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What you need to know about COVID-19: August 14, 2020
When Michel Lebeau delivered a deposit of $46,620 to Ashcroft Homes in October 2017, he had every reason to be satisfied.
He had secured the right to a new semi-detached house in a development southeast of Blackburn Hamlet. Lebeau, a 911 dispatcher at the time, was just 23 and still living with his parents.
“I saved my ass off,” he said.
Assuming all went well with the construction, Lebeau would be able to move into his new $310,800 home on Oct. 15, 2019.
But things didn’t unfold as planned — neither for Lebeau nor for dozens of his would-be Eastboro neighbours. Ashcroft wrote Lebeau twice to inform him of delays in the deal’s close.
On July 6, Ashcroft Homes notified more than 50 buyers, including Lebeau, that it was terminating their sale agreements rather than delaying things even further. The reason, according to the letter: “Ashcroft has been unable to meet the condition regarding the servicing of the subdivision within the time permitted.”
Lebeau and other homebuyers contacted by this newspaper were stunned. Delays were one thing, but cancellation? Quite aside from the inconvenience involved, many had been anticipating significant gains on the value of their new homes even before they moved in.
That’s because each had placed a deposit just as the housing market took off. In Lebeau’s case, average residential house prices in Ottawa have jumped 35 per cent since he secured his new Ashcroft home. That house could be worth an extra $109,000 today.
Similarly with Ziad Jaber, an information technology contractor who put down a sizeable deposit in September 2018 on a $400,000 home. In his case average prices have climbed 28 per cent, which would have produced a gain of $111,000.
Instead, Ashcroft Homes said it would return the deposits “without interest.”
“As soon as we are ready to re-launch the affected homes, we will contact you to offer you an opportunity to purchase at a VIP preferred price,” the builder wrote.
Manny DiFilippo, Ashcroft’s chief financial officer, says he understands buyers’ frustration. “They had their hearts set on this and now they’re disappointed,” he said in an interview with this newspaper. “But any time you develop land, a lot of risks come into play: roadwork, servicing, environmental studies. These all need to be done.”
In this instance, a central issue appears to involve a report on something as prosaic as municipal drainage. The delays appear to reflect a severe case of regulatory paralysis.
City council four years ago hired an independent engineer, Robinson Consultants, to design a downstream drainage system. However, the city says the engineer’s report has had to wait for approvals by various regulatory agencies such as the Ministry of the Environment of an upstream stormwater management system. On top of this, according to David Ryan, the city’s program lead for municipal drainage, public works and environmental services, Ashcroft must include a large area to preserve certain habitats downstream of Eastboro and this must happen “before the drainage engineer (Robinson Consultants) can complete their report.”
But, according to Kieran Watson, the Ashcroft manager with direct responsibility for the Eastboro file, Ashcroft is waiting to receive a draft report from Robinson Consultants. Without it, Watson said, Ashcroft can’t get the necessary approval from the Ministry of the Environment to start building the next phase of Eastboro.
Robinson Consultants president Derek Potvin did not immediately respond to queries from this newspaper.
Ashcroft, which has already completed the first phase of Eastboro, has plans to build 852 more residences. About 50 buyers had put down deposits. These are the ones who have seen their sales agreements terminated.
Why didn’t Ashcroft wait longer? The company can’t leave things open-ended indefinitely, DiFilippo said, adding that the company intended to “go back and make amends” to affected buyers. “Our business is to build homes and have happy customers in those homes. It’s not in our interest to sell homes and years later cancel them. It just isn’t,” he said.
So where does this leave things? Ashcroft still intends to move ahead with the next phase of Eastboro, but obviously has to wait for that report and Ministry of Environment approval. The offer of VIP pricing for the group of 50 obviously needs to be fleshed out before those affected can decide if they want to stick with Ashcroft.
Some of the buyers are hoping to put some pressure on Ashcroft through Merovitz Potechin LLP, an Ottawa law firm they’ve approached to assess the possibility of a class-action lawsuit. The grounds for such a legal fight aren’t clear. Noah Potechin did not respond to queries from this newspaper.
Lebeau, now 26, a city employee and still living with his parents, is suffering buyer’s remorse. Because his capital was tied up with the Eastboro house, he missed out on the huge move upwards in the local residential resale market. “I can’t afford to buy anything in Ottawa now,” he said.
That’s a bit of an exaggeration. But he’s certainly much poorer than he would have been had he occupied that new home as intended last autumn.
Copyright Postmedia Network Inc., 2020