The case of a Fort McMurray condo-rebuild project gone awry – involving a Vancouver-area builder and condo owners accusing their board of project mismanagement – highlights the lack of financial oversight in some of that community’s recovery efforts from the region’s 2016 wildfire disaster.
That’s the reaction of several owners of the Hillview Park condo development after they were hit with a sharp spike in monthly condo fees – to between $700 and $900 from $250 – starting December 1, for units that remain far from completion after the project fell almost two years behind schedule.
The new condo fees, owners said, come atop two special assessments issued this year by the Hillview Park condo board of $30,000 and $20,000 per unit, respectively; in addition, many owners are already paying monthly mortgages of around $2,000 and dealing with backup housing costs or lost rental income.
Rebekah Benoit, who owns one unit with her husband and had been renting it out to tenants at the time of the wildfires, said both had to declare bankruptcy last month due to the heavy financial burden. Benoit added that many others are facing the same fate.
“I just laughed when I saw the special assessments, because I knew I couldn’t pay it,” said Benoit, a teacher who is now living month to month in a rental unit in Saskatoon with her husband and three children. “We’ve all been paying our mortgages all this time. Our insurance for lost rental income is scheduled to run out. We don’t have any money; nobody has any money. We have no choice but to go bankrupt; there’s nothing else we can do.”
Hillview Park, a 214-unit complex in Fort McMurray’s hard-hit Abasand neighbourhood, was destroyed in May 2016 in the wildfires. And although Hillview Park’s board originally projected the condos to be rebuilt by December 2017 and contracted Richmond-based Viceroy Houses Ltd. in October 2016 to handle the $77 million reconstruction project, the two sides have since been embroiled in a legal dispute after Hillview terminated its contract with Viceroy in August 2017.
Viceroy, a brand with six decades of history in the Canadian market, was saved from bankruptcy in 2015 after an investment by Andrew Sun, owner of Wiston Building Materials Co., the Vancouver office of a Chinese wood-product company.
Field LLP, a Calgary law firm representing Hillview’s board, declined to comment on the Viceroy lawsuit. Viceroy could not be reached for comment on the case, and Sun was unable to comment due to health problems. But according to legal documents filed at the Judicial Centre of Calgary, Viceroy filed suit this February, citing a breach of contract on the part of Hillview’s board. According to the lawsuit, Viceroy is seeking $23.1 million, partly for failing to pay for the work done between April and August 2017.
“Hillview failed to issue Change Directives or Change Orders for numerous items of work Hillview demanded that Viceroy perform, but which were outside of the original scope of the work under the contract,” Viceroy’s lawsuit claimed. “Viceroy gave notice to Hillview that it considered this work to be extra work and that corresponding increases to the contract price would be required.… Hillview nevertheless demanded that Viceroy proceed with the extra work. Viceroy did so, but to date [property damage consultant] SPECS has failed to issue Change Orders for the extra work and Hillview has failed to pay Viceroy for the extra work, in breach of the contract.”
A countersuit launched by Hillview’s board through Field LLP claims that Viceroy has failed to “perform the work in a skillful, good workmanlike and professional manner and in a manner such that the project was free from defects and deficiencies.”
Hillview’s board is seeking $9.3 million, in part for the cost of repairing existing work on site and in part for the increased completion costs for the final project.
In the meantime, owners like Benoit said the board has issued the special assessments this year on the reasoning that it needs a loan to complete the repairs to Viceroy’s work on site (the work is not covered by the original $77 million reconstruction insurance), and Benoit said the board has not communicated the details of where the money raised in the assessment and the condo fee will be going.
She added that a growing number of Hillview owners are preparing to sue the condo board, and several owners have contacted Service Alberta – the province’s consumer protection agency – to conduct a forensic audit to determine why the project has gone so far off track. But Benoit added that there has been little response so far.
In a written response, Service Alberta said it is monitoring the situation, but condo legislation in Alberta does not address reconstruction issues “apart from provisions related to day-to-day governance of the condominium corporation.”
Both Service Alberta and the Regional Municipality of Wood Buffalo, where Fort McMurray is located, said they are contributing along with the Red Cross to a $6 million fund to help owners like those at Hillview Park to pay for special assessments related to the rebuild. However, due to Red Cross’ policies on investment properties, only the owners who were living in the units during the 2016 fire are eligible, leaving those like Benoit to fend for themselves.
Wood Buffalo Mayor Don Scott said the municipal government is trying to help, but its hands are tied because condo regulation is chiefly a provincial government matter.
He added that the case shows more outside attention on what’s happening in Fort McMurray’s rebuilding efforts is needed: “A lot of people assume that the fire recovery is over in Fort McMurray. … but while we are making progress, the recovery isn’t over.” •