About 200 people who bought condo units in an Etobicoke high-rise project may lose their homes after the development was placed into court-ordered receivership due to massive financial problems.
The project, still only about 15 per cent complete six years after it was first marketed to potential buyers, will now be sold off by the receiver in a bidding process.
The buyers who paid for the pre-sold condos — 208 of the project's 242 units — will get their combined $6.3 million in deposits back. But the condos they bought and waited years to move into will likely be sold off at much higher current market values by whomever steps in to complete the project.
Some of the original buyers had purchased their units as far back as 2011 when Toronto home prices were about half of what they are today.
Development's collapse financially 'devastating' to many buyers
Toronto condo lawyer Denise Lash says many of those buyers may now find themselves priced out of the market.
"It can be devastating" she told CBC Toronto, adding if they want to buy their units from the new developer, it's likely "they have to purchase at 2017 prices, not the prices they paid [years earlier]."
Lash says while "it's rare" for condo projects to fail in Toronto's red-hot housing market, buyers should always "research the developer. There are resources ... do your due diligence when you're buying."
The project, proposed by Terrasan 327 Royal York and marketed through its sister company Stanton Renaissance, is located on Royal York Road adjacent to the Mimico GO station. Both Terrasan and Stanton Renaissance are owned by Toronto resident Louie Santaguida.
Aptly named On the Go Mimico, buyers were promised 27 storeys of luxuriously finished condo units with retail space on the main level. It was supposed to be the first condo building of its kind in Toronto with direct access to a Metrolinx station. Stanton Renaissance also promised buyers a "commitment to sustainable urban dvelopment."
But almost immediately there were problems. In 2012, Metrolinx backed away from the deal to partner with the developer. The regional transit agency's spokesperson, Anne Marie Aikins, told CBC Toronto that "some information had come to our attention that made this a less than desirable agreement to enter so we pulled out of that agreement [that year]."
By 2013, soon after excavation of the site began, crews walked off the job claiming they weren't being paid by the developer.
Developer had never built condos before, had history of corporate bankruptcies
Santaguida's other business ventures had a troubled history of bankruptcies leaving creditors on the hook for millions of dollars in unpaid bills. The financial issues prompted Brantford city council to walk away from an agreement that would have seen one of Santaguida's companies take on a big industrial redevelopment in that city.
Stanton Renaissance had never built a condominium or a residential tower anywhere before the company applied to the city of Toronto to build and sell its condos to hundreds of potential buyers.
'The City cannot refuse to accept applications or issue approvals...'
- Bruce Hawkins, City of Toronto spokesperson
City councillors rezoned the land for the developer and staff issued the various building permits needed to move the project forward.
In an email to CBC Toronto, city spokesperson Bruce Hawkins wrote, "the City cannot refuse to accept applications or issue approvals (including both planning approval and building permits) on the basis of past history of the applicant/developer/owner, or based on an evaluation of the financial stability of the applicant/developer/owner."
Local councillor big booster of the condo project
The local councillor, Mark Grimes, who represents Ward 6, Etobicoke-Lakeshore, was a vocal proponent of the project. Grimes supported the developer's application to increase the height and number of units beyond what was permitted in the original proposal.
Grimes appeared in a promotional video for the project. While two other councillors were seen in the video, they didn't speak. Grimes, however, appeared to be wearing a wireless microphone under his golf shirt as he answered questions about the project.
"We're on the platform of a GO station. So, out your back door you walk one minute to the platform," he said in the video. "So, people who don't have a car, this is the place you want to buy."
In 2015, when CBC Toronto first outlined growing financial problems at the project, Grimes said he didn't know he was being filmed for promotional purposes. He also said the video was edited and used without his knowledge or consent.
Monday, in an email exchange with CBC Toronto, Grimes said he was not aware of the developer's previous financial history and that he feels "terrible for anyone who may lose their purchasing opportunity. It is very unfortunate that this happens quite often in the city."
He also added. "What's to say the market doesn't crash tomorrow and the buyers are better off than prior to the bankruptcy?"
Court documents allege the developer started defaulting on payments just months after being loaned $21 million in construction money last year. The documents also allege Santaguida directed more than $2 million earmarked for the project to other uses.
Land registry records show trades companies have put more than $5 million in liens on the project, claiming the developer hasn't paid them for work completed. The tower is only about 10-15 per cent done. according to documents filed by the court-appointed receiver.
Local community groups are also affected by the financial collapse of the condo project.
The city allowed Stanton Renaissance to use a historic train station located in a public park across the street from the construction site as a sales centre for more than two years.
In return, Stanton Renaissance agreed to restore the building. Community groups say the developer has left the building looking like a modern condo sales office, not a historic train station as they believed was promised.
Stanton Renaissance's website boasts plans to build three more condo projects in Toronto and Hamilton.
CBC Toronto reached out to Santaguida through Stanton Renaissance, but did not receive a reply.