http://leaderpost.com/news/local-new...capital-pointe
The Capital Pointe project has built up a mountain of outstanding bills and postponed mortgages, prompting one contractor to wonder if he’ll ever get paid.
Seamus Carroll, president of CLC Building Solutions, said his company stopped excavation work at the site last summer. He was frustrated. According to his telling, developers behind the long-delayed tower at the corner of Albert Street and Victoria Avenue had failed to settle hundreds of thousands in outstanding bills.
He said they still haven’t made good.
“It doesn’t help to be out that kind of money. It’s very hard to keep going,” Carroll said. “We have employees to pay and equipment to run and maintain.”
CLC put a lien against the property last month, and was soon joined by two other firms. Land title documents show a total of $986,405 in outstanding claims from contractors. Asked about his level of optimism at ever seeing the money, Carroll was blunt: “low.”
But Fortress Real Developments, the company leading the project, called Caroll’s comments and figures “grossly inaccurate.” The company’s development team prepared a series of statements that a press representative relayed in a series of emails to the Leader-Post over several days.
“Anyone can register a lien on a project,” one email read. “That does NOT mean the monies are owed to them. This matter will be resolved through a process that is set out in the Saskatchewan Lien Act. As often times, liens are filed erroneously and improvidently, we believe this is the case here and we intend to defend our position.”
According to City Hall, Capital Pointe had, as of late February, also racked up the second-highest bill for late property taxes in Regina. A notice displayed at city hall last month showed the property had amassed $49,502 in tax arrears. Given the value of the land, however, the figure could have been accumulated over a single year.
Coun. Bob Hawkins, who has long expressed frustration over the “big hole” left by excavation, advised the developers to pay up.
“Like any property owner, they’re obligated to pay their taxes,” he said. “And the city can take action if they don’t.”
“How do they rationalize not paying taxes?” asked Coun. Andrew Stevens, whose ward encompasses the site.
Fortress did not respond to repeated emailed questions about when they plan to pay their taxes or if they’ve been paid since the notice was issued.
The Capital Pointe project, a hotel and condo development, first came before the city’s planning commission in September 2009 under the name “Westgate Plaza.” Construction was to start a year later, with completion slated for November 2012. The current 27-storey plan, which would become Regina’s tallest building, was unveiled in 2010. Fortress took it over in 2014.
But the developers have long struggled with building challenges and a cooling market for condos in Regina. First came trouble with electrical infrastructure, then with a sanitation line and debris from the old Plains Hotel, said Fortress.
“The housing market conditions have definitely created challenges for this development,” an email from the company read. “We have not sold all the units.”
It called the repeated delays “excusable.”
Robert MacKay, a Regina-based real estate lawyer, said all signs point to financial difficulties with the project, given the liens, although those aren’t unusual in the construction industry.
All told, the Capital Pointe property is carrying $43 million in mortgages, with 24 separate postponements on record. MacKay said postponements can be a way of reordering the priority of debt to raise new financing.
He also commented on another legal point about Capital Pointe: The company that officially owns the site, Westgate Properties, wasn’t an active corporation as of last week. It was listed as “struck off” the corporate registry. From a strictly legal perspective, that means it could not carry on business.
“If I bought a unit there now, I can’t own it, because they’re not in a legal position to actually be able to transfer me the property,” MacKay said on Friday.
He added that the issue is largely a technicality. And Fortress, which is a major shareholder in Westgate, told the Leader-Post on Monday the registry problem resulted from an “oversight” and has now been resolved.
Fortress said it has already paid $1.2 million to the city in permits, taxes and fees. It stressed that it is still committed to finishing the project and repaying its debts.
“We have never contemplated not constructing the building,” the company’s email read.
“All projects deal with mortgages, disputes that may result in liens, and at times tax arrears,” it continued. “We fully intend to make sure all the items are dealt with as we move to the next phases of construction.”
To get there, Capital Pointe must first surmount a major bureaucratic hurdle on March 15. If the developers can’t show “meaningful construction work” by that date, city hall can declare the current building permit expired.
That’s up to administration, not council. But Hawkins said he hasn’t seen anything to convince him there’s been meaningful progress.
“What I’m hoping to see is some activity indicating that the project is moving forward,” he said. “It’s no more complicated than that. There’s a feeling that nothing is happening.”
Fortress argues that foundation work has taken place, pointing to progress on forming and shoring the excavation site. That work is 97 per cent complete, according to the company, which says it’s preparation for pouring concrete.
“Major works will begin once weather permits,” the email stated.
Fortress now says the tower will be built within 18 to 24 months. It’s far from the first new completion date provided for Capital Pointe. And Coun. Stevens is skeptical.
“They expect to have the project done in two years, every two years,” he said.
awhite-crummey@postmedia.com
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