Mark Rendell
Mark Rendell

Condo Comedown: The Story Behind CAVO’s Endless Delays

Local developers say they have valid reasons for leaving purchasers in limbo

In early fall 2013, Greyson Gritt put a $9500 down payment on a studio suite in Niven Lake’s CAVO development, then being touted as Yellowknife’s most exciting new condo project. Summit Development Corporation was the well-appointed, market-canny force behind the project. Things were already a year behind schedule. Gritt, a first-time real estate buyer investing a large chunk of savings, was assured everything would be in place for a May 2014 move-in by the project’s spokespeople.

The spring of 2014 came and went, yet none of the units were in place. Summit, run by Jon Jaque and Wayne Guy, told their increasingly anxious buyers the project would be ready in August, and Phase 1 and Phase 2 would be completed at the same time. Then they told them it would be ready in November. No, December. Wait, February.

“When you tried to get something substantial… when you tried to dig for the dates, it would be like, oh, we’re just talking to the developers, we’ll get back to you,” says Gritt. “That’s happened numerous times up to now. They really don’t give enough notice. It’s like they blatantly don’t give a shit.”

Dave Marriott, one of several people who helped fund the project early on, says even investors were given little explanation for the delays.

“There would be no updates at all, or maybe once every four months. I cut them some slack, because they’re new. But I wish they had their shit together a little bit more.”

The CAVO project and its delays became a part of city gossip. What was going on? Why so many delays? Was there something rotten at the heart of CAVO? Was this incompetence, or malfeasance?

Innovative delays

The reason for nearly three years of delays with meagre explanation to investors and buyers has to do with a failed supplier and Summit’s fear of a potential legal suit, Jon Jaque tells EDGE.

“That’s the part of the story that we really didn’t expose completely,” he admits.

In the fall of 2012, Jaque says, Summit entered into a contract with Innovate Building Systems, an Edmonton-based supplier of modular building units. Innovate produced the show suites for CAVO. The plan at the time was to start shipping units up to the Niven Lake site within six months and have Phase 1 in place by May 2013.

Problems started, according to Jaque, when Summit began to “identify issues with Innovate.” The supplier, it became increasingly clear, was in dire financial straits. By 2014, Innovate had folded, leaving around 100 people without jobs.

“Without creating a legal contracts issue with them, we began discussions with Guerdon [a modular unit builder] in Boise [Idaho],” says Jaque. “We did not lose money (on deposit) with Innovate. We only lost time invested in them and the costs associated with that.”

Although Summit acquired the CAVO property as a “legal option” from the City in June 2012, they didn’t gain title until November 2013, after securing a $5.6 million mortgage from RBC. This had to do with money being tied up in Edmonton, says Jaque.

So why didn’t Summit tell their buyers and shareholders things had gone south (literally and figuratively)? According to Jaque, Summit was terrified it would be sued by Innovate if it became public they were going behind the collapsing company’s back to other suppliers.

“We continued under an information black-out… to avoid being pulled into a unlikely but possible legal conflict with a breach of contract.”

It’s a wobbly legal tightrope that the company has been walking for several years, Jaque tells EDGE.

As the project began to take off again in 2014, following a $1.5 million private mortgage – secured at 10 percent interest with a single year pay-back period – the summer forest fires and their effect on trucking “sent our construction schedule spinning,” he says.

Condo-less and couchsurfing

Because of the delays, and Summit’s decision to hide their ongoing problems, numerous Yellowknifers feel they’ve been left in the lurch. CAVO representatives sent out multiple messages to people with hundreds of thousands of dollars on the line, not to mention the lack of a roof over their heads, all that suggested there was nothing to worry about.

By November, Greyson Gritt’s apartment lease had run out and Gritt was beginning to panic. Phase 2, which Gritt had bought into, was pushed back to the summer of 2015 and they were looking ahead at months of couchsurfing and house-sitting.

“I’m not satisfied with this, you’re messing with my life,” Gritt told Summit. “I need you to find me a place in phase 1 or I’m walking with my deposit.”

Summit agreed to move Gritt to Phase 1, then slated to open in February; but this still left Gritt couchsurfing for two months.

Gritt’s experience was not unique, nor was it the worst.  Joshua Colford, also a first-time real estate buyer, put down a deposit when the buildings went on sale in 2012. He was told he’d be moving in within six months.

“I gave up my apartment, and moved into my parents’ place under the impression I’d be there only for a few months. A year and a half later, I’m still on their couch.”

A month ago he moved to Ottawa and managed to sell his unit, even making $10,000 profit, as the price of the condo had risen. But that didn’t change the fact that Summit’s delays and communication blackout left him sleeping in his parent’s living room for well over a year.

A third condo purchaser, who wished to remain anonymous, put in a down payment in the summer of 2012 with the intention of moving in the following year. He’s since had to renew his year-long apartment lease three times – in 2013, 2014 and 2015 – as he plays the waiting game.

“I always call it our imaginary condo,” he jokes. “But it’s okay, I’ve got imaginary equity.”

Worth the wait?

Phase 1 is now on the ground and Summit is doing walk-throughs of the units. So far, the reviews are mixed.

Gritt did a walkthrough last Sunday, and wasn’t impressed. Instead of the dark finishes requested, the floors, counters and cabinets were a light pine. The fridge was dented and smaller than the one in the show suit, Gritt says, there were scratches on appliances and floors, the bathtub was discoloured and there was a dime-sized hole in the linoleum.

“The refrigerator was actually important to me because I cook a lot…The scratched appliances were cosmetic, but I’m paying hundreds of thousands of dollars for this place,” says Gritt.

“I spoke with someone today…she went through the same things…All these things were changing with no one offering up any information whatsoever.”

Jaque says the change of colour had to do with Gritt’s move from Phase 2 to Phase 1. The Phase 1 units “arrived before we made the arrangement…so the colour package of the unit that was not yet hers was already decided,” he argues.

Because of Gritt’s complaints, Summit offered three options: walk away with the deposit, take a discount for the deficiencies, or rent the condo in Phase 1 until another opens in Phase 2. Gritt, who says the offers on the table keep changing, has decided to walk away.

On the other end of the spectrum, Marie-France Bernèche, who moved in last Sunday gave a glowing review of her unit.

“It is absolutely beautiful and the views are fantastic, the unit looks gorgeous, it’s a great feeling to be in here,” she says. “The delays have been challenging, but it was worth the wait.”

She did, however, note some deficiencies – a few scratches and nails sticking out of the baseboards.

According to correspondence from CAVO, in November 2013 all of Phase 1 and Phase 2 were sold out. Now, Phase 2 is only half full and there are still spots in Phase 1.

Jaque says this time buyers will be able to move into Phase 1 by March. However lot 109, the lot that Phase 1 is built on, was only registered with the land office as a condo less than a week ago. As of Thursday, the title change was still pending.

 

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