The Waldorf Hotel story took an unusual twist today with a revelation that the entertainment-company leaseholder, Waldorf Productions Inc., contacted developers last year to get housing built on the property.
The building owner, Marko Puharich, told the Georgia Straight by phone that he received an email on August 15 from Ernesto Gomez, a partner in Waldorf Productions Inc.
Gomez informed his landlord that he has "begun working with a very important and connected architect and urban planner who has done lots of research in City Hall both in the planning department and the administration".
According to Puharich, Gomez also stated in the email that this architect and urban planner was looking into "our idea to make your block a mix of residential, affordable housing, mixed artist–live work, industrial studios, and commercial-retail on your land. The city has had a very positive reaction to our ideas."
Puharich then read out the next two sentences written by Gomez: "Furthermore, through him we have been meeting with one of the biggest developers in the country and they like our ideas and are very interested in moving forward and potentially making a proposal to you. These people are real heavyweights and have done a lot of innovative and famous projects. They believe they can get the zoning changed to accommodate this change of use."
Today, a large crowd showed up at the hotel to show their support for Waldorf Productions.
Waldorf Productions will leave at the end of the week
The entertainment company has announced that it will vacate the 63-year-old hotel on January 20 because the East Hastings Street property has been sold to the Solterra Group of Companies, which develops condos.
There was a distinctly antidevelopment mood among many in the audience. As the Carnival Band entertained people near food carts, the frontman, Ross Barrett, declared that many Vancouver buildings "are made of cardboard and chalk and particleboard".
Media coverage has focused on the possibility that after Solterra takes over the property later this year, the city may lose an important cultural venue.
Gomez readily acknowledged to the Straight that he contacted several developers and architects last year—including Westbank Projects, which built the Shangri-La Hotel, redeveloped Woodward's, and is proceeding with the Telus Garden project. The head of the company, Ian Gillespie, organized a fundraiser for Vision Vancouver before the 2011 municipal election.
"We had one meeting with Ian Gillespie," Gomez said. "One meeting with him, you know, and that was it. Then there were many other people. These are respectable people. These are people who do a good job in the community."
Gomez emphasized that in meeting developers and architects, his goal was to save the hotel and his entertainment business, plus facilitate the development of affordable housing for artists on the parking lot adjacent to the building. He said that he never met with anyone from Solterra.
He declared that he did this because every month, he hears good artists tell him that they can't afford to live in Vancouver anymore. So he took it upon himself to find someone who might develop housing that was inspired by what Waldorf Productions is doing inside the hotel.
"This talent that's leaving—this is the soul of our city," Gomez stated. "Our idea as socially responsible businesspeople was to find someone who would develop this property for that."
He readily admitted that he doesn't know a lot about development.
Gomez emphasized that Waldorf Productions is in the "making people happy business" by providing cultural programming and entertainment. He also claimed that Puharich, who's in his 60s, was going to retire eventually.
"So we said, 'What if we, you know, started working on this project where there would be a component of commercial...a really cool place of micro restaurants with a community market, with maybe even performance spaces outside, where we could do the food-cart festival'," Gomez recalled. "And there could be, you know, an affordable mix—artists, live-work spaces—with another mix of residential. I mean...just a very general kind of discussion."
Landlord wasn't receptive to the email
Gomez said that after he sent his email to Puharich, he received a "very angry" response from a lawyer representing Waldorf Hotel Ltd.
"So I never mentioned it again," Gomez revealed. "And that was it."
Puharich read out part of his lawyer's August 29 reply over the phone. It included the following sentences:
When I met with a representative of Waldorf Productions a month ago, our clients received a representation that outstanding Productions financial information would be produced forthwith. It was finally received on Friday afternoon. The financial information established that Productions is insolvent.
Since Productions has occupied the Waldorf Hotel, it has consistently been in default to the landlord and to its numerous creditors, including the government of Canada. The financial information shows that these creditor liabilities have continued to increase.
With respect to the landlord, Productions has failed to make rent payments when due. It has failed to keep the hotel premises in a proper state of affairs....Our clients have suffered severe economic consequences from the repeated failure of Productions to make required rent payments. Our clients have granted every indulgence to Productions notwithstanding the ongoing economic harm caused by Productions' monthly tenancy.
Gomez claimed that Puharich and his former real-estate representative, Scott Primrose, were aware that he was contacting developers and architects.
Puharich, however, adamantly denied to the Straight that he was aware of Waldorf Productions reaching out to developers prior to receiving the email. His lawyer's August 29 letter included the following sentence:
It was exceptionally disturbing to our clients to learn that during the same period it was not receiving rent and granting indulgences to Productions, this continually defaulting tenant was secretly conducting due diligence on redeveloping property owned by Puharich family companies.
Waldorf Productions claimed in a news release issued today that it has invested $1.6 million into the rehabilitation of the hotel. In the first year, the company took on another $400,000 in debt.
"There has been some speculation that our business model is financially unviable and we would like to dispel that myth," Gomez's partner, Thomas Anselmi, said in the news release.
The landlord, Puharich, maintained to the Straight by phone that the leaseholder painted the exterior, renovated the beer parlour—which was done two other times since 1980 by the owner—and actually destroyed some of the Polynesian themes inside the hotel.
Waldorf Hotel Ltd. forgave rent
Puharich also claimed that his family-owned company, Waldorf Hotel Ltd., forgave $311,876.46 in unpaid rent from Waldorf Productions before a lease was renegotiated in September.
Puharich characterized this as "$311,876.46 that Waldorf Hotel Ltd. and the Puharich family contributed to the arts community in the city of Vancouver".
For his part, Gomez said that his company had a good relationship with the Puharich family. He credited the landlord with being quite sympathetic to the difficulties he and Anselmi faced after launching their business in 2010.
Gomez emphasized that both the landlord and the leaseholder recognized it would take some time for the business to get up and running.
"They were actually very glad—happy—to support us, and they gave us six months' free rent, which was agreed by them in the spirit of helping us," he stated.
When the Straight asked Puharich if Waldorf Hotel Ltd. will sue Waldorf Productions, he replied: "A long time ago, somebody once told me that you can't get blood out of a stone. These guys are broke. They owe so much to the government."
Last week, Puharich revealed to the Straight that his company has four liquor licences: two liquor primary, one food primary, and one special retail store for the beer and wine outlet.
Despite the letter from the lawyer at the end of August, the Puharich family company renegotiated a four-month lease with Waldorf Productions in September. According to both Puharich and Gomez, Waldorf Productions met its financial obligations.
Entertainment company sets conditions for staying
So why is the entertainment company leaving this month when Solterra won't take over until later this year?
Gomez explained that Waldorf Productions signed a 15-year lease, recognizing that it would take some time for the business to prosper.
Generally speaking, he said that the business is slower in January and February, picks up in March, and tails off a bit before improving in summer. He claimed that the company generates profits in spring, summer, and through the autumn.
He added that the landlord had told him that if Waldorf Productions met the terms of its most recent lease, it could get a longer-term deal.
However, Gomez said he learned only recently that the property had been sold to Solterra. Waldorf Productions is now on a week-to-week lease.
He said the company wants to avoid "going through the slow season, losing money, and then having someone terminate our lease with a week's notice when there's plane tickets to be paid [for entertainers]".
"We're dealing with international, respectable booking and talent agencies that require contracts," he said.
The only way Gomez could see Waldorf Productions remaining at the hotel beyond January 20 is if Solterra and Waldorf Hotel Ltd. can work collaboratively on a solution.
That would entail the Puharich family granting a lease until the Solterra takeover.
"Then we need another longer-term lease with Solterra in which they give us security," Gomez added. "Of course, we've already had a lot of people reaching out at this point....This has been an expensive situation for us. So we would need some fresh capital to put back into programming and into, you know, rolling back the machine, because obviously, we've closed the restaurant. We've lost a lot of money."
Gomez noted that people have stepped forward with offers to help finance his company and that there has been a great deal of community support.
"I'm sure we could do fundraisers," he noted. "We could do a lot of things. We're very creative. We have a good team."