Developers want to buy out owners of troubled Burlington condo
BURLINGTON — Two development firms and a real estate brokerage want to buy out the owners of a structurally problematic condo on New Street to build anew on the site.
Offering fair market value will mean paying three times more than what the units at 2411 New St. are really worth, says John Mehlenbacher, partner in the Rosseau Group. That’s why he and his partners need some help through municipal incentives, such as development charge breaks or special allowances for density and height, Mehlenbacher says.
“Otherwise, it just makes no sense.”
The residents of the six-storey building near Guelph Line are embroiled in multimillion-dollar lawsuits over its structural problems, and feel trapped in plunging investments. Inadequate concrete floor slabs and a suspect roof threaten its entire structural integrity. An engineering report estimated the repair could cost several million dollars. The lawsuits allege the city was negligent in approving the construction of the original apartment building in 1965 and when it was converted to condos in 1998. The city and other defendants, including Megna Real Estate, the east Hamilton developer behind the conversion, have rejected the allegations, which haven’t been tested in court.
In the meantime, faced with mammoth costs, the condo board has left smaller needs, such as crumbling balconies and exposed rebar, to fester. In April, Mehlenbacher and his partners, fellow developer GlenMax Group and real estate brokerage Rocca Sisters and Associates, found about 2411 New St.’s woes in The Spectator.
They approached Ted Griffith, a local resident who launched an advocacy campaign on behalf of the residents urging the city to buy the owners out of the 56 units at fair market value.
The city didn’t bite.
Now, Griffith — who works for a Toronto-based lobbyist firm — hopes the group’s pitch gains traction at City Hall, chiefly in the form of incentives.
Many municipalities in Ontario, including Hamilton, use the public policy tool to encourage the redevelopment of brownfields and underutilized sites, he noted.
“If the City of Burlington doesn’t help out with what are normal means in most every other municipality in Ontario, yes, I don’t believe this will happen.”
Rosseau Group and GlenMax Group are already planning condo towers on two parcels immediately east of the troubled building.
They bought the properties — a strip mall and parking lot with a vacant restaurant — in August. The second is contaminated, a brownfield the partners must clean up. The project can go ahead without 2411, but adding it to the mix would make for a bigger 2.6-acre landscape, said GlenMax’s Stephen Horbatiuk.
“I’m optimistic because Burlington city staff and Halton Region staff, they’re very good people to deal with.”
In an email, city manager James Ridge noted Burlington doesn’t have a brownfield redevelopment program.
“Development of incentive programs would need community consultation and city council discussion,” he said. “We are aware that Halton Region is launching an incentive program next year for projects in the region.”
But he added the city “is always open to discussing” redevelopment proposals. The partners say they must move forward with a plan by August.
Jesse Glen, a Rocca associate, hopes the confluence of interests will lead to a positive outcome for the residents. “It’s a terrible situation for them.” Griffith, who’s volunteering his time, plans to make a formal pitch to the residents’ group once a proposal is firmed up.
In earlier interviews, he’s suggested fair market value would be about $200,000 for a one-bedroom unit and $250,000 for a two-bedroom unit.
In 2011, a one-bedroom condo at 2411 New St. sold for $50,000, documents show.
Mehlenbacher — whose firm is a partner in the massive Bridgewater condo and luxury hotel under construction on the downtown lakeshore — said it’s too early to discuss figures.
Resident Slavica MacIntyre says the buyout would benefit residents and the city by breathing new life into New Street. She and her family have lived “in limbo” as the lawsuits drag on. Rather than millions, the city has argued a more modest $670,000 to $770,000 could deal with the building’s problems. That said, the condo’s “stigma” will still linger, said MacIntyre, a 48-year-old mother of three. “As they say, ‘It’s like putting lipstick on a pig.'”
Fellow resident Colin Brown, a 49-year-old car salesperson, is skeptical of the latest rescue plan. “You know what? I’m not going to hold my breath. It’s been disappointment after disappointment after disappointment.”
ORIGINAL ARTICLE: thespec.com