Rendering of proposed development in Markham.Supplied
A developer who received fast-tracked rezoning from Ontario’s government to build a multimillion-dollar film studio in Markham is fighting a lender’s attempts to obtain a court-ordered sale of its assets after it defaulted on a $30-million loan.
The battle is over 99 acres of former farmland on the urban fringe of the Toronto-area suburb. The case highlights the risks that can accompany lightning-quick approval of major land deals using Ontario’s ministerial zoning orders (MZO).
In July, 2021, Hong Kong businessman Philip Wong of SOW Capital Ltd. appeared at a virtual meeting of Markham’s electronic development services committee to appeal to the councillors to support his application to the province for an MZO that would allow him and local partner Tung Kee Investment Ltd. Partnership to build a huge movie production studio, hotel and commercial office space at 3143 19th Ave. Claiming that timing was of the essence because there was a limited window of opportunity to capture a share of the global film production business, and dangling the prospect of creating more than 9,000 jobs, Mr. Wong urged councillors to skip the normal planning process and seek an MZO.
“It wasn’t something where we had a pressing need, it wasn’t affordable housing,” said Jack Heath, a veteran of Markham politics who retired from the regional council in 2022 but voted against the MZO motion in 2021. “I don’t like MZOs; I don’t believe in them except for really important things such as long-term care. I don’t believe there should be a Queen’s Park planning department where anything big or pressing goes to Queen’s Park and bypasses the municipal planning process”
Section 47 of the Planning Act authorizes Ontario’s Ministry of Municipal Affairs and Housing to issue ministerial zoning orders that essentially allow the minister to take on all the local planning powers the province normally delegates to lower levels of regional or municipal government and redesignate land uses with no possibility of appeal. It’s essentially a nuclear option that wipes away the normal course of the rules-based system for municipal land planning developed over decades that require land developers to participate in community consultation and environmental studies and offer a basic rationale for their projects.
Since 2018, the Tory government of Doug Ford has issued 108 MZOs, more than all previous governments.
It’s a process that NDP MPP and municipal affairs critic Jeff Burch calls “a mess” and he’s been asking the Auditor General to look into why and how some of these MZOs have been made, often with no transparency.
“Before the Greenbelt scandal really turned the public eye on it in a big way there’s already so much that’s been done, we’re going to be spending the next year discovering all the backroom deals that have been made,” he said.
Despite Mr. Heath’s opposition, Markham’s council did support the film studio MZO. Within a month, former Minister of Municipal Affairs and Housing Steve Clark issued the order, Ontario Regulation 599/21, redesignating the agricultural land as commercial.
The One Markham plan proposed to build 3.5 million square feet of office space, film studios, a hotel and retail space. Barely a year later the major lender on the project, Romspen Investment Corp., was seeking an order to obtain power of sale over the lands after Tung Kee missed payments on a $30-million loan.
Romspen is just one of five mortgage lenders on the properties and the combined debt totals more than $65.7-million.
Following unsuccessful attempts to sell the land in early 2023, in July, Romspen applied to the Ontario Superior Court for an order appointing a receiver to begin a sales process for the lands. In a counteraction filed in August, Tung Kee and SOW Capital filed a claim seeking damages of $120-million from Romspen, whom it alleges scuttled a deal to sell the land.
In its filings, Tung Kee claims if the lands were developed the site would be worth more than $320-million, and that Romspen’s attempt to sell the as-yet-undeveloped site for $64.5-million was “improvident” and well below its assessment of the market value.
What’s clear is the land is worth more now that it’s zoned for commercial uses than it was before the MZO was approved. Indeed, in the marketing materials for the sale Romspen suggested the MZO allows almost any commercial use.
“The bottom line here is this government is issuing MZOs without adequate due diligence,” said Mr. Burch. “Really what should happen is it should be revoked if it’s given out for a specific purpose,” especially if that purpose is null and void, he said.
Mr. Wong was not available to comment. Romspen and its lawyers did not respond to requests for comment.