Here’s the Mahony and Sons Lease

I’ve had this document kicking around for a while and there’s no reason to keep it to myself anymore.

Here’s the Mahony and Sons lease.

While it’s mostly a standard lease agreement, for a period of 10 years ending in April 2016, it does contain a few interesting things. One section of minor interest is “4.3 Prohibited Uses”, where UBC Properties Trust lists the business activities that may not take place in the Mahony’s space. Paraphrasing, they’re not allowed to do the following:

• Sell second-hand goods, or be a liquidation-type store
• Sell firecrackers or fireworks
• Hold auctions, liquidation, bankruptcy or going-out-of-business sales
• Catalogue sales
• Be a pawn shop
• Anything that is shady in UBC’s opinion

However, the most interesting part of the lease is certainly the restrictive covenant. In this case, the covenant states that UBC is not allowed to rent space to any other bar or liquor store in the University Boulevard neighbourhood, defined as the yellow area in the picture below.

Mahony's restrictive covenant includes everything within the yellow boundaries.

“But wait”, I hear nostalgic sixth-year students saying, “what about Cafe Crepe?” It’s true that Cafe Crepe was once in the space where Scotiabank is now and was basically a bar serving cheap pitchers under the guise of a crepe restaurant. Technically, it operated on a food-primary licence, so it was allowed. (Also why they made you buy a plate of fries to go with your 6 pitchers of beer.) The restrictive covenant only applies to liquor stores and places with a liquor-primary licence.

In the map above, the current SUB is not within Mahony’s exclusivity area, and so the Pit and Gallery were not affected by the restrictive covenant. Then the NEW SUB was approved, and the location decided upon was within Mahony’s exclusivity area. In theory, Mahony’s could have prevented any liquor-primary establishments from moving into the NEW SUB.

A piece of background needed for this story is to know that UBC not only owns the land on campus, but they also own the buildings. While this might seem self-evident for academic buildings, it’s not quite as obvious when it comes to a building like the SUB, which is majority-funded by students and operated by the AMS as their own. In fact, the AMS leases the SUB from UBC and is free to operate it with basically no interference from the university. But the AMS doesn’t own the SUB.

Luckily, Mahony’s did not move to block the AMS from keeping their liquor licences and the NEW SUB lease agreement allows the AMS to retain their two existing liquor primary licences in the new building. However, retaining these licences came with strings attached. UBC placed restrictions on where the Pit and Gallery could be located, how much floorspace they could have, and how they could be advertised. Patios, doors, and windows on the ground floor were ruled out on the south and west sides of the building. Prohibitions on signage were also enacted for the south and west sides of the building. This map is from the NEW SUB lease:

Note also that the housing planned for U-Blvd is "Student Housing". This will be important when UBC claims in a few years that the intention was never to have it be student housing.

When asked about the effect of the Mahony and Sons restrictive covenant on clauses in the NEW SUB lease, Chris Mahony would not comment directly, saying: “As you know Mahony & Sons is a big supporter of the students and the UBC community as a whole. I certainly don’t want to leave you with the impression that we are against the AMS or any other student related groups. We really enjoy doing business on campus and wish to continue our great relations with the student body. To be honest, one of the benefits of having a private company is being able to keep certain information about our business private. This is a matter between UBC Properties Trust and us as a private business. We are not willing to make any of our lease information public.”

Determined to have a licenced patio somewhere in the NEW SUB, the AMS found a loophole and the plan now calls for a licenced patio on the roof. Tentatively called the Perch, it would be like (a hopefully much better version of) the current Gallery-Pendulum combo. However, the plan now is for it to operate under a food-primary licence, so that under-19s are allowed in to get food during the day. (The fate of the AMS’s second existing liquor primary licence is still up in the air.) It’s a creative solution to a problem that never should have been a problem in the first place; the patio and signage bans wouldn’t have existed if it weren’t for UBC Properties Trust giving Mahony’s that restrictive covenant in their lease.

The ban on liquor stores in U-Blvd is perhaps the more inane part of the restrictive covenant. The ban is not protecting Mahony’s from competition for something they do, it’s protecting them for something they don’t do. Even if they wanted to do off-sales, Mahony’s is unable to under the current terms of their own licence.

It’s obvious why Mahony’s would want to restrict a source of indirect competition like a liquor store, but now that the BC Liquor Store is moving away from the village, and UBC is still planning to build more retail space in the U-Blvd area, that area might make an ideal location for a private liquor store if such a retailer was interested. (I’ve always thought the AMS running a private liquor store in the SUB would be a fantastic money-maker.) But this covenant makes the idea a non-starter while adding no value to consumers. It’s protectionism for protectionism’s sake.

The Mahony’s lease was signed in 2007; the theme of that year’s UBC annual report was “Foresight”. It was at the height of UBC’s delusional plans for the University Boulevard neighbourhood. The lease was signed under the assumption the neighbourhood would develop exactly as planned – namely condos and retail, with a laughably undersized bus loop underneath.

Now much of the plan that gave context to this lease has been scrapped. Rather than being used to stop someone like the Donnelly Group from opening up “Campus Public House” directly across the street on U-Blvd, the restrictive covenant is being used to dictate signage and patio restrictions to the AMS. The liquor store in the area will soon move away, and anyone hoping to replace it in U-Blvd will be shut out by UBC Properties Trust, who are at least partly responsible for luring BCL away in the first place. Despite 2007 being a year of intense student objection to the U-Blvd plans, apparently no one had the foresight at the time to imagine that things might look a little different just 5 years down the road.

Document: Annotated excerpts from the Mahony and Sons, and NEW SUB leases.