'Just as stunned as anyone': Architect was working on Connolly last week
Among those stunned by Monday's news that The Connolly is in receivership: the architect designing the addition of 30 storeys of residential condos to the old James Street Baptist facade.
"We were working on it up until last week," said Drew Hauser, the architect from McCallum Sather who drew up the plans. "I'm still just as stunned as anyone."
He said he had a conference call about below-ground grading and costs with a contractor and with project developer Louie Santaguida last week. He said Santaguida didn't say anything about the receivership.
But The Connolly entered receivership on June 22 after Santaguida went into default on a $5 million loan, court records show. A notice pinned to the fence at the construction site alerts the public to that fact; word spread quickly Monday of the project being on shaky ground.
And beyond his surprise as an architect, the news hits Hauser personally: He also has a deposit on a condo in the project.
Santaguida did not respond to calls or messages Monday or Tuesday asking for comment.
'The purchasers' deposits should be safe'
Court records show that the project had 114 units presold on the building as of June 2015. They would have put a presale deposit down for 20 per cent of the purchase prices, which ranged from units in the $200,000 range to penthouses for $684,000.
Ontario law requires new home developers to keep buyer deposits in a trust.
David Ionico is a condo lawyer with McHugh Whitmore. He reviewed the receivership documents and said as long as Santaguida's lawyers did not improperly release the deposits from trust, the buyers' money should be safe.
"The purchasers' deposits should be safe as long as everyone involved followed the law," he said.
The documents state that the deposits would be held by Santaguida's lawyers and, should they for some reason not be in the trust, there is a security in another mortgage registered to the property.
That means that Santaguida, in 2014, took out a security policy that promised to Tarion, Ontario's home warranty corporation, that if the builder defaulted on the project and the deposits weren't in the trust, the company would pay the deposits owing to Tarion, which would distribute the deposits to buyers. Tarion automatically guarantees at least $20,000 to all buyers, but may potentially guarantee more than that.
'The remnant of a former church'
In 2014, Santaguida's company Stanton Renaissance demolished two-thirds of the historic James Street Baptist Church from 1878 as it planned the 30-storey Connolly tower.
The court document refers to the property at 98 James Street South as "vacant lands" except for "the remnant of a former church without a full roof, all four walls or interior structure."
Nothing was ever built there. Santaguida told CBC Hamilton he'd been delayed by the discovery of a stream running under the project. In April, when another of his projects elsewhere went into receivership, city officials were still believing The Connolly would happen, and said he had until November to get some substantial work going to qualify for a city grant.
But court records show Santaguida failed to make required interest payments last September and December, and was some $27,000 behind on payments as of mid-December 2016. He did make two payments of $23,750 after that, but the credit union behind the $5 million loan began the court process to seize the property on Dec. 28.
The records also show Santaguida is more than $100,000 behind on municipal property taxes.
'Hopefully ... it will be another developer who wants to carry on'
Glen Norton, the city's director of economic development, said he's been calling Santaguida's cell after learning of the receivership on Monday, and the calls go straight to voicemail. He said he's eager to hear from the receiver what the process will be for selling off the property.
"Hopefully, and logically, it will be another developer who wants to carry on with the original plans and will offer the unit purchasers the opportunity to stay in," Norton said.
But it may prove lucrative for a new developer to cancel the contracts with current buyers and try to raise prices to current levels. The Connolly project was approved in January 2015 for a maximum of 259 condo units and two floors of commercial space.
Prices have been rising in the two years since then. The median price for condos sold in 2015 in Hamilton and Burlington was $291,801, according to Realtors Association of Hamilton-Burlington numbers.
In 2016, the median price rose 12 per cent to $326,703.