TTC could face legal action if it reneges on newsstand deal
The TTC’s Gateway newsstand operator has the right to take legal action but would prefer not to go that route if the TTC board decides to withdraw its previous approval of a $48 million, 10-year lease extension, says a company spokesman.
“We know it’s within our right to do so but we don’t want to have a bad relationship with our largest landlord in Toronto. There’s a delicate nature of how we’re going to handle this,” said Noah Aychental of Tobmar Investments International, which operates 65 Gateway stores, some lottery booths and bakeries in the subway.
He made the comments on Monday following reports that an independent review by a real estate consultant recommends that the TTC put the newsstands out to tender, even though the Toronto Transit Commission has twice approved extending its relationship with Gateway.
“It’s very clear there is some contractual law that does exist here,” said Aychental. “We have a deal that was accepted twice. We would like the TTC to uphold its end of the bargain.”
Although the lease renewal between his company and the TTC has not been signed, a draft has been issued to Gateway, he said. Aychental also confirmed that the TTC originally approached Gateway last year about renovating some of its stores in preparation for the 2015 Pan Am games.
“This was going to be a cost-saving venture for everyone including the TTC to harmonize everything we do. We were thrilled to be a part of our major landlord in Canada to help them out with what they needed from us,” he said.
TTC chair Karen Stintz said Sunday that, following the outcome of the review, she expects a competitive bidding process will commence later this year or next.
Although she has been criticized by Mayor Rob Ford and his brother, Councillor Doug Ford, for “sole-sourcing” the newsstand business, Stintz says putting the lease out for bids will cost the TTC millions.
Not only will the transit system lose $3 million in a retroactive rent increase, but it could potentially lose more money if the Gateway stores have to close and be transitioned to a new provider.
On Monday, Doug Ford said tendering the newsstands is the right decision.
“I’m happy. I’m happy with the chair, I’m happy. It’s the right thing to do for the taxpayers of Toronto,” he told reporters.
“We’re going to agree to disagree on that point. We could be leaving $3 million on the table. So I could flip it around the other way. Anyways, they’re doing the right thing. It’s a no-brainer. It’s automatic,” said Ford.
The current Gateway leases begin expiring next year. The lease extension was supposed to give the TTC a 67 per cent rent increase and allow Gateway to harmonize leases on its subway operations that expired between 2014 and 2022.
Two other companies, International News and New York News Café, have expressed interest in taking over the TTC locations.
Franchised Gateway stores have held the TTC lease for 19 years. The original agreement was extended once in 2004 without being put out to tender, said Aychental.
However, a third party evaluator, looked at that lease extension “and it was recommended strongly that the TTC take it because it was a stellar,” he said.
Although it’s believed that the TTC board was discussing the newsstand leases behind closed doors Monday morning, the issue does not appear on the Monday afternoon public agenda.
Aychental said his company won’t appear at the commission until March or even April.
With files from Paul Moloney
