Taxpayers to foot bill for Belvedere Orphanage demolition, as tangle of debts snarls property
St. John's mayor says costs will be applied to tax bill, and will be recovered
The fate of the former Belvedere Orphanage property in St. John's is tied up by millions of dollars of debt and unpaid mortgages, as the city moves to demolish the historic property that was razed by fire nearly three months ago.
And for now, it appears that St. John's taxpayers will be on the hook for the costs of dealing with the site's safety issues — at least in the near term.
A CBC News investigation has found that:
- There were repeated calls about suspicious activity and safety concerns — including the risk of fire — at the abandoned building before it finally burned down.
- The owner of the property was behind on insurance payments, raising questions about whether the policy was in effect at the time of the fire.
- The owner — a numbered holding company linked to Craig Williams of the insolvent Future Group of Companies — had $59 in the bank at the end of 2016, compared to registered mortgages on the land and other unpaid debts approaching $3 million.
Williams declined an interview request.
"Based on the fact that the mortgage holders are now fundamentally in control of this property, I don't see that there is much I can add to what information is already in the public domain other than to confirm that the insurance payments were not up to date at the time of the fire," he said in an email to CBC News.
Just two years ago, St. John's city council received an application for an $11.7-million "full restoration" of the former Belvedere Orphanage site, featuring a condominium complex, plus three community areas with landscaping and public seating.
Now, the city is about to call for a tender to demolish what is left of the historic building, which dates back to the 1800s.
Razed by fire in April
Police and firefighters were called to the former orphanage just past 4 a.m. on April 7.
But that wasn't the first time the Royal Newfoundland Constabulary had sent officers there.
According to RNC records, police had responded to calls of suspicious activity at Belvedere at least a half dozen times in the three months before the fire, mostly related to young people trespassing.
And over the span of a year and a half, the city had received repeated complaints from nearby residents — at least another half dozen, according to documents obtained through access to information.
- Belvedere fire: Neighbour wants city to keep better watch on vacant buildings
- Questions remain after former Belvedere orphanage goes up in smoke
- Nov. 13, 2015: "Caller says that the building is a hazard … major fire hazard …"
- June 30, 2016: "SAFETY CONCERN: Building is vacant, kids have gain (sic) access and smashing out windows (sic). He is concerned they might start fire."
- July 14, 2016: "Resident says in the last 48 hours many windows have been broken out and residents are concerned about fire."
In the month before the fire, the city paid contractors to board up windows and doors of the abandoned building.
St. John's Mayor Dennis O'Keefe says all protocols were followed in this case.
"There's not much the city can do," O'Keefe said. "It's private property. So our responsibility is to ensure that a property is safe, that it's secure."
The mayor says action is taken "on a complaint basis."
When a complaint is made about a particular property, the city will have an initial look, then periodically go back and assess its condition to see if anything needs to be done.
"The ultimate responsibility would lie with the property owner," O'Keefe said.
"But we simply can't lay back and allow an unsafe condition to take place, and to exist. And that's why, if there's a safety issue, we'll go in right away, and secure the property."
Company aware of problem with 'vandals'
While the city took some action leading up to the fire, it's not clear what the property's owner did to secure the building before it was gutted by flames in April.
Craig Williams did not address CBC News inquiries asking how his company dealt with complaints about trespassers and vandals at the Belvedere site.
It doesn't have any employees, it's currently not doing any business, other than making sure that vandals don't destroy the building.- Craig Williams, at March 9 court hearing
But in court testimony just weeks before the fire, Williams acknowledged there was a problem.
The numbered company that owns the Belvedere property was being sued by an architectural firm over unpaid bills, and Williams was called into court to testify about the company's finances.
"It doesn't have any employees, it's currently not doing any business, other than making sure that vandals don't destroy the building," Williams said at a Newfoundland and Labrador Supreme Court hearing on March 9.
Williams outlined the company's dire financial situation.
Its only cash asset as of the end of 2016 was a $59 HST refund in the bank.
The company owed more than $1.2 million on a first mortgage provided by an unrelated numbered company. Williams testified that mortgage was about five months in arrears.
There was also a second mortgage on the property, this one to Eastcan Trading, a New Brunswick company linked to Kent Building Supplies.
That second mortgage guaranteed debt for Skymark Contracting, another Williams firm. Skymark has since gone bankrupt.
Williams told the court he believed there was about $1.8 million owing on that second mortgage. It had been registered at $1.5 million in April 2016, according to documents at the province's registry of deeds.
There was also a "significant tax bill with the city that's in arrears," Williams told the court.
He also indicated there was $8,900 owing to the insurance company.
Which raises the question — was the property insured at the time of the fire?
No answer to insurance question
And that's a question to which there is no answer at this point.
The insurance company did not respond to messages from CBC News.
The two mortgage holders aren't speaking either. It's not clear how they plan to proceed, to potentially recoup the millions they are owed.
The two directors of the unrelated numbered company with the first $1.2 million mortgage on the Belvedere property did not respond to messages from CBC News.
Eastcan, which holds the second mortgage, declined comment.
It's also possible that the property could get ensnarled in the bankruptcy proceedings involving other Future Group companies.
But that would only happen if the trustee believes there is money that could be recovered after existing mortgages on the Belvedere property are paid off and settled.
City to incur demolition costs
To date, the city says it has spent around $7,000 to secure the Belvedere property.
That amount will likely take a dramatic increase when a demolition tender is let and the building is destroyed.
I'm told the city will be high on the possibility level of getting the money back that we've actually put into the property.- St. John's Mayor Dennis O'Keefe
O'Keefe said the city has tried contacting the owner, but hasn't heard back. So it will now proceed with the work on its own, for safety reasons.
He stressed that any cash outlays by the city will be applied as a charge against the property, and will be recovered eventually.
"If and when there's a bankruptcy proceeding, then I'm told the city will be high on the possibility level of getting the money back that we've actually put into the property, to secure it and have it demolished," O'Keefe said.
The length of time that takes will depend on a number of factors, including any pending legal proceedings.
"But we will get it back," O'Keefe said.
According to the RNC, investigators have wrapped up their probe, and could not determine a cause for the fire.