Troubles brewing for Hotel X project
Work at resort halted as builder takes out $32M lien on property
The already-delayed construction of a “cutting-edge” resort at Exhibition Place was halted last month when the company that was building the complex placed a $32-million lien against the city-owned property, the Star has learned.
In an Oct. 25 email to the Board of Governors of Exhibition Place, which includes five city councillors, Chief Executive Officer Dianne Young said she had informed the city’s legal department of the situation at the Hotel X, a project near the iconic Princes’ Gates that has been discussed since as early as 1999.
Young wrote that one week earlier — in mid-October — Multiplex Construction Canada “suspended work on the Hotel X site” and took out liens against the property. Young said the owner of the Hotel X development subsequently hired a new builder “because of this action and the inability to move the project forward.”
Exhibition Place is a publicly-owned area that is run by a city-appointed board of governors, which can lease properties for business ventures with municipal approval. The Hotel X project was given the green light in December 2009, and was originally slated for completion in May 2015, according to a board report.
Government records show Multiplex certified a lien against the Hotel X prop- erty on Oct. 19 that is worth $32,573,260. Six more contractors took out liens in the following days, ranging from just over $20,000 to almost $5 million. Liens are typically placed against properties as a means to keep a right of possession until a debt is paid.
Toronto Councillor Jim Karygiannis, a board member, told the Star that further delays in the project could affect other Exhibition Place ventures, such as bookings for the conference centre.
“I do have a lot of concerns about what I’ve been hearing,” he said of the suspended construction. “Where there’s smoke, there’s fire.”
Responding to a series of questions from the Star, Henry Kallan, president of the company that owns the Hotel X, said in an emailed statement that “there are no cash flow problems with the project and never has (sic) been.”
He added that construction is not halted and that work continues under the new construction company, McKay-Cocker Construction.
Multiplex Construction, the company with the $32-million lien, declined to comment on the situation.
Owen Whelan, president of McKayCocker, said that the six contractors that took out liens — excluding Multiplex — are in talks to withdraw them and return to the project.
“I do have a lot of concerns about what I’ve been hearing . . . Where there’s smoke, there’s fire.” JIM KARYGIANNIS TORONTO CITY COUNCILLOR
“I think everybody knows that the job — the project — was taking an awful amount of time to complete, so there was a dispute between the owner and the contractor, and it ended,” Whelan said.
“From what we know, and all of the due diligence that we’ve done, all of the tools are there to successfully get this to grand opening.”
The Hotel X is billed on its website as a “unique lakefront urban resort,” that features a 30-storey hotel with a rooftop pool, an adjoining athletic facility with several squash and tennis courts, and a pub and beer garden housed inside the retrofitted Stanley Barracks.
The project to build a hotel at Exhi- bition Place was approved by city council in late 2009.
Original estimates pegged the cost at $90 million. By 2015, according to a board report, that earmark had swelled to $175 million, with “hard costs” borne by the developer. The construction schedule also expan- ded; work began in January 2013 and the hotel was slated to be built by May 2015, the report says.
That was pushed to July 2016, but now the Hotel X website indicates the complex will open “early” next year.
One major reason for the delay was the discovery, in September 2013, that some of the soil upon which the hotel would be built was contaminated.
The south portion of the site was on a 100-year-old landfill used to bury the shallows of Lake Ontario, while the entirety of the property was a parking lot for half a century, and Exhibition Place will pay an estimated $7.5 million by the end of the project to have the contaminated soil removed, according to the board report.
Whelan, the McKay-Cocker president, said that the precise schedule for the completion of the project will be worked out during the coming weeks.
“All in all, this project is well on its way to the finish line,” he said.
The email from the Exhibition Place CEO, Dianne Young, stated she would bring a full report on the situation to the Dec. 5 board meeting.