Residents stuck in condo nightmare
Structural problems at the Burlington building lead to a flurry of lawsuits and leave property owners in limbo
The owners of a crumbling condo building in the heart of Burlington say the city is partly to blame for their sinking investments as the shadow of pending disaster hangs over their heads.
Structural studies have uncovered major problems at 2411 New St. — bombshells that have led to drawn-out litigation.
As the condo corporation dips into its reserves for engineering reports and legal fees, the building near Guelph Line continues to deteriorate.
Rebar is exposed through cement; balconies are corroded with rusted railings; cracks show on walls and floors.
“It looks like welfare,” longtime resident Joe Gillis says. “Most people probably don’t know this is a condo.” But the worst is what you can’t see. A 2009 engineering report says the building was constructed in the 1960s with concrete support slabs throughout the building that weren’t thick enough to support the six-storey structure.
The problem wasn’t addressed when the city approved a Hamilton-based developer’s plan to convert the rental apartments into condos in the late 1990s either, the lawsuits allege.
The fix could cost anywhere from $3 million to $12 million, estimates suggest, costing its 56 unit holders tens of thousands of dollars.
In a news release issued Tuesday, the city rejects those figures, saying updating the building
to the current Ontario Building Code would cost $670,000 to $770,000.
The city, which is named in two lawsuits, also maintains the building is “structurally sound now” and met building codes at the time.
In the statement, Mayor Rick Goldring expresses sympathy for the residents.
“I certainly understand that there are challenges for residents at this building — challenges they have expressed to the city,” Goldring said.
“We have asked our legal team to set the record straight by providing accurate information to respond to factually incorrect information posted online.”
The mayor’s last remark refers to a website (2411newstreet.ca) launched recently by a newly formed organization representing about 40 condo owners.
The group is asking the city to buy them out at fair market value “as if the building had indeed been built to code standards.”
THIS ISN’T where
Gillis, 69, expected to be nearly 20 years after he and his wife bought their modest unit for about $84,000.
The value is reduced to “peanuts” in a market that has escalated out his reach, says the retired millwright, whose wife died a few years ago. Meanwhile, fees and bills keep rising. “It’s kind of a crazy situation for anybody to be in,” he says. “A lot of people are just getting fed up.”
Gillis, like his neighbours, said he had no idea about the problem when they bought their units.
That’s why the condo corporation launched a lawsuit in 2010, seeking $20 million in damages from a litany of defendants, including the City of Burlington, a Hamilton real estate firm, engineers and others. The defendants, in turn, are suing each other. Guelph-based SmithValeriote, which is handling the lawsuit on behalf of the condo corporation, didn’t respond to repeated requests for comment.
A second lawsuit filed in 2011 by individual condo owners thickened the plot by also blaming the condo corporation.
That effort, which is expected to go to trial in January 2017, represents 26 unit holders.
None of the plaintiffs’ allegations nor the defendants’ responses or cross claims have been proven in court.
The condos, located in the heart of Burlington, were a “foot in the door” for people who couldn’t otherwise afford such real estate, says their lawyer, Laura Hillyer, of Burlington-based Martin & Hillyer.
“And their whole lives have been placed on hold. They can’t sell their units. They can’t mortgage their units. They’re in a real spot.”
For example, a one-bedroom condo at 2411 New St. sold for $50,500 in 2011, documents show.
THE CITY approved the design, not once, but twice: when it was built as an apartment block in 1965 and converted into condos in the late-1990s.
The original builder, Walbrook Construction, no longer exists.
For its part, the municipality denies it did anything wrong.
“The building met all relevant building codes at the time it was constructed, and again when it was converted to a condo,” the city said in a statement Tuesday.
The building, the statement adds, has stood for more than 50 years “without any sign of structural failure.”
“The various professional engineers that have investigated the issue would have a professional obligation to alert the city of the threat of structural failure and the building would have been shut down. None of the engineers took that action.”
In legal filings, the city also argues the allegations are “statute barred” because the plaintiffs didn’t take legal action within two years of knowing or “ought to have known” about the issues.
Megna Real Estate, a family firm based in east Hamilton, was behind the renovations and sales of the units at New Landing Condominiums.
Bruno Megna, the main driver of the project, died of cancer in 2004. He was 60.
But his estate and the firm, which still operates at Barton Street East near Kenilworth Avenue North, are being sued.
All have denied claims against them in legal filings.
Roy Megna, Bruno’s brother, recently told The Spectator neither knew about the major structural problems.
“If the engineers didn’t report anything, and inspected more than once … how was I to know? And I really question whether there is a problem with the structure,” the 69-year-old said. He wouldn’t comment further. K.L. Hodges and his firm, Frontier Engineering, also defendants, have also formally rejected claims relating to their role in the conversion. Hodges couldn’t be reached for comment. The issues came to light after contractors hired to repair a leaky roof opened a Pandora’s Box.
In 2009, engineers found bowing concrete slabs in the building weren’t thick enough. The reinforcing steel was also inadequate.
“If one slab collapsed, it could cause the collapse of the slab below, and could lead to the collapse of a significant portion of the building,” Kleinfeldt Consultants Limited noted.
In response to litigation, the city’s legal team hired engineering firm Halsall to conduct its own study, which characterized the risk on a lower scale.
The bowed concrete slabs have “likely been stable since the early 1970s,” its report said, concluding analysis results “indicate the building frame slabs have adequate factors of safety.”
THAT DOESN’T put Slavica McIntyre at ease. She and her husband are raising three children in the two-bedroom unit they bought for $108,000 in 2001.
They’re stuck in limbo as the market skyrockets all around them, says McIntyre, 47. “It’s like you’re being held hostage.” With so much spent on lawyers and engineers, there’s not enough money for major repairs, says Tiffany Ivey, a condo board member.
“Instead of fixing stuff, we have to be patching stuff.”
Property management company Wilson Blanchard Inc. told residents in a notice that mounting legal costs had “severely depleted” funds, “leaving us with less money for the maintenance and care of the building.”
That same notice also referred to unsafe balconies.
“We have also warned that no one may lean on the balcony railings, as railings are not considered sound.”
A letter from the management company also noted that the condo corporation’s insurance “does not cover the building structural issues as currently identified.”
Wilson Blanchard, also being sued, has formally denied claims against it. The firm didn’t respond to a request for comment.
The desperate situation has caught the attention of Ted Griffith, a public relations professional who lives in Burlington.
He’s organized about 40 residents into an association whose goal is to convince the city to buy them out at fair market value — about $200,000 for a one-bedroom unit and $250,000 for a two-bedroom unit.
The proposal would also circumvent the legal process.
“They should get that money and they should be able to get on with their lives,” says Griffith, who works for Campbell Strategies, a Toronto-based lobbying firm.
If the city buys the property, located close to downtown and the lakefront, it could sell it to a developer and turn a neat profit, he says.
“If you go on that side, well, this is a no-brainer, and you look like heroes.”
The organization’s website tells their story and asks supporters to contact city councillors via email and Twitter.
Late Tuesday, Griffith noted the city solicitor had sent him a letter, which he planned to follow up on.
Griffith, who’s offering his services pro bono, says he was in touch with Goldring and Coun. Marianne Meed Ward about his buy-out idea in January.
On March 21, Goldring emailed a brief statement to The Spectator about the proposal.
“The City of Burlington is aware of the concerns around this property.” But the mayor declined to elaborate. “I am unable to comment further as this matter is before the courts. We are hopeful a resolution can be reached.”