Regina P3 school site developer 'having financial issues'
City threatens to take over if deadline not met
City of Regina is poised to take over development of the northwest P3 joint-use school site because, it says, the developer hasn't met its financial obligations and the timelines required for the project, according to a report that will be presented to city council next week.
Rosewood Park Alliance Church was required to provide a $3 million performance bond guaranteeing it could do the work months ago but it still hasn't. That's one of the reasons the city issued a notice of default to Rosewood on March 9, which removes the developer from the project and allows the city take over the work at the developer's expense.
But at the last minute Regina's Westridge Construction stepped in and offered to bail out Rosewood by becoming a partner.
Rosewood told the city that with the help of Westridge it would be able to complete the job on time and post the required performance bond
Rosewood experiencing 'financial issues'
The city report says Rosewood is "having financial issues" and "has been unable to pay several contractors working on site and does not appear to have the financial ability to fund the construction of the remaining infrastructure required."
However, because of the offer by Westridge the city has given the developer another chance. Rosewood has until April 29 to get the bond in place, provide a proposal to pay off creditors and a credible plan to finish the job on time.
"If they don't have that information by next Friday then the city is going to step in to finish the work that's required." said Diana Hawryluk, Regina's executive director of city planning and development
The administration's report says if the job is not done by Dec. 31, 2016 there could be significant consequences for the city.
"If the timelines are not met, the city could risk a termination of the Contribution Agreement by the province and the demand for the repayment of the funding provided to the city."
As it is, the report says if the city has to step in and take over the project from Rosewood it would cost at least $1.5 million, which it would attempt to recover from Rosewood.
Tight timelines caused trouble
In July 2015 land owned by Rosewood Park was chosen by the city as the site for one of three new P3 schools in Regina. The province is funding the construction of nine joint-use schools around the province.
While the province pays for construction it asked municipalities to provide serviced land where the schools can be located.
Originally the northwest school was slated to be built in the Skywood subdivision but it became clear that the costs associated with the school were too high for the developer so the city had to scramble to find another location.
By the end of July city council settled on land owned by Rosewood Park, against the objection of city administration.
In a July 2015 report to council, city administration said "the risks associated with the developer (Rosewood) delivery of the site are too high. It is the Administration's assessment that the planning approvals are in [their] infancy and there a number of conditions have yet to be adequately addressed by the developer."
The administration noted that one serious problem was the tight timeline. The developer was expected to hit its first deadline for servicing the land by Oct. 31, 2015, leaving just three months for the work that would usually take 18 to 24 months.
Rosewood defends its performance
Rosewood's director of planning, Jason Petrunia, told CBC the church overcame tremendous odds and hit that deadline.
"Of course it's an unflattering report. They're positioning it that way. But we've met all the provincial deadlines to date," Petrunia said.
Petrunia said the time crunch meant that the church wasn't able to refine its costs as much as it would have liked. And he said as the project went along the city added new requirements the developer wasn't aware of at the start which caused the costs to more than double.
"You have to understand the terms weren't clear at the beginning."
He says those tight deadlines and the changing requirements have motivated Rosewood to ask for concessions from the city.
According to city reports Rosewood wants the city to forgive a $3 million municipal loan and $2.68 million of municipal Servicing Agreement Fees. And it has asked the city to remove about $1 million dollars of infrastructure requirements from the servicing agreement.
City says Rosewood had all the information it needed
City administration is recommending council reject Rosewood's appeal for concessions and forgiveness.
"So if there was a forgiveness that money would have to be made up somewhere," said Hawryluk.
She said Rosewood went into this project with its eyes wide open.
"I think those risks were all identified up front with respect to the timeframes," said Hawryluk.
However she notes that ultimately it's up to city council to decide what to do next.
It will consider this matter at its meeting on Monday, April 25.