Original Keg deal caused flap, too

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

Barb Sweet bsweet@thetelegram.com
Published on February 1, 2011

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