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DERA's pub could be on market
By David Carrigg-Staff writer
The mortgage holder is fighting for the right to sell the Downtown Eastside Residents Association's troubled Metropole Hotel and pub to recoup its money.
The People's Trust loaned a company controlled by DERA and a Richmond-based family $2 million in 1998 to help restore the Metropole's pub and convert the rooms to self-contained units.
That company, 320 Abbott Inc., also received $1 million from Canada Mortgage and Housing Corporation on condition DERA would operate the hotel as social housing.
However, as a result of fighting within the Gill family and between the Gill family and DERA, payments have not been made in full since the pub opened in early 2001. On Sept. 20, a court-appointed receiver will take control of the pub and hotel.
Alan Frydland, the lawyer representing The People's Trust, said the company also wants the receiver to have the right to sell the property.
Lawyers for DERA and the Gill family indicated at the hearing they don't want the property sold, said Frydland, adding DERA's lawyer George Jones said DERA wants to purchase the property outright or indirectly.
DERA formed in 1973 as a grassroots advocacy group for residents in the area and has since become a complex group of non-profit societies and for-profit companies, all overseen by executive director Terry Hanley, president Ian MacRae and housing manager Frank Gilbert.
When DERA formed three private companies to co-own and manage the Metropole Hotel and pub, it hoped to be protected from bailing out the private companies.
However, the organization is already in financial strife and has loaned $143,000 of its money to the DERA for-profit company that operates the pub, money that's unlikely to be repaid when the receiver takes over.
The DERA for-profit company that owns 40 per cent of the Metropole Hotel and pub is the company that would likely attempt to buy out the Gill family and repay the $150,000 owed to The People's Trust.
Frydland said the receiver will decide whether to allow DERA to continue operating the pub and hotel. The People's Trust is not demanding that the property, believed to be worth $2.3 million, be sold, he added.
"We aren't necessarily wanting to take it out of the Gills or DERA's hands. If they kiss and make up great, but their fight should not be our problem. Somebody should put the money up and move on with it."
Val Rosenthal, of CMHC, said if the property is sold, The People's Trust would get its money back before CMHC. Behind The People's Trust and CMHC are a string of unpaid contractors who have liens on the property.
"They are in default and it's being taken over, but we don't know yet how it will impact us," Rosenthal said. "It's possible the arrears could be paid and then it won't be in default, or The People's Trust can demand full payment and if that doesn't happen, it can go on the market for sale. It's still a little ways off before it will be sold and the new owners might take over the CMHC loan."
Hanley, Gilbert, MacRae and George Jones were not available for comment at the Courier's press time.
The B.C. Supreme Court will decide next Friday whether or not to grant the Metropole receiver the right to sell the property or not.
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