Drummond Report: Ontario to sell downtown LCBO warehouse and

The_Jester · Post by **The_Jester** » Mon Feb 13, 2012 12:46 pm

From the Toronto Star:

To raise money and cut costs Ontario will sell the downtown Toronto LCBO warehouse and privatize more Service Ontario operations, Finance Minister Dwight Duncan said Monday.

The government — which is preparing for the release of Wednesday’s Drummond report on cost-cutting — will also look at scrapping horse racing subsidies that have cost taxpayers $3.4 billion since the previous Progressive Conservative government started them in 1998.

Selling the LCBO warehouse and head office on valuable waterfront land ripe for redevelopment is expected to generate over $200 million, Duncan said in a luncheon speech.

“We can make better use of the property to maximize the value of this taxpayer asset,” he told a crowd of 500.

“A flagship retail store will remain in the vicinity, while head office and warehouse could be moved.”

Duncan warned that the former TD bank chief economist Don Drummond had warned him that the government’s annual deficit — slated for $16 billion this year — could balloon to $30 million by 2018 if the way public services are delivered are not “transformed.”

In last October’s election campaign, all three major parties promised to slay the deficit by 2018.

“It is clear that this serious challenge requires a serious plan,” Duncan said.

For Service Ontario, about two-thirds is already privatized with online transactions costing about $1 each — much lower than the $3 to $8 for in-person transactions such as renewing drivers’ licences or getting birth certificates.

“Obviously, greater efficiencies can be gained by driving customers to a lower-cost, online channel,” Duncan said.

The horse racing subsidies topped out at $345 million last year through the Ontario Lottery and Gaming Corporation’s “slots at racetracks” program.

“It’s more support than we provide for water protection or road safety to protect our families...that kind of money would pay for over 9 million hours of home care,” said Duncan.

The contract lasts another year and will be honoured until then, a ministry official said.

JerCraigs · Post by **JerCraigs** » Mon Feb 13, 2012 12:50 pm

It's hard to argue the logic of moving the warehouse from a financial perspective, that property must be worth a fortune. The question is where would they move it to? Are licensees required to pick stuff up there or can they just get it at a local store?

icemachine · Post by **icemachine** » Mon Feb 13, 2012 2:11 pm

My guess is it'll go to an industrial park in the 905. Pretty sure licensees can get their orders delivered to any store. Hopefully this will force a change to get private orders delivered to LC's as well

Torontoblue · Post by **Torontoblue** » Mon Feb 13, 2012 2:27 pm

It will also hit the consignment program hard if agency drivers have to go way outside downtown.

JerCraigs · Post by **JerCraigs** » Mon Feb 13, 2012 3:00 pm

Even just somewhere in the inner burbs (e.g. Etobicoke) would be cheaper than where they are.

Rob Creighton · Post by **Rob Creighton** » Mon Feb 13, 2012 5:07 pm

My guess is the cost of the new LCBO headquarters and warehouse tops $400 mill.

Derek · Post by **Derek** » Mon Feb 13, 2012 5:40 pm

Rob Creighton wrote:My guess is the cost of the new LCBO headquarters and warehouse tops $400 mill.

Yeah, there's no point in generating 200M if a replacement will cost you more (though maybe the old warehouse requires work?).

If they did build closer to the 401, they might save some transportation costs (time & money), which could then be passed on to the consumer.

icemachine · Post by **icemachine** » Mon Feb 13, 2012 5:56 pm

Derek wrote:
Rob Creighton wrote:My guess is the cost of the new LCBO headquarters and warehouse tops $400 mill.
Yeah, there's no point in generating 200M if a replacement will cost you more (though maybe the old warehouse requires work?).

If they did build closer to the 401, they might save some transportation costs (time & money), which could then be passed on to the consumer.

Didn't know you were starting a career in comedy, Derek

100,000 sq ft would rent for about $1M/year or could be bought for $15-20M in the inner 905 belt. Selling the downtown location is something that should have been done a while ago.

Kish84 · Post by **Kish84** » Mon Feb 13, 2012 11:02 pm

What are the chances of better storage conditions in the new warehouse?

ErkLR · Post by **ErkLR** » Mon Feb 13, 2012 11:10 pm

Kish84 wrote:What are the chances of better storage conditions in the new warehouse?

They do recognize that craft beer is their fastest growing segment. But whether they will bank on that continuing and build a refrigerated section or if the planners talk to the people that know it's growing, or if it's even cost effective are different matters.