DRESCHEL: LIUNA has an eye on Sarcoa
https://www.thespec.com/opinion-stor...eye-on-sarcoa/
Toronto investors aren't the only people interested in doing something with the troubled waterfront restaurant Sarcoa.
For several months last year, the Labourer's International Union of North America (LIUNA) negotiated buying out the restaurant's sublease from the owners, reportedly for up to $5 million.
According to LIUNA vice president Joe Mancinelli, the union "backed away" from the deal because of the Sarcoa's complex legal wrangle with the Hamilton Waterfront Trust (HWT).
But Mancinelli says LIUNA is still very much interested in the property, possibly for a combination commercial and residential development.
"We haven't really concluded anything or done anything, but we are still interested. It's a great, great property."
Sarcoa, which subleases the city-owned former Discovery Centre on Pier 8 from HWT, is suing the city and trust for $15-million for allegedly breaking their lease agreement by not permitting it to hold what it claims are financially essential patio music parties.
HWT, which denies the allegations, recently terminated Sarcoa's sublease for alleged "protracted breaches," prompting the owners to threaten further legal action and effectively casting into limbo what is widely seen as one of the harbour's première locations.
Meanwhile, The Spectator reported earlier this week that former mayor Larry Di Ianni, acting on behalf of an unidentified Toronto group, has given HWT a proposal which, among other things, would see the investors pay Sarcoa's rent for up to six months while they explore development possibilities on the site.
The HWT board has neither accepted nor dismissed the proposal. But, outside of calling a special board meeting, it's put off dealing with it until Sept. 12 — rather an odd response given Sarcoa's rent is a main source of revenue and that the trust currently owes the city some $384,000 in property taxes.
Interestingly, it turns out Di Ianni, who operates a consulting business, was also acting as the go-between during the LIUNA negotiations. Di Ianni says there are some similarities between the LIUNA and the current Toronto proposals but also some "real differences."
A definite offer to purchase the sublease may be one of those differences.
According to Sarcoa co-owner Sam Destro, LIUNA offered to buy out the lease for "between $3- and $5 million," the upper end of which is roughly what he and his partner claim to have invested in the property.
Destro says LIUNA walked away last December because "there were some logistics that they weren't comfortable with."
Although the Sarcoa sublease has been widely reported as a 10-year deal, it's actually a 20-year contract — with two five-year options — that commenced in 2012.
The length of the contract and the great location at the northwest corner of Pier 8 may go a long way in explaining why developers are interested in acquiring the sublease. It would give them a solid foothold amid the looming wider residential and commercial redevelopment of Pier 8.
Although LIUNA was only negotiating with Destro and his partner, Marco Faiazza, HWT reportedly played along by agreeing to suspend all legal action against Sarcoa for the duration of the talks.
Mancinelli says LIUNA was acting in tandem with the Hi-Rise Group, its development partner on projects such as the Lister Block and the $40-million student tower that's going up next door.
He says the strife between the HWT, city and Sarcoa remains a big obstacle to exploring the "enormous potential" of the waterfront site.
"I can't think of any developer who wants to dive into the middle of that myriad of conflicts."
Once the legal battles are over, Mancinelli says, LIUNA would love to re-engage, even if it means taking part in a formal request for proposal process.
"That's fine. We're willing to compete. There's no problem there. But it needs to be a clean deal."
Hopefully, that may act as a bit of a wake-up call for all parties: A sense of urgency and leadership might go a long way right about now.
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