Alfredo Romano, president of Castlepoint Numa, shown in this file photo, said, “We cannot finance a phase of a project where you neither have the approvals in hand nor a budget that will support it. The passage of time has killed it.”Erik Heinrich/The Globe and Mail
A Toronto real estate developer is blaming delays obtaining city approvals and rapidly increasing construction costs for the cancellation of a planned condominium building, but would-be residents facing a booming condo market are hoping to salvage the project.
The nine-storey, 168-unit building, known as Museum Flats and planned for the Junction Triangle neighbourhood, was called off by developer Castlepoint Numa in registered letters sent to purchasers, along with their deposit cheques, in late October.
The cancellation is one of only 23 preconstruction condo buildings to not go ahead in the Greater Toronto Area since 2012, according to consulting firm Urbanation, a risk inherent to the sector that the local city councillor says underscores the need for enhanced provincial consumer protections and greater public awareness.
"I think there's a conversation that needs to happen, but the first thing is, really as it stands right now, is to say to people be aware when you're buying this, that yes, it can be a great deal … but there's also a risk," said Ward 18 Councillor Ana Bailao.
The developer said it was unable to obtain construction financing and cited "lengthy delays" in obtaining approvals and permits from the city.
"The project is not financeable," said Alfredo Romano, president of Castlepoint Numa. "We cannot finance a phase of a project where you neither have the approvals in hand nor a budget that will support it. The passage of time has killed it."
However, the company said it would return to the drawing board and "relaunch" a residential building once it has the necessary approvals.
But frustrated purchasers are asking for a meeting with Mr. Romano to see whether they can negotiate a way to revive the Museum Flats project, perhaps by increasing prices slightly to help offset higher costs. In the 18 months since presales launched, prices for similar units in other developments have increased substantially, reducing buyers' purchasing power.
"Of course, it doesn't seem right but I don't know where the morals in this business are in terms of protecting purchasers and consumers," said Anthony De Sa, a teacher and writer who, along with his wife, bought four units in the building for themselves and their three sons. "It seems to me that the developer has the upper hand."
Purchasers have already met twice to discuss options, including earlier this week in a gathering organized by Ms. Bailao's office. Some have consulted lawyers about possible legal action, Mr. De Sa said, but the consensus was to first explore whether a solution can be negotiated.
"We really wanted the opportunity to sit down with the developer … and to see if he would be open to entering a world of discussion and sitting at the table and seeing if that would be something that would be economically feasible for all involved," said Mr. De Sa, who previously bought into another condo project by the same developer that was also cancelled.
Ms. Bailao, who is meeting with Mr. Romano next week as part of regularly scheduled meetings about the project, said she is also hopeful for a deal.
Asked whether he would entertain such negotiations, Mr. Romano said: "No comment at this time."
A note on Castlepoint Numa's website says: "The Museum Flats in its current form and design cannot be relaunched. We will go back to the drawing board and determine the best possible way to get the entire Lower Junction project moving forward." The proposed building is one of several planned for the site, near Bloor Street West and Lansdowne Avenue.
Original purchasers will be given "first opportunity" to buy units at a discount in a new project, the statement says.
The developer says construction costs have already increased by 13 per cent due to the delays in receiving planning approvals and are expected to go up another 8 per cent over the next year. In addition, projected soft costs, which include consultant fees and development charges, have almost doubled.
In an Oct. 31 briefing note prepared by the planning division, the city says it was reviewing the developer's site-plan applications, which were submitted in May, and expected to approve them in the second quarter of 2018. The developer also submitted a minor variance application to the committee of adjustment in July. The city also said it was also working in parallel to approve the larger site's draft plan of subdivision.
Some aspects of the overall Lower JCT project, which received zoning approval at the Ontario Municipal Board several years ago, are already under construction. The site is to include a mix of residential, commercial and office spaces, including the new home of the Museum of Contemporary Art, a 36-unit townhouse development, a daycare, affordable housing and a park.
Asked about calls for the provincial government to enact protections for consumers, a spokesman said the province protects deposits paid by those who buy presale units.