EDGECUMBE TRUST HOTEL LICENSING COMMITTEE INVITES APPLICATIONS FOR DEBENTURES TO RAISE £l0,000

Bay of Plenty Beacon, Volume 15, Issue 70, 17 July 1950, Page 5

EDGECUMBE TRUST HOTEL LICENSING COMMITTEE INVITES APPLICATIONS FOR DEBENTURES TO RAISE £lo,ooo

Debentures for the amount of £IO,OOO in sums of £5 or more will be invited by the Edgecumbe Trust Hotel Committee as funds towards the establishment of a trust controlled hotel at Edgecumbe. Sums of £5 or more will be accepted and applications or promises are to be made in writing to the committee. This was decided at a meeting of the committee on Thursday night. It is hoped to have the amount in full by July 27. However, if the money cannot be raised the committee will recommend that application for the hotel proceed no further. Anyone may apply for debentures.

The. chairman, Mr I. B. Gow, gave an outline of the committee’s activities in gathering information regarding the establishment of a Trust Hotel at Edgecumbe as a result of the directive given it at the first public meeting on the matter. It had been rather a difficult job as there was no precedent for the establishment of a trust hotel, which is an entirely different project to that - of a trust area.

Much Information Much authorative information had been obtained from widely different sources. The tenor of all infor"mation received was that if the people of the district required a trust hotel in preference to a privately owned license then the people must find the necessary finance by public subscription. There was no possibility of the ratepayers having to underwrite any finance required. The trust, if established, would not be able to strike a rate in the ■event of financial difficulties, neither would it be able to obtain finance as normally constituted public bodies are able, that is against the land as security. The only security it could offer would be its own assets.-

Finance •Cost of establishment including the cost of poll; county solicitor’s fees for general work; in event of the poll being carried, (a) Fees of solicitor to present case before the Licensing Committee; (b) If successful the cost of building and furnishing which would not be likely to come to less than about £so,r 000; (c) Cost of license, which would be expected to be some £I,OOO. ■ Mr Gow said that the method of financing had become obvious in that the district itself would need lo raise at least £15,000 by sale of debentures before, it would be likely that any financing institution would advance the major portion of the sum required. For this major sum a first mortgage over assets would need to be given and debentures take second place. Interest upon debentures would be conditional upon profits being sufficient for that purpose after first mortgage charges had been met. The committee had not been able so far to gather any reliable information as to labour and general maintenance costs or receipts from which could be called a comparable hotel. The bar trade could only be a matter of speculation based upon {some knowledge of what neighbouring hotels are doing. It was felt however, that the annual gross profit would need to be in the vicinity of £6OOO before the hotel could be expected to pay its way. Will Take Time The committee is generally agreed, Mr Gow continued, that although there might be a period of some years before there would be substantial nett profits, the prospects for the future on a long term, view should be very good. It remained therefore, for the people of the district to demonstrate whether this view has sufficient public backing. If they really desired a trust controlled hotel this was the only way in which it can be done, the chairman added.

When the question was opened for discussion the figures for the hotel returns were queried. One speaker said that in his experience takings totalled about £l2O a week, £6240 a year.

The secretary, Mr G. E. King, pointed out that a figure of £2OO gross takings had been estimated by the committee for one hotel similarly placed to that proposed at Edgecumbe.

Representing the Whakatane County Council councillor W. Hunter declared that the meeting was not representative of the district He did not think the Council would, therefore, take any further action in holding a poll.

Agreed to Poll At a previous meeting the Council had agreed to make application to the Licensing Committee for permission to hold a poll and he did not think they would break faith with the people of Edgecumbe, the chairman replied. Even though the meeting was not as lifrge as was hoped it was of the usual size of those held at Edgecumbe, at which similar decisions of public importance had been made. Mr Gow said that future action relative to the establishment of an

hotel would be the responsibility of the trust committee when it was formed. The present committee had to report as impartially as possible and it had to make recommendations. The final decision lay with the people. At this stage Mr Andrew McLean moved that the committee be authorised to invite the public to subscribe debentures for the amount of £15,000 and that if the sum of' £IO,OOO was not raised by July 27, application for a trust license be proceeded with no further.