Construction delay on school has devastating results, contractors
Thursday, Mar 13, 2014 10:33 am
A number of local and Calgary contractors say they are out hundreds of thousands of dollars due to the major construction delays of the Airdrie Koinonia Christian School’s (AKCS) new location in Gateway.
AKCS is a private Christian school that is regulated by Airdrie Konionia Christian School Society, made up of seven volunteer members who are elected by parents. All the current members are parents to children attending the school.
Construction began on the 57,000-square-foot building, on Gateway Dr., in March 2011 and was expected to be completed by September 2013. The school’s almost 300 students are currently attending classes in a number of churches around town until the new building can be utilized.
In a letter sent to AKCS parents and stakeholders on Feb. 7, the school claimed the board terminated their contract with Airdrie-based JDS Construction, the contractor in charge of the building, after the school “met financial obligations.”
A document sent to Paul Wolff, JDS founder, by Warnock Rathgeber & Company (the school’s legal counsel at the time) on Feb. 3 stated “due to the substantial funds owing to the trades and due to the approximately $3.5 million owing to complete the project and due to multiple liens placed on the title by the trades, AKCS is formally notifying JDS that the contractual relationship between AKCS and JDS is terminated.”
The Feb. 7 letter to stakeholders signed by Scott Calderwood, AKCS board chair, states the school had paid $9.66 million to the contractor, out of the total cost of $10.5 million, as of November 2013 and JDS “did not in turn pay the full amount owning to sub trades, which led to the registration of multiple liens against the school property.”
According to a Statutory Declaration dated Nov. 29, 2013 that was signed by Wolff, “the contract for the completion on the Airdrie Koinonia Christian School is 95.5 per cent complete.” The same document goes on to state: “All accounts for labour, products, services, and equipment which have been incurred directly by the contractor in the performance of the work as required by the contract and also all substantiated invoices from all subcontractors, according to the contractual or written agreements made to complete the project to the percentage completion stage in paragraph 1 (a) above, have either been paid in full or will be paid in full from funds advanced from the draw for which this Statutory Declaration is declared.”
The document concludes by stating “$1,622,818 is the total of all invoices received to date and future expected invoices to complete the contract, including all subtrades and JDS Construction and all builder’s lien holdbacks.”
Wolff did not return numerous requests for an interview.
There are now 27 claims adding up to about $4.2 million in liens owing on the building, according to Ron Smith, AKCS director of advancement.
Steve Falconer, exterior specialist with Airdrie company Stesuz Contracting, said he is out $168,242. Falconer said he employed six people to work on the school project.
“I’ve gone broke,” he said, adding he was last paid for his work in November 2013. He said he was paid a total of $41,000.
“This has ruined me. I have another business (Beyond the Vine, a local wine-making store) and there is a good chance I am going to lose it.”
Mark Moffatt, president of Platinum Roofing Ltd., a company out of Calgary, registered with the BBB since 2011 with no recorded complaints over the past three years, claims he is owed $248,421, which has limited the type and number of projects the company can bid for now.
“The effects of this are devastating,” he said.
“I’ve had to cancel a contract and some others can’t go forward. I have been doing this for 20-plus years but if I have no money to invest in projects, I am no longer a contractor. It is so frustrating to see opportunities pass us by. This is affecting my reputation that I have spent years building.”
Moffatt said he has worked with JDS Construction before and has never had a problem until he stopped receiving payments for the work he did on the school in September 2013. He said he received a total of $247,298.
“What is really the most frustrating thing is that we don’t know if it is JDS that is withholding funds or if the school hasn’t paid him (Wolff). Someone needs to come forward and shed some light on the truth.”
According to Smith, the original budget for the project was about $5.3 million because only part of the school was to be built initially and the rest of the school would be completed at a later date when funds were raised.
“In the beginning, it was the plan to only construct stage one and move all the children into that one part of the building with classrooms until we could raise more money,” he said.
“A number of things including an inspection that required we put in all the HVAC at one time and the fact that we could get materials cheaper if we bought in bulk as well as the fact we could get financing for the whole project, we decided to do the whole project at once.”
Smith said about $1 million for the project was provided by parents and fundraising and another $2 million came from the sale of the school’s previous location on Yankee Valley Boulevard. The building is between 85 and 90 per cent completed, he added.
According to “Mortgage Statements” dated Feb. 5 from McLennan Ross LLP, legal counsel for Bow Valley Credit Union Ltd,. the AKCS Society had a mortgage for $4.5 million as of Nov. 22, 2012 and a refinanced mortgage of $7 million as of Oct. 22, 2013. The same documents, state AKCS paid JDS directly from November 2012 to August 2013 and then paid in trust through the credit union or the school’s lawyer Warnock Rathgeber & Company until December 2013.
Smith said when the Bow Valley Credit Union increased the mortgage amount, they became more involved in the process and suggested the Society start paying JDS through the credit union and lawyers.
“We are not experts at this. We let our hands off the wheel because we were too comfortable (with JDS Construction),” said Smith.
“We took our hands off the reigns.”
Isabel Toole, part owner of Calgary company Diamond ROC Interiors, which does Commercial & Residential Steel Framing Drywall & T-Bar Ceilings, said the project’s financial troubles seemed to “come out of the blue.”
“We just want to know what happened to the money,” she said, adding she was last paid in September 2013.
“I’m shocked that we were led to believe that everything was fine and there was enough money and now we are out hundreds of thousands of dollars.”
Diamond ROC claims to be owed about $173,000.
“It doesn’t look optimistic,” she said about being paid in full.
According to the AKCS letter, the school will apply to establish the amount of a Builders Lien Fund on March 24, 45 days after the last tradespeople were on site. The Builders Lien Act assists contractors, labourers, and suppliers who have provided work or material to a construction project, yet have not been paid. The Builders’ Lien Act also affords owners some protection by limiting their liability to that of the lien fund in the event a general contractor does not pay its subcontractors and suppliers.
Toole said that could mean subcontractors would receive a significantly smaller portion of funds than what they are owed.
“We are extremely frustrated,” she added.
“We can’t bid on projects that are the size we would like to. It is a huge loss and it feels like we have been completely left in the dark.”
According to Calderwood, there are three to six weeks worth of work remaining on the building in order to gain partial occupancy. Calderwood said the Society will try to enter into a direct agreement with the trades to complete the school by September of this year. Smith added he hopes to have the children moved into a portion of the school by May.
“I don’t see anyone working with them at this point,” said Moffatt.
“I’m not sure who would agree to that after all the money we are all owed.”
Smith said he is sympathetic to the sub contractors.
“We don’t want people to think the board is not sympathetic to the folks who have done work and were not paid,” he said.
“We are willing to work under the assumption the truth will be revealed and are hoping it will be a positive outcome for all of us.”