Presale buyers left in limbo after Burnaby development goes bust
Had things gone according to plan, Joe Racanelli and his wife would have long been settled in their new fifth floor condo in Burnaby and enjoying beautiful views of the North Shore mountains, in a building called Siena at the Heights.
Instead, the retired couple and former painting business owners can only look at the big hole in the ground on Hastings Street that's now up for sale and wonder when they'll get their presale deposit of $170,000 back, after the Siena at the Heights failed to get off the ground.
"It was a great location for us. We like that area," said Racanelli. "The only problem is we've waited for four years and we've been promised every year that things were very close to being taken care of."
The Racanelli's downpayment was for a two bedroom, two bathroom top floor unit in November of 2021, and it was equal to 15 per cent of the purchase price.
According to their agreement with the developer, the completion date would be sometime between April 1 to July 1 of 2024, with an absolute latest completion date — or "outside date" — of Dec. 31, 2024.
Marketed as "classic in character, uncompromising in design," the Siena was supposed to be a five-storey mixed-use development with 38 condos above street level strata retail.
But things started going sideways almost as soon as construction began, and the project stopped completely after only a portion of the underground parking had been built.
'Dead in the water'
"[The developer] said there were labour disputes with the original contractor," Racanelli said. "They extended the outside date to September 16, 2026. We kept waiting on that because we really wanted it to succeed. But now it's dead in the water."
In November of last year, lender Desjardins Group filed to put Siena at the Heights into receivership, claiming the developers had defaulted on payments and conditions attached to almost $30 million in loans.
The response filed by I4 Property Group Inc., its president Myron Calof, I4PG Hastings Street Inc. and Hastings Street Limited Partnership claims that another company, Kerkhoff Construction (2022) Ltd., was the problem.
Kerkhoff had been hired as general contractor for the project.
"As events transpired, the fact that [Kerkhoff] was as [a] single purpose corporation incorporated for purposes of this project cause the project considerable difficulties," it reads.
The response goes on to say that Kerkhoff "had difficulty with the excavation, and by June 2023 the project was in financial difficulties."
It says Kerkhoff could not provide "required statutory declaration that its sub-trades had been paid." Kerkhoff was fired in Sept. 2023.
In an attempt to stave off receivership, the response also laid out a plan to reorganize the project's financing and debts, stating the building could be easily restarted, as "... it is not suffering any damage or waste ... while construction has been halted."
However on Valentine's Day of this year, Deloitte Restructuring Inc. was appointed receiver and the Siena lands at 4437 Hastings Street were ordered sold.
CBC reached out to Calof for comment. In a text he wrote: "The matter is before the courts and I do not feel I am at liberty to say anything."
The Siena property is now on the market for $16 million in the court ordered sale.
The assessed value of the .16 hectare site was $12.269 million as of July 1, 2024. According to documents posted by Deloitte, Dejardins Group is owed $14,546,000 on a first-ranking mortgage, Travelers Insurance Company of Canada owed an "unknown amount" on a second-ranking mortgage, while Longthorn Holdings Ltd. holds a third-ranking mortgage of $700,000.
In addition there are nine builders' liens against the property amounting to $2.48 million. Fifty-nine "other creditors" are owed a cumulative $1.64 million from the failed project.
Smoke Signals Flagging of Chilliwack, B.C., is one of those creditors, out $31,507 after being hired by Kerkhoff and spending months at the site.
One-woman protest
"I had a truck and two people on the job. What [Kerkhoff] owed me was piling up and piling up. And then they told me they went bankrupt," said company owner Danita Leon.
Leon even went so far as to stage a one-woman sit-in at Kerkhoff's office in Chilliwack, demanding what she was owed.
"I was so mad. I marched in there and told them 'I'm just a small little Native company. I pay my bills and you should too.'"
Kerkhoff coughed up a bit of money, according to Leon. As for the remaining $31,507, she's come to terms with having to eat the loss and doubts she'll ever see a penny from the receiver.
"I cried about it but now my tears have now dried up," she said.
The 31 parties who put down presale deposits amounting to over $5.336 million should fare better. That's because the Real Estate Development Marketing Act compels developers to hold presale funds in trust.
Racanelli said he's been assured by the receiver that his deposit money is secure, but is still awaiting confirmation on the conditions of a refund.
Making matters worse is the math. Racanelli calculates had his $170,000 sat in a bank account rather than being tied up in the dead asset of the Siena for almost four years, he could have earned upwards of $30,000 in interest.
"It's been frustrating and worrying," he said. "What if it takes another two or three years for this to be sold? I mean, the property is definitely not going ahead. We should get our money back."
Contamination claim
Separate court documents shine a light into a contamination issue at the site, which the developer raised a few years prior to construction.
In a 2019 notice of civil claim, I4PG Hastings alleged a number of dry cleaning businesses — some going back decades — that had operated in the same block as the Siena project, leaked chemicals that contaminated the site and caused "contaminated vapour plumes."
The claim was seeking compensation for site remediation, removal of contaminated soil and groundwater and "construction of an impermeable barrier to prevent ongoing contamination," however the action was abandoned in January of last year.
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