Mondo Condo Makeover P.06
Cooked Turkeys Getting Stuffed?
Cooked Turkeys To Go These words appeared in October 2004 on a large mobile sign in front of the hotel that is the subject of this series. I had to laugh. The hotel was just advertising some prepared food it was offering for the Christmas holidays but to me - having spent several months following the strange goings-on at this west end Toronto hotel, I couldn't help but think of a few variations on the theme: Cooked Turkeys Must Go, Cooked Turkeys Basting Slowly in Their Own Juices, Cooked Turkeys to Go - where?! The possibilities were endless.
Was there a message in those words - you know - one of those unintended messages that, in the end, turns out to be very prescient? Could it be that the cabal of business guys and union pension gurus who are behind the strange goings-on were about to "go"? Was a comeuppance upcoming? Were they fixing to cut and run? Had something happened that might upset the best laid plans of rats and men?
Little did I know, that just days earlier the scheme to convert the hotel to a condominium - a move that will throw over one hundred UFCW members out of work - had been dealt a blow that could throw the whole plan into a tailspin.
It's been a while since we last looked in on the Mondo Condo - the west end Toronto hotel where trustees of the UFCW's pension plan (CCWIPP) first climbed into bed with the legendary Ron Kelly, a former Catholic priest and convicted (but subsequently pardoned) pedophile.
In our earlier Mondo Condo segments, we told you that story and where it led.
House of Cards
More than a decade after its controversial launch at this hotel, the Canadian UFCW's lame assed strategy to create union jobs (read: buy new members) by loaning pension money to needy business guys has bottomed out in a tangled mess that will now cost a lot of union members their jobs.
While CCWIPP struggles with an enormous solvency deficiency, the hotel into which millions of workers' dollars were poured over a period of more than a decade, is on the verge of closing. Once bustling with business, the hotel is a shadow of its former self. Whatever Ron Kelly did with the cash he borrowed against the property, is a mystery. From all accounts, he didn't invest much of it in the business and he sure didn't pay a lot of it back.
Back in the summer of 2004, an official of Royal Host REIT, one of the current owners, acknowledged that Kelly defaulted on his CCWIPP loans a few years ago leaving the the UFCW's pension fund with a 50% ownership stake in the hotel.
Not long after that, a man named Joe Ieradi turned up with an offer to buy the hotel and convert it to a condo. Ieradi needed to show that he could sell most of the units before he can arrange financing for the project. His first plan, to convert the place to a hybrid condo and hotel, never got off the ground but Ieradi came up with another - to convert the hotel to a full condominium. For the hotel workers, the three years since Ieradi first turned up on the scene, have been a time of much uncertainty about their jobs. Despite the obvious implications, Mr. Ieradi's involvement - who's backing him and why he seems to have so much influence over the two large organizations (Royal Host and CCWIPP) who own the place - has never been explained to them.
Their union, the UFCW, has been especially tight-lipped. One worker reported that the last time anyone saw a union rep around the place was just before Christmas when one stopped by - to deliver a gift to the General Manager.
For almost a year now, workers have watched Ieradi peddling condo units out of a presentation centre on its top floor. They've heard him tell customers that the place is closing soon to make way for his condos and have watched customers take their business elsewhere. They've been told that Ieradi's objective is to sell enough units to become a 50% owner in the property. Once that happens, the hotel will close and the conversion project will begin.
The mysterious Mr. Ieradi is said to have kept a low profile after our Mondo Condo series came out a few months ago but lately has been more visible than ever at the hotel, darting about taking measurements of the lobby and looking quite excited. An enormous sign covering the entire north face of the one of the hotel's two wings went up earlier this week "Westmount Condominiums Best Value, Price, Location Phone...". Another sign tells passers-by that the condos are now "over 76% sold". All the while no one had told the workers anything.
It's hard imagine a looming layoff that's been handled as callously as this one - especially at a unionized workplace. In the absence of information from their employer, their union or their union's pension trustees, the workers have been left to quietly wonder about a lot of things that don't add up. They've wondered about the viability of the conversion project given their knowledge of the building's condition and structural peculiarities. They were shocked to learn (from MfD) of the more than $100,000 in liens that are registered against the property by federal and provincial tax authorities (all in relation to Ron Kelly's unpaid taxes). They were surprised to learn (again, from MfD) that Joe Ieradi didn't own the building after he told the local media that he bought the place early in 2004. They've seen the occupancy date of the new condos pushed further and further into the future. They wonder what's going on and how much longer will it be before they are thrown out of work as a result of a scheme inwhich their union's pension fund is clearly involved but about which their union is telling them nothing.
The UFCW must know what's going on. Its pension trustees must know what's going on. The pension fund is a co-owner of the property. The trustees know what Mr. Ieradi is up to. He wouldn't be selling their hotel one unit at a time unless he had their blessing. They know but they're not telling. Maybe they're just speechless.
A Hard Road
On October 4, 2004 - just as the Cooked Turkeys sign appeared - the City of Toronto gave the condo converters a pat on the back and a boot in the ass all in one. According to these City Clerk's records, on that day a Committee of Adjustment granted approval for the condo conversion on condition that:
"...the applicant enter into an Agreement with the City of Toronto to provide to the City and to the satisfaction of the City Solicitor and at no cost to the City, the land required for a roadway (and existing encumbrances below) which is specified in OPA 318 and is the subject of the current Environmental Assessment process".
The City wants to build a road through the hotel property, to accommodate traffic from the condo and the new townhouse development that's going up to the south of the hotel. The townhouse developers were required to give the City part of their land for this roadway, and they did, in order to get their development approved.
The City's demand creates a problem for the hotel keepers and their guy Joe: It's going to be quite a feat to build the roadway without demolishing the parking garage located behind the hotel. And why is that a problem? Because condo buyers have been told that's where their parking will be.
When MFD's secret shoppers visited the condo sales center in the spring of 2004, they were told that parking spots, which are included in the price of each unit, would be available in this above-ground garage which would be enclosed and covered in stucco.
Having visited the hotel on a number of occasions since, we're hard-pressed to understand how a public road could traverse this property unless the garage gets out of the way. If the garage is demolished, we're hard-pressed to understand where an alternative garage could be built on this property. Digging out an underground garage is a costly proposition even if it could be done.
But these niggling details notwithstanding, the folks at the Westmount Condos are still promising parking with their condos. When MFD's secret shoppers called again today they were told that the condos, now slated for occupancy in August 2005, would come with parking - in the above ground garage to behind the hotel. They also said that work on the conversion had already begun and that the condos would be ready for occupancy in August 2005.
The things that don't add up continue piling up.
Obviously "work on the conversion" cannot have started. The required authorization from the City is pending something the agreement on the roadway. Joe running around with a tape measure isn't exactly "work on the conversion". Unless the City backpedals on its demand for the roadway, the project can't go ahead. In order to go ahead with the conversion, the condo converters must agree to the road. If they do there's the small problem of where to put a couple hundred cars - belonging to people who paid for parking as part of their purchase agreements. A fine kettle of reeking fish.
In Joe We Trust
Some of us CCWIPP-watchers have been wondering for a while now why Ieradi went ahead with his condo sales without getting the required approvals in advance. Nothing says he had to of course but it would seem a sensible thing to do. Why take a chance on being surprised with some unexpected demands that could throw your plans into a tailspin? We've also wondered why the supposedly sophisticated movers and shakers at Royal Host and at CCWIPP have been so willing to take Ieradi into their hearts. Did anyone ever think of asking, "Hey Joe, the City's going to let you do this, right? We don't want any surprises buddy."
For one reason or another, the two owners of the hotel, seemed especially willing to ride along with Joe Ieradi.Our best assessment of the murky situation is that Ieradi is part of a desperate effort by CCWIPP to offload its 50% interest in the hotel. In the wake of the ongoing examination of its investments by the Financial Services Commission of Ontario, the CCWIPP boys need an exit strategy from this investment (and other barking dogs just like it). They've pinned their hopes on Ieradi. If he can peddle enough condos they'll sell their 50% to him and might escape from this breathtakingly reckless investment with their pants half only half off. It's unclear how much Ron Kelly stiffed them for - CCWIPP's 2001 financial statement shows a $25 million investment in this hotel (probably about twice its value). That's only one of a number of investments in Kelly's various enterprises that went down the toilet. The CCWIPP boys have been sitting on these investments hoping to - who knows - lay an egg? Whatever they're hoping, they have to get out and, having hitched their burned out star to Joe, they're stuck with him.
The Royal Host boys are going along for the ride because the conversion presents an exit strategy for them as well. The hotel will require a substantial investment if it is to continue operating. Why not get rid of it and make a few bucks in the process? The place can't be worth much as a hotel but the land it sits on is a valuable piece of real estate in an area that's slated for major redevelopment.
Anything could happen of course. Maybe the City will back off of its demand for the new road - the wrath of hundreds of residents be damned. That's risky. Maybe City officials will compromise with Joe and his pals and agree to build half a road. Hmmm...that's not likely. Perhaps an innovative solution will be found to the parking dilemma. Our CCWIPP watchers are putting their money on the following scenario: The hotel will close. The conversion project will fall through. The blame will be heaped on City officials and their unreasonable demands. The property will be sold off at a discount to some lucky buyer who will turn around and flip it to a developer at a hefty profit. Whatever will eventually occupy the site will be a monument to bad unionism and boneheaded pension investing.
Whatever happens, at the rate that things are going, we know the workers are getting burned. After years of being kept in the dark, workers should demand some answers and accountability from the UFCW and its pension trustees. Their wrongheaded experiment in buying members has helped no one, except Ron Kelly and other needy guys looking for financing on easy terms. These turkeys deserve to get cooked.
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