Update on Construction
Hi friends! It's been a while since we provided an update on where we are with construction, so I'll update you here. I chatted with many of you at the Pincher Creek Trade Show in April and the Calgary International Beer Festival in May, but here we go for those I have yet to see! The photo for the blog post was taken in September 2021…..oh, the things we have learned since then! Just a couple of eager future brewery owners thought they would be breaking ground in just a few months.
As many of you know, we were approved for financing in June 2021. We then proceeded to secure our team of consultants for the project. The team was assembled by July 2021. Through July and August, the team created the design, engineering, and all documentation required to submit to the Town of Pincher Creek for development permit approval. We hired consultants recommended by our project manager and put our trust in the team to adhere to our budget constraints. We were told the initial design would get us within 70% accuracy of our budget. We submitted the request for a development permit to the Town for a review at the end of August, which was approved. It then needed to go to the MDSA for approval at the end of September.
Through the process, the Town requested we develop a road adjacent to our lot extending Veterans Street to Highway 6. As the only building on said road, and the high financial cost (approximately $250,000) to a new small business, we had expressed that if this were indeed the case, we would not be able to move forward with the project. Luckily, the Town removed this request, and we could move forward. Unfortunately, this also brought an unexpected invoice from one of our consultants to redo the drawings to appease the Town's request. While we didn't approve anything beyond the scope of work initially discussed, the invoice from this consultant was almost $30,000 above our approved scope and cost.
As for the tender process, I don't think we could have reiterated our budget for the project enough. The team reassured us that the proposed design and engineering would meet our construction budget. Unfortunately, this was not the case. In November 2021, the tender process results came back at 300% over our budget. We had expected some cost overruns that we could mitigate by cutting costs in certain areas, but 300%? This news devasted Tim and me, and we were inconsolable. We had put a large amount of our life savings into a dream that may never come to fruition. The money invested was specific to this building on that property in Pincher Creek.
We contacted the General Contractor to gather more information regarding a cost breakdown to determine where we could shave off a couple of million dollars! After a few months of trying to clarify and feeling we were getting the runaround and unable to move forward unless we threw more money at the project, we terminated the relationship with this GC in February 2022.
While still working through the process with the GC, we contacted a few other contractors for second and third opinions and quotes, thankfully, at no cost. We worked with two different contractors from December 2021 into June 2022, and unfortunately, the costs were still too high and needed to meet our budget. While it may be easy to suggest re-design the building or leasing a space, you need to understand the amount of money we have already invested into the current project. To re-design would have additional costs in engineering, which we are trying desperately to keep to a minimum. To lease space will still require architecture and engineering costs. Our costs to date in architectural design and engineering are at $200,000. We are unwilling to forfeit this large sum of money easily, and we want the project to work as envisioned.
In July 2022, a friend referred us to a construction company. This company could get the building enclosed for us within our budget, and my dad and I would tackle the work on the interior and contract out work as needed. At the same time, our loans were approaching their lapse date. This would incur a $10,000 fee. Luckily, we provided a detailed justification of why we had not started construction, and the fee was waived and our loans were extended. We nailed down the design by September that was cost-effective for us and streamlined the design for the construction company. I had sent a request to the Town in August to schedule a meeting to discuss the Town taking on the costs of the utilities on their property, up to our property line, as they were placing that cost on us. The overall quote for the utilities was $120,000, with around 40-50%% of the utilities on the Town's property. We received an update in December 2022 with a decline in any assistance. The design was ready; we just needed to reengage the engineers and tradespeople for some tweaking. We had hoped to start construction in the Spring of 2023.
Right before the holidays in December 2022, we were hit with another blow. One of our major investors had a significant change in their financial situation and had to pull out of the project. Thankfully it happened before we were in the construction process, but this meant we had to go back to the banks. We met with them in early January and were told we needed to re-submit a business plan and projections for re-approval. We submitted the revised business plan and forecasts in late January. The revised plan eliminated the production brewery, which comes at a considerable capital cost, and we scaled back to a small pilot system. We would continue to contract brew our large-scale core beers in Calgary and small batches on-site that would be sold exclusively out of our taproom. We were told it would take about six weeks to determine approval. At the end of March, one of the banks backed out of the project due to the change in our business plan, as we no longer met their criteria as a full-scale production facility. The other bank was still in but now needed a new bank to help out. At the time of the Pincher Creek Trade Show in April, we had gotten off the phone with the two banks that seemed optimistic about the project. Once they obtained all the documentation, approval would take about ten days. We submitted everything they had requested at the beginning of May and have been waiting since.
Our previous loan(s) interest rate was around 5.50% (combined between the two banks); the proposed new Canada Small Business loan rate will be about 9.95% with another rate increase this month, so we are looking at around 10.25%. There is so much to consider, and we wanted to update everyone that we have yet to give up and are trying our best, given all the roadblocks that we have encountered and the time spent exploring solutions. The banks updated us on Thursday of last week that they need more information as this is considered a high-risk industry. They have also informed us that this will not be a quick or easy process and still doesn't guarantee approval. There will be lots to consider if we are approved and the terms associated with the loans. We know the local community and our supporters are eager for us to be up and running with a taproom where they can enjoy our beer; believe us, we are too! We thought we would have been open by now when we ventured to start our own brewery. But, sometimes, things don't go as planned, and life throws some serious curve balls your way. This quote resonated with me: “We can’t choose the music that life gives us, but we can choose how to dance to it.” — Unknown. Things happen for a reason. All we can do is pivot (yes, the word of the pandemic) and do what is best for us and our business.
We are extremely grateful to the companies and individuals who have helped us along the way at no cost. Your time and expertise have been a huge help. I don’t think we could ever express our sincerest gratitude enough!
We are still determining the future of Wild Winds Brewery concerning its taproom and location, but we will continue to produce tasty beers that we are passionate about. We thank you for your continued support and patience throughout all of this uncertainty! Please know that whatever happens, our hearts are in Pincher Creek! Cheers, friends!