Maroc - STOREYS.COM - A La Une - 30/Apr 19:24

Pace Developments' 50-Acre Barrie Project Under Receivership Over $47M Debt

Construction on the Urban North Townhomes project in Barrie, Ontario will likely be facing some delays as a result of the project being placed under receivership in March.The Urban North Townhomes project is set to sprawl across a 50-acre site at 700-780 Mapleview Drive East, adjacent to the Barrie South GO Station, and will consist of approximately 1,000 townhouses, which will be delivered across six phases.The property is legally owned by Mapleview Developments Ltd. and beneficially owned by 2552741 Ontario Inc. and Pace Mapleview Ltd. — also known as Pace Developments, which is a Richmond Hill-based company that primarily develops townhouse projects.The ReceivershipThe application to appoint a receiver was filed on March 14, 2024 by KingSett Mortgage Corporation, which entered into an agreement with Pace Developments in September 2022 that would see KingSett extend seven separate loan facilities to Pace for a maximum aggregate principal amount of $105,762,112. The guarantors of the loan are Dino Sciavilla and Yvonne Sciavilla, who are both directors of Pace Developments, according to records obtained from the Home Construction Regulatory Authority (HCRA).After the maturity date of the loan agreement was extended several times, according to court documents, the loan facilities matured on February 1, 2024, at which time KingSett claimed that it was owed a total of $47,099,842.63, with interest accruing. KingSett subsequently issued demand letters and notices of intention to enforce security on February 16, 2024, before exercising its contractual right to seek out a court-appointed receiver a month later, in March. KingSett's mortgages are first-ranking, with other charge holders including Westmount Guarantee Services for $5M and MarshallZehr Group for an unconfirmed amount. Vector Financial Services Limited also holds a first-ranking mortgage over 750 Mapleview Drive East for the amount of $2,885,000, but KingSett says it is not seeking to enforce its security there. Additionally, a total of 10 construction liens have been registered, the most significant of which is a lien claim of $4,133,280.68 by Con-Drain Company (1983) Limited. The registration of construction liens are also considered defaults on Pace Developments' loan agreement with KingSett.The Ontario Superior Court of Justice granted the receivership order on March 21, 2024.What Happens NextThe case appears, like most receiverships, headed towards a sale of the property — a move that would allow the creditors to recover the debt.In its receivership application, KingSett said the appointment of a receiver would, among other things, "provide the most effective and appropriate method of effecting an orderly, efficient, and transparent sale of the property." It begs to reason that the receiver is now likely working on establishing a sales process timeline, which would require approval from the court. Once approved, the receiver will retain a commercial real estate brokerage to list and sell the property, with the sale also requiring final approval from the court. For pre-sale purchasers of Urban North Townhomes, there is not much they can do at the moment but wait. According to a notice to purchasers published by the receiver on April 11, 2024, "no action has been taken by the receiver with respect to the project completion or any purchase agreements" and "the purchase agreements remain in full force and effect." According to the receiver, all 311 units from the first two phases of the project have been pre-sold, with 264 of those sales transactions already closed. Some units from the third and fourth phase have also been pre-sold, but the receiver did not say how many. Only the first two phases had commenced construction. Pace DevelopmentsThis is not the first time the Urban North Townhomes project has been put under a negative spotlight. In 2021, Pace Developments sent letters to 70 pre-sale purchasers on the project saying that they would be cancelling the purchase agreements unless the buyers paid an additional $100,000. At that time, Pace Developments cited pandemic-induced cost increases, but that didn't stop Ontario Premier Doug Ford from calling out the developer."Nothing burns me up more than that," Ford said when asked about it at an unrelated press conference. "Some developer just trying to make extra money off the backs of hard-working people? Unacceptable. They see the market going up and all of a sudden they pull back their contracts? It's ridiculous. I'll have to look into that because that's unacceptable in mind. All you're doing is targeting hard-working people. [...] You signed a contract. You better build that damn house at that damn price." After the HCRA looked into the issue, it referred Pace Developments — Mapleview Developments, specifically — to the Discipline Committee in November 2023, alleging that the company "misled 33 purchasers to unethically extract over $3M from them" and that "Mapleview altered most of the APSs and provided those fake versions to the HCRA" when the HCRA looked into the purchasers' concerns.A hearing date has yet to be set.