The Niagara Foundation says an agreement that saw the organization take over and operate NOTL’s historic Foghorn House from the Town of Niagara-on-the-Lake is a win-win for both parties.

Lyle Hall, chair of the foundation, says despite public criticisms that were voiced during the summer months on social media, the agreement benefits both the town and the foundation.

The criticism he’s referring to was an anonymous post made on a NOTL Facebook group, which claimed the foundation got a sweetheart deal from the town during the 2018-2022 council period. The post ignored several important details surrounding the agreement, which has been in place since 1986.

The agreement allows the foundation to manage the property, located at 99 River Beach Rd., as a rental, with a portion of the proceeds going back to the town’s coffers.

As part of the terms, the foundation was tasked with repairing and maintaining the dilapidated property, and must pay the town 15 per cent of the rental income. Until 2022, the foundation also paid property taxes.

Hall said, in total, the foundation has paid the town more than $270,000 from revenue share and property taxes during its time operating the Foghorn House. During that same time, after all costs and expenditures have been tallied, the foundation has earned about $70,000.

The agreement was renewed and amended in 2022 due to operating losses suffered by the foundation. That amendment waived property taxes on the home from 2022 until now.

In a memorandum sent to the town in 2021, the foundation said from 2016 to 2020 it lost $15,000 with depreciation, partially due to losses caused by the COVID pandemic.

“We just finished COVID so our nightly rentals were substantially reduced,” he said, noting that the home is now rented by a permanent resident and not on a nightly basis.

The town agreed to waive property taxes on the home. The total amount of taxes deferred as of March 31 this year is $20,806.50.

Now, the foundation is planning to exercise an option to extend a lease that allows it to continue to manage the town-owned structure until 2026.

“We have an option agreement in our current lease which allows us to add one extra year from February 2025 until January 2026,” said Lyle Hall. “We are invoking that.”

Home was in dire need of repairs

Hall says the home was in a state of disrepair when the foundation took over responsibility for the home in 1986. At that time, the foundation committed to restoring it in exchange for the right to recoup lost finances through a rental income stream.

“We spent a considerable amount of money — several hundred thousand dollars — in renovating and maintaining the structure, and as a trade off the town enabled us to recover some of that money through the rental of the building,” he said.

An outline of the work completed was provided in a 2021 memo sent to the town by Hall.

In that memo, Hall outlined that between 1986 and 1990 the foundation spent $100,000 to repair and renovate the building for habitation.

“The foundation also contributed $10,000 towards shoreline improvements during the initial year of the lease (1986),” he added.

“In the early 2010’s an additional $90,000 was spent on furnishings and minor upgrades to use the building for the purpose of nightly rentals.”

In an interview with The Lake Report, Hall elaborated on those renovations and repairs saying the foundation undertook the expense to connect the home to the town’s sewage system, had electrical and plumbing refits done, put on a new roof, added new partitions inside the structure, put in a new kitchen and updated the bathrooms.

“The building was in pretty sad shape,” he said.

When it came time for the 2022 renewal, the foundation asked the previous council — led by former lord mayor Betty Disero — for the new concessions surrounding the waiving of property taxes.

“Over the past five years, the foundation earned $36,377 from operation of the Foghorn House before depreciation. After depreciating our capital investment, the foundation’s loss stands at just over $15,000 for the period 2016 to 2020. During this same period, the town received $29,933 in rental commissions (15 per cent of total revenue) and an additional $40,247 in property taxes,” the memo reads.

The lease agreement also stipulates that other costs related to the property are to be shared by the town and the foundation.

The amended lease says the town is responsible “for routine maintenance of the building” and “for any costs associated with maintenance of the shoreline protection of the property. It says the foundation will “pay all heat, light, and other utility costs for the property” as well as “any capital costs with respect to the maintenance of the building” and “shall maintain the grounds of the property in a clean and trimmed condition.”

Mixed opinions on value of the deal

Current Lord Mayor Gary Zalepa said the deal, as it stands now, does have understandable factors, but when it comes to such things as waiving the property taxes, he is less understanding.

“I don’t think I would have done that,” he said.

He does, however, see the logic behind entering into a mutually beneficial agreement to manage the property.

“I can see why the town would enter into an asset management agreement to allow an organization such as the foundation to manage an asset, because it does make sense if you can create a sustainable MOU (memorandum of understanding) or relationship.”

“I’m not sure that was captured in all this,” he concluded.

Zalepa said a more sustainable relationship “that allows the municipality to fairly recover the cost to do this and responsibly put away proper funds into a reserve for capital repairs and maintenance just like any owner of property would do to manage an asset,” is the kind of agreement that he would prefer.

He didn’t explain why the current agreement, to him, doesn’t accomplish that goal.

Hall, however, believes the current agreement is a win-win situation where the town gets an important historical property restored and maintained, plus some revenue, and the foundation is happy because it helps it accomplish its mandate to protect the history and culture of NOTL.

“The foundation’s objectives with this building, and with several others in town, was to preserve heritage structures,” he said.

He is confident council will honour the extension clause in the current agreement.

He said the foundation has “achieved our mandate in terms of maintaining and putting the house in a good state of repair,” he said.

“We have no reason to believe the town won’t abide by the lease that they agreed to and that that lease is consistent with the last three years, which was that we will not pay property tax.”

Hall adds there was never any intention of the foundation entering this agreement to make money and that the town benefitted financially.

The Town of Niagara-on-the-Lake refused to disclose financial figures for the property.