Original Keg deal caused flap, too

Barb
Barb Sweet
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'This is the only place in the world this would happen"

Businessman Chuck Matchim has a disturbing sense of déja vu about a St. John’s harbourfront agreement between The Keg restaurant and the St. John’s Port Authority.

“I couldn’t believe that. They are giving everything to The Keg,” said the former St. John’s restaurateur, who was one of the proponents who objected to the original port authority deal that put The Keg on the harbourfront in 2004.

Now the The Harbour Walk Hospitality Group Inc. has submitted a plan to the St. John’s council to build a two-storey building next to The Keg. It would have two restaurants with a common entrance on Harbour Drive — at a cost of $10 million. The land is to be leased from the port authority.

Bitterness over the way that original deal was done prompted Matchim to close his popular Chucky’s Fish and Chips on King’s Road.

He retired for several years, then opened a seasonal inn and restaurant in Happy Adventure on the Eastport Peninsula, because he’s always dreamed of a waterfront restaurant.

Matchim said it’s too late now for him to be interested in the St. John’s waterfront, but he contends the latest proposal repeats the history of what happened years ago and the authority is handing The Keg owners a harbourfront monopoly.

Matchim worked for months on a proposal as a result of a port authority tender call, but didn’t submit a bid because he had problems with the size and capacity of the facility the authority planned to build seven years ago. Other proponents who made a bid said they were galled that while they expressed major problems with the design to no avail, the port authority turned around and rejigged it for The Keg.

The issue first drew an uproar in 2004 when The Telegram revealed the authority had dismantled a sail-like steel frame that was constructed for a restaurant at Pier 7 in order to accommodate The Keg proposal. It was later reinstalled.

This time the controversy is over the fact that no tenders were called. The proposal had downtown bar and restaurant owners complaining to the media in the last week.

“That’s very sad,” Matchim said in a telephone interview with The Telegram.

“This is the only place in the world this would happen. When you don’t go out on open tenders, something is drastically wrong.”

Port authority president and CEO Sean Hanrahan said the authority did not have to go to tender this time as long as fair market value is obtained. He said there have been three instances in the last three years where land was offered for lease to adjacent businesses — in those cases industrial or marine operations. The idea is to offer current tenants a chance to expand.

The authority already has an agreement in principal for the kiosk site with the restaurant developers, who would be responsible for constructing the new building.

The proposal replaces a series of kiosks that flopped financially for the port authority. But Hanrahan said they’ve also attracted vandalism and public drinking, and Christmas lights were stolen from them last year.

The kiosks will be given to Easter Seals House free of charge, but the children’s disabilities charity will have to pay to transport them to the new site.

“Everybody told them those booths were going to be a nightmare,” Matchim said.

Hanrahan said the new proposal will be the last of its kind as the port authority’s other open waterfront property can’t be built on. The marginal wharf is built out over water, whereas The Keg and adjacent site are on top of land.

Robert Moore of The Harbour Walk Hospitality Group Inc. also remembers the 2004 controversy and says he is bending over backwards now to accommodate the city and the site’s neighbours.

“We didn’t want to go that route again,” said Moore, who added the company put $3 million of its own money into The Keg building and is taking all the risk this time.

Moore said the misconception is that The Keg got the deal of a lifetime in ’04, but it actually pays more than $40 a square foot for its lease.

“Nobody else is paying those kind of rents,” Moore said, adding that zero public money is going into the new proposal.

He said the packed Keg turns away reservations, and that benefits other restaurants.

“It’s a great project for the city,” he said. “I certainly will have no trouble sleeping tonight.

“Everybody is worried about the competition. The Keg (already) draws thousands annually to the harbourfront and that spills over to George Street and the entertainment district.”

He declined to confirm which national chains his company has been talking to, but said the original proposal called for three restaurants in a three-storey building, plus his company’s headquarters and a banquet room. It was roughly double the square footage of what’s now proposed, which is 16,000 square feet.

The company hasn’t ruled out independent restaurants either.

Moore also said there’s waterfront opportunities for others because his company has been offered private land, but turned it down because it liked the location beside The Keg.

Moore’s company approached the port authority years ago for the kiosk site but he said the authority wasn’t interested at that time.

“It didn’t take a whole lot of business smarts to realize that kiosk project wasn’t working,” Moore said.

As for Matchim, he said his inn and restaurant in Eastport, which serves Chucky’s fish and chips, other seafood and wild game, was blocked last summer.

Moore expects city hall approval in two or three weeks.

bsweet@thetelegram.com

Organizations: The Harbour Walk Hospitality Group, Port Authority, The Telegram Easter Seals House

Geographic location: George Street

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Recent comments

  • MallRat
    February 06, 2011 - 12:54

    To all the Haters, build a bloody bridge and get Over it! It's about time this City hook some serious Franchises, and if someone can come up with the Capital and absorb start up losses like the current "Keg Group" can, let them run with it. I'm sick of idiots getting on this topic bitching about fairness and underhanded dealings blah, blah, blah. That's what CANADA was built on! You sound like unionized workers in the lunch room always bitching about how Johnny got more smiles from the boss, meanwhile he works his Ass off, and deserves the smiles. Elementary minds.... Oh and Come on, did I really just read that the Telegram actually granted Chucky an Interview?? Imagine he abandon his business plan on the Waterfront opportunity because what the Port Authority had in mind was on a larger scale than what he was planning. I bet he was interested in one of those vendor shacks on the current site selling "Fish and Chips" just what we need downtown, more Fish and Chips! Bloody Priceless, you can't purchase this kind of Entertainment, what a Bunch!

  • Twonie
    February 02, 2011 - 10:05

    Why is it that people always complain about development!!!! If this busniess man can afford to put two resturants there then go ahead and do it!!!! You have to change wit the times people!! Harbor Front resturants are very popular. Im all go for this! I think its a great idea. And im sure half these people complainign will be down there filling there guts when the doors open!!!

  • cabana
    February 01, 2011 - 17:34

    Political watcher you knows nothing! Go Leo's!(fish n chips that is:)

  • Aaron
    February 01, 2011 - 17:13

    When the Keg was built at Pier 7 the Port Authority had to take down a building that was still under construction because it didn't fit the Keg's requirements. It cost the Port a loss of approximately $1 million but Port Manager Sean Hanrahan assured everyone that the Port made a good deal.. At that time the Port had coincidentally just received a $1 million grant from ACOA to develop Pier 7. Mr. Hanrahan said that $1 million was not for the restaurant but rather for kiosks to be built next door to the Keg. Well now just 6 years later the kiosks are history so that's another million out the door. Another good deal Mr. Hanrahan? Who is The Pub and Restaurant Authority sorry, Port Authority trying to fool. You've blown $2 million because of bad management mistakes. It's time someone was held accountable.

  • Jeremiah
    February 01, 2011 - 15:08

    Turry, The Keg is far from high end. It is overpriced fast food, so-so if you like fast food. The waterfront, our gateway, should have something more than a chain franchise. Why not have a look at what Halifax has done with their waterfront. Planning is not a bad thing.

  • turry from town
    February 01, 2011 - 14:10

    St.John's needs more highend restaurants in it's downtown core close to hotels and nightlife.Not everyone who comes to St.john's wants fish and chips.A visitor would rather meander up some laneay through old parts of town to get authentic fee and chee,than go to a chain like fish and chip joint from the US.

  • James Whitmore
    February 01, 2011 - 12:06

    According to Mr. Hanrahan, the public is simply confused. The St. John’s Port Authority is not subject to the public tendering act or any other legislation designed to protect the taxpayer, avoid conflicts of interest, and ensure competition in the marketplace. It is Mr. Hanrahan’s opinion that the Authority got fair market value for the lands being turned over to the Keg and that’s all that matters to Mr. Hanrahan. Never mind that the public or the business community might think otherwise. They did after all get an outside consultant’s report telling them what it’s worth – what more can the public expect? Did it occur to Mr. Hanrahan when he was negotiating this deal in secret with the Keg that the public might not be confused enough? It might not be so confused that it failed to recognize well known Tories dealing with well known Tories behind closed doors. It might not be so confused that it wouldn’t ask the obvious question – wouldn’t going public with this opportunity remove any question that this was a sweet heart deal negotiated between sweet hearts? An appraisal report is a useful start but as any appraiser will tell you quickly, the marketplace is the only mechanism for determining the true value of a property. What Mr. Hanrahan doesn’t, and can’t, know is whether some other business group might have been prepared to pay a higher price to be located on the last piece of waterfront that might ever be available for that type of development. What Hanrahan didn’t consider was whether the public interest might be better served by having three independently owned enterprises competing with each other instead of a single group owning all three restuarants. Hanrahan is no fool. He and the people he was dealing with understood that this would not go down easy in some circles. But he thought he could respond with some blarney about how the property had been vandalized (as if that somehow legitimized his non-competitive approach) and how any public concern was based on a complete misunderstanding of how things work at the Port Authority. As one unconfused member of the public, Mr.Hanrahan, let me assure you I know how things work in these nondescript, obscure creatures of the government that are placed just far enough away from the Auditor General’s reach to make sure they can do what ever they want to do without being accountable to anyone other than a carefully handpicked board of directors. Perhaps the Telegram can, for once, venture a little deeper and invite, for example, the members of that board to discuss their reasons for locking out every other member of the busines community in this province when it comes to the development of teh St. John's waterfront.

  • John Smith
    February 01, 2011 - 11:47

    This is just sour grapes on part of the george street crowd, and a few others. These guys were smart enough to get this deal, so congratulations. Lucky for them they didn't have to go through the city, because they would still be planning the KEG. We desparately need more, and better restaurants in this town. The PF Changs would be great, but I would love to see more family restaurant chains, that's what we are really lacking in my opinion.

  • Lacking Vision
    February 01, 2011 - 11:37

    Instead of encouraging more of the same on the waterfront, why doesn't the Port Authority encourage the structure of a year round Farmer's Market, where farmers and artists alike have an opportunity to sell their products. Look at Halifax Harbour or Boston and their markets.... something for locals and tourists with an opportunity to eat, shop and chat. Does the port authority have any creative ideas apart from more of the same? This idea is totally lacking vision.

  • Peter
    February 01, 2011 - 10:32

    If the policy is to allow existing businesses to expand. If the proponents have to pay fair market value for ground rent. If that is currently $40 per square foot. What is all this nonsense about ? The operators have established a first class building and restaurant there with the Keg. Now they are expanding. Good for them. What's the news value here? Must be slow news day for St. John's if this is the BIG news of the day.

  • Frank
    February 01, 2011 - 07:38

    Chucky's Fish & Ships was my favourite place to eat in the city (not "Chips" - he ran a boat tour company on the side, hence "Fish & Ships"). I heard he shut the restaurant down because of shady dealings on the harbourfront development, and I never set foot in the Keg as a result. Now that I know "Chucky" has a place out in Happy Adventure, you can bet I'll take the time to get out there this summer.

  • political watcher
    February 01, 2011 - 06:52

    Mr. Matchim, the man who closed his restaurant because he was "too busy": yes, this was one reason he gave. Look, there are enough places in St. John's where a tourist can get a feed of fish & chips and other dep fried delights. The Keg, although I am not a big fan, has been good for the downtown and has sprucd up the waterfront area. To those ho say that tourists don't want to see Chain restaurants downtown I have two point: 1. Tourists may want a break from the locaal fare and will look to a familiar restauant where=by they know what they will be gting. 2. You tell me that when you visit somewhere else you don't eat at National/Internation chains? I find it difficult to believe and you too. March on Mr. Moore as you have a stellar reputationwhen it comes to family dining and have introduced a much better selection of restaurants to th City and I look forward to more from you. P.S. I don't know Mr. Moore and wouldn't know him if he was standing in front of me but I do know what a decent restaurant is.