Sweetheart deal on the beach

It’s good to see that interest in the Tuggs  Restaurant lease has become an election issue. The circumstances surrounding the awarding of this lease  to Tuggs without tender is one more example of  Toronto City Council demonstrating contempt  for Toronto taxpayers. Toronto City Council  does  not tender contracts when it should.

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By SUE-ANN LEVY, City Hall Columnist

Last Updated: September 12, 2010 11:41am

http://www.torontosun.com/comment/columnists/sueann_levy/2010/09/12/15323871.html

You might call it a controversial lease deal like none other.

As many already know, for the next 20 years George Foulidis, owner of Tuggs Inc., will enjoy the exclusive rights to sell beverages and food at the Boardwalk Cafe and at the D.D. Summerville pool and Kew Beach concessions.

He’s been handed the same exclusive rights to the parklands at Woodbine Beach, Ashbridges Bay, Beaches park and Kew Gardens park — all of this for rent of $200,000 a year, 20% less than what Foulidis himself originally offered in an unsolicited proposal in 2006.

But there’s so much more, according to the lease documents obtained through a Freedom of Information (FOI) request by Martin Gladstone, the lawyer running against long-time incumbent Sandra Bussin in the Beach.

“I was absolutely shocked with what I found,” said Gladstone, who pursued the FOI request because the whole deal was so secretive. “It is a sweetheart deal.”

The lease, which runs until Sept. 14, 2028, was signed by city officials and Foulidis on June 2. Curiously, a June 7 legal opinion to council from solicitor Jasmine Stein states that the city has yet to take “the formal step of signing the agreement.”

Stein’s opinion persuaded enough councillors not to reopen the matter at their June 9 council meeting.

The lease documents state that the rent of $200,000 yearly is good for five years, at which time it will rise to $225,000 for the next five years. It is to be paid in quarterly installments, rather than the standard monthly payments pursued with commercial leases.

Revenue of $10,000 a year Foulidis is expected to pay the city as a result of sponsorships is not due until Dec. 15 of each year.

While Foulidis indicated in his business plan that $2.15 million in capital improvements would be done to the deteriorating Boardwalk Cafe and its patio and to the concessions, there is no deadline given in the lease to complete the renovations.

It merely says the improvements are to be undertaken “in a timely manner.”

Gladstone, who has spent much of his legal career specializing in corporate commercial leases, said there is no obligation stated in the lease either to clean up the Boardwalk Cafe once the deal was done in June — that is, to fix the peeling paint, replace the broken glass and pull the weeds.

In fact, he says following a visit down there Friday, there is broken glass, weeds growing everywhere, garbage, litter and wires hanging out — the latter clearly a safety hazard.

“It’s disgusting,” Gladstone says. “It’s not somewhere you’d be proud to go.”

According to the lease documents, Foulidis will also have exclusive rights to the existing 90 parking spaces at Woodbine Beach — spaces for which the public must pay during the summer months.

The lease is silent about who gets the proceeds from the pay parking. But it very specifically states that the city will take care of the repair and maintenance of the parking area — including salting, paving, lighting, snow removal and painting of lines.

The city has also agreed to take on responsibility for the maintenance and repair of the exterior of the Summerville and Kew Gardens concessions — AND to pay to insure the two buildings.

The city — that is, taxpayers — will also be on the hook to replace all soft landscaping and trees surrounding the Boardwalk cafe and its patio.

Gladstone points out that the lease contains no square footage of the premises involved — something he found “highly unusual” especially since Foulidis has also been given the green light to expand the concessions and the cafe.

“If he increases sales, he’ll (alone) get the benefit of the expansion, not the city,” he said.

When contacted Friday, Foulidis responded by e-mail but refused to allow the contents of his e-mail to be quoted.

Bussin’s executive assistant, David McCully, responded in an e-mail to requests to his councillor for an interview.

He provided a report prepared by deputy city manager Sue Corke on Aug. 3 in which she outlines the terms of the contract settlement.

When I endeavoured to question items not included in Corke’s report, but that were in the lease documents, McCully responded at 5 p.m. Friday, asking me to contact Corke directly.

Councillor Mike Del Grande, who voted against the Tuggs Inc. deal and for the reopening, said Foulidis probably has a “big smile on his face” as a result of what was negotiated.

“It is a terrible deal,” Del Grande said, noting councillors were not made aware of many particulars contained in the actual lease.

“This is the reason the free ride should be over.”