' transactions is not known. It can be assumed that many of the 76, 835 either intended to make other transactions while on their trip anyway or thought of some other business while in town independently of the LCBO' s location or, in the course of making some other transaction, thought of or saw something that resulted in a secondary transaction. The secondary transactions derived directly from the LCBO being in the downtown would be in the minority and certainly would not be sufficiently numerous to render any business in the downtown a failure if the LOBO were to move elsewhere. Any business that is that close to failure has problems that go well beyond the LOBO location issue and are probably not making a significant contribution to the overall viability of the core itself. Of far greater importance to the business community is that the LCBO will remain in town so that the village as a whole can continue to attract consumers originating out of town. If the LCBO can be used to increase the number of consumers being attracted to Orono, the entire business community can expect to benefit. The current location of the LCBO is not conducive to I i 11 such an increased attractiveness nor are we aware of any plans to develop a major attraction downtown that a new LCBO store could be part of that would serve the purpose of increasing overall business traffic. The Orono Plaza offers the LCBO a location that is visible from Highway 35/115 with its high traffic volume which represents a market that is, to a large extent, indifferent to Orono at present. The Plaza is visible to an average of 12 , 900 vehicles per day and higher volumes in the summer. The immediate question is how many of these vehicles would exit at Orono as a result of seeing an LOBO store at the Orono Plaza. To assist with this question, a review was undertaken by the LCBO of similar relocations of LCBO outlets. Only one case was found to be sufficiently comparable to the one proposed in Orono to provide a measure of the effect of relocating a store in a small community from an obscure site to a visible location on a major highway. The case is that of the South River store which was relocated in the Fall of 1986 to a site adjacent to Highway #11. In that instance, the variables are as follows: a) 1987/1988 sales: $935, 000 b) Average transaction amount: $13 . 34 c) Sales increase over previous location: 450 d) Number of additional transactions at new site: 21, 752 e) Annual Average Daily Traffic on Highway expressed as the annual total : 1, 843 , 250 (5050 x 365) i f) Additional transactions expressed as a percent of the Annual Average Daily Traffic on Highway 11: 1. 18% Based on the above, the 1987/88 sales can be divided by the average transaction to get the number of transactions (70090) . This represents an increase, according to the LCBO of some 45% over the original store' s performance. The number of additional transactions at the new site is then calculated ,to be 21, 752 . The annual traffic volume on Highway 11 based on the Annual I 12 Average Daily Traffic figures in 1985 was 1, 843 , 250. Assuming that the additional transactions were derived from the highway traffic and that they represent one vehicle each, the percentage of vehicles exiting from the highway to patronize the LOBO in The South River case was 1. 180 of the total traffic volume on the highway. In the South River store case, the new location had a direct access from the Highway and this might have resulted in a better capture rate than the Orono Plaza location can hope for with its clear visibility from the highway but indirect access. According to the LCBO estimates, they anticipate that the new location in Orono could generate a 30% increase in sales. Following the same set of calculations as for South River but assuming the sales increase to be limited to 30%, the following steps determine the percentage of vehicles that would have to exit from Highway 35/115 to visit the Orono Plaza LCBO outlet in order for it to show a 30% increase in business over the current store: a) 1987/1988 sales at the present site: $1, 015, 000 b) Average transaction amount: $13 . 21 C) Sales increase over previous location: 30% d) Number of additional transactions at new site: 23 , 050 e) Annual Average Daily Traffic (1987 statistics) on Highway # 35/115 expressed as the annual total: 4 , 708,500 (12 , 900 x 365) f) Additional transactions expressed as a percent of the Annual average Daily Traffic on Highway 35/115: 0. 49% Less than half of one percent of the traffic volume on Highway 35/115 would be required to exit to the new LCBO store to allow it to achieve a 30% increase in transactions. This would appear to be an achievable capture rate and we can conclude that it can be achieved or exceeded. If the percentage of vehicles exiting were the same as in the South River case, i 13 1. 18%, the number of vehicles would equal 84 , 753 per year. The actual forecast is, therefore, somewhere between 23 , 050 and 55, 560 per year or from 76 to 183 per business day. The above is based on the reasonable assumption, consistent with the general experience in other types of retailing, that there is a relationship between the volume of highway traffic and the number of vehicles that will exit to patronize an LCBO outlet that is visible from the Highway. 4.3 Potential Downtown Spin-Offs from New LCBO A portion of these additional vehicles will have to pass through the downtown on their way to the Orono Plaza. This is particularly true of the south-bound traffic as it would have to exit on either the Station St. or Main St. exits and be forced to travel up Main St, through the downtown, to get to the Plaza. This would involve approximately 50% of the additional vehicles or between 11, 525 and 27 , 780 per year. Once stopped, some portion of the total new vehicles now visiting the Orono Plaza LCBO will seek other goods and services in Orono. Apart from supermarket supplies, the only other commercial outlets are in the downtown. Regardless of whether they have passed through the downtown to get to the new LOBO or not, perhaps 10% of these vehicles might fall into this category and become downtown customers. Again, this represents between 2 ,300 and 5, 556 per year. This should more than off-set the 'downtown impulse' purchases lost by the downtown businesses as a result of the LCBO relocation. 4.4 Replacement Tenant for Present LCBO Store Premises There are, currently, few or no vacancies in the downtown and the second story space is largely occupied. In the case of the original IGA store premises, a replacement tenant materialized. The vacated LCBO space represents an opportunity i I 14 for a new business to be established in the downtown particularly as the rear parking is in good condition relative to other locations and could be attractive to the right type of tenant. Also, the increase in traffic from the highway resulting from the LCBO being relocated could improve the potential viability of a new outlet. A new business would, similar to the experience with the IGA relocation, have the net effect of increasing the overall community business and tax base. I I _7 15 5.0 CONCLUSIONS a) The short term impact is a vacancy in the downtown. This impact will continue until the vacancy is filled. b) The downtown will lose impulse purchases directly derived from consumers that only visit the downtown because the LCBO was located there and the LCBO was the only reason for their trip. Impulse purchases not directly derived from these conditions will not be affected significantly. C) The medium to long-term impacts on the downtown are expected to be positive. Based on the experience in South River, an LCBO store in a location visible and accessible from a major highway such as Highway 35/115 can expect to have an increase in sales relative to those in its previous obscure location. d) The extent of the increase could be 45% as was the case in South River. However, in the Orono case, the increase can be reasonably expected to be at least 30% as this requires less than half of 1% of the by-pass traffic to exit. This is equivalent to 23 , 050 vehicles per year. e) Based on the ratio between the increase in transactions in South River and the volume of traffic on Highway #11, the percentage of traffic exiting to visit the LCBO could be as high as 1. 18%. Based on this ratio and applying it to the Orono situation with Highway 35/115, the additional transactions derived from by-pass traffic exiting to the LCBO store could be 55, 560. This is considered to be high i and unlikely but represents an upper limit. f) As approximately 50% of the by-pass traffic that exits Highway 35/115 to visit the LCBO must pass through the 16 downtown to reach the Orono Plaza location, the downtown can expect a positive impact derived from the new LCBO location based on sales and business generated by this traffic. Between 11, 525 and 27, 780 vehicles per year are involved. g) Regardless of whether they pass through the downtown to reach the Orono Plaza LCBO store, a portion of the additional visitors will, once stopped, seek other goods and services, many in the downtown. This could be 10% of the additional visitors which represents between 1, 152 and 5, 556 vehicles per year. h) The additional traffic downtown will improve the potential viability of any new tenant that leases the vacated LCBO store as well as improving the general business environment. i) The degree to which the increased downtown traffic results in business transactions is a. function of the effectiveness of the downtown business community' s merchandising. j ) The relocation of the LCBO to Orono Plaza will enhance the service and selection for the local residents. k) The relocation of the LOBO to the Orono Plaza will ensure that the IGA store will remain viable and continue to be in business as the only supermarket outlet in the Village to serve the local residents. 1) The overall medium to long-term impact of the relocation of the LOBO store from the downtown to the Orono Plaza location will be positive in terms of the traffic generated within the village and the potential business that can be captured by local businesses.