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Aldermen reject Manchester mayor's proposal to take 25% of Derryfield Restaurant's future Keno revenue

New Hampshire Union Leader

March 20. 2018 11:15PM

MANCHESTER — City aldermen voted Tuesday night to approve adding language to the city’s management agreement with The Derryfield Restaurant allowing Keno operations to take place there, but rejected a proposal by Mayor Joyce Craig where the city would receive 25 percent of any new revenue brought in by the game.

The vote by the Board of Mayor and Aldermen was unanimous to approve the new language, which includes no mention of taking any additional funds for city coffers.

“Twenty-five percent greatly exceeds the current amount included in the management agreement,” said Attorney Roy Tilsley, representing The Derryfield Restaurant management. “We were surprised and taken aback by the request. We don’t think it is consistent with the relationship we’ve had with the city for many years.”

Tilsley went before the Lands and Buildings Committee Tuesday to review the proposed “Fifth Addendum” to the city’s management agreement with the popular Mammoth Road restaurant, drafted to address concerns by some city officials the facility was offering Keno 603. The bingo-like game, offered by the New Hampshire State Lottery Commission, is not specifically addressed in the existing management agreement between the city’s Parks and Recreation Department and BLL Restaurant Inc.

The language included in the current agreement prevents Derryfield management from putting slot machines or video poker machines on the premises, and requires that all employees be informed that gambling is prohibited on the premises at all times.

Keno 603 does not require management to have either video poker machines or slot machines on site.

To address concerns over the game being offered, Tilsley wrote up a fifth addendum to the management agreement that specifically allows BLL Restaurant Inc. to operate Keno on site. Committee members voted unanimously to recommend the new addendum be approved.

Keno can only be played in restaurants and bars with a liquor license. Businesses hosting the games get an 8 percent commission on how much is wagered on Keno each day.

Earlier this month Craig suggested the city receive 25 percent of the 8 percent in new revenue the Derryfield receives from Keno sales. Under the existing management agreement with Manchester officials, the city receives 1.5 percent of the gross revenues generated by the restaurant.

Management reached an agreement with the city last year to extend that lease, agreeing to a minimum monthly payment and an increase in base rent that ups the annual management fee payment to the city to nearly $192,000 per year.

“My clients are happy to pay it, we feel this is a fair market value for this facility,” said Tilsley. “We do not have any type of a sweetheart deal. We pay fair price for this facility.”

According to Craig, the Derryfield has generated about $61,000 in overall gross revenue from Keno sales since the game launched on Dec. 15 — which would yield about $5,000 in non-property tax revenue annually.

“Keno is not a profit center for us,” said Tilsley. “This is something we are offering because other restaurant are offering it. Our fear is we will lose customers to other places that offer it.”

Alderman Barbara Shaw of Ward 9 opposed the city taking any additional portion of Keno gross revenue sales at the Derryfield.

“If you begin to generate a lot more money in your restaurant, you will actually be increasing the amount of money you pay to the city,” said Shaw.

Tilsley said his clients — in exchange for dropping the request by the city for 25 percent of Keno gross sales — would be willing to add in language to their amendment calling for an annual donation of $1,000 to support a city literacy program.

“I don’t think it’s necessary to put that in writing,” said Shaw. “You’ve always been a leader in the community in terms of support.”

Craig thanked Tilsley and Derryfield management for committing to support the summer reading program.

“It means a lot to the city,” said Craig.

Board members approved the new addendum to the agreement between the city and restaurant management, without including Craig’s proposal.

Local and County Government Manchester

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