City needs $9.5M to finish St. Lawrence Market building

The City of Toronto is poised to drop $9.5 million in emergency spending to keep construction of the St. Lawrence Market north building on track — and a serious internal management issue is partly to blame, a document obtained by CBC Toronto shows.

Mayor Olivia Chow said Friday the situation will be looked into and details about what's happened will be made public. "Every dime that we spend needs to be accountable," she said when CBC asked about the situation.

Her council will be asked in late July to approve the additional spending so the facility can begin opening to the public this fall and city staff can move into the brand new glass and orange metal building, complete with a green roof. 

The spending is also needed to stop the contractor, the joint venture Buttcon-Limited/The Atlas Corporation (BA-JV), from exercising its right to terminate the deal and delay the project indefinitely.

That delay, the document warns, would cost the city millions.

"An Emergency [non-competitive procurement] is the only course of action available that would allow the City to meet its immediate legislated payment obligations, while mitigating the threat of a stoppage in work and legal action from BA-JV," the document from June 10 states. 

Cost overruns on government construction projects won't surprise Torontonians, but this time CBC Toronto is able to show a clearer picture of the internal problems, caused by an unnamed former employee, than staff are disclosing to the public.

A public-facing document says the need for emergency funding is "primarily driven" by costs associated with the COVID-19 pandemic, evolving needs for its court services division and "errors and omissions" from the prime architect.

In an email statement, the city said the money is needed to get the project done on time. "A number of changes to the General Contractor's scope of services were accelerated on an emergency basis," it said.

"All changes were validated by the project's Contract Administrator and were determined to be legitimate and required to support evolving building needs."

However, the internal document and recent comments from the executive director of the city's real estate division, paint a different picture.

The document shows a city staffer working on the project was not following "proper change management processes."

Change orders are costs that arise during a construction project that are above and beyond what was initially contracted. In an email, the City of Toronto said they are common on large capital projects. 

The staffer's error has left management and the city's legal team scrambling to keep the contractor on the job, the document shows.

"The goal of this plan is to bring the contract and project back in compliance," the document notes, adding specifically that the city also needs to meet its payment obligations.

CBC Toronto asked the city if the employee in question was terminated. The city said it doesn't comment publicly on personnel matters.

Real estate division head says he was told project was on track

The north St. Lawrence Market building redevelopment has been years in the making, with construction beginning in 2016 to replace the old, low-slung brick building that most will associate with hosting farmers' markets and antique sales. 

In 2019, council was asked to spend $14 million more than the initial budget. If it approves the new emergency spending, the project's total budget will hit $128 million. 

Some details about how the building's redevelopment hit this latest setback were revealed at a July 2 meeting of the general government committee. 

Patrick Matozzo, the executive director of corporate real estate management for the city, told councillors that the manager had told him the project was "on budget" when it was not.

"The person in charge of the project had the change log, knew that there were changes, and was waiting for the end of the project to bring forward all the changes," Matozzo said.

"They didn't forecast the additional funds that are requested here."

Matozzo confirmed that should have been done, and said this mismanagement was an isolated case.

Coun. Stephen Holyday moved a motion to send the report to the city's auditor general for review.

"I feel like we get reports and we don't have a choice on them because it's so late in the process," Holyday said. 

City council is set to vote on the new funding at its July 24 meeting.

Coun. Shelley Carroll, speaking Friday alongside Chow, said the building will eventually pay for itself because of the major parking lot that was built inside it. "That's the only reason we said yes" to the major project, she told reporters, noting there's a shortage of parking in the area.