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Financial problems continue to plague Kelowna's Sopa Square development
Work has stopped once again on a large, high-profile development in South Pandosy. This time it’s because the project has gone into receivership.
Sopa Square, the planned mixed-use development once touted as a potential anchor for the South Pandosy commercial area, was originally slated to include an 11-storey tower, a four-storey townhouse portion and a mixture of commercial, retail and residential units. The original cost was estimated at $70 million.
But after the original local developer ran out of money and the project stalled, and then a second developer—this one from Alberta—took over but did not have the money to complete the work, the courts were petitioned by the project’s second mortgage holder to put it into receivership. With the approval of all the partners, late last month the professional services firm of Ernst and Young was appointed interim receiver.
According to Kevin Brennan, senior vice-president of Ernst and Young in Vancouver, the second mortgage holder, the Leslie and Irene Dube Foundation, a private foundation based in Saskatoon, was “basically being asked to put more money into the project.” But it balked as it was already owned $19.4 million.
Brennan said his firm has just started looking at the project this week. “It’s way too early to contemplate who any new tenants would be,” he said Wednesday.
Right now, the company is assessing the project, he said, looking at when it could be completed and how much it will cost and if a buyer or any other sources of funding can be found.
Last year, a decision was made to hold off on the residential component until after the commercial and retail parts were complete. Brennan said the developer did bring the commercial and retail portion to “substantial completion.”
Currently, there is just one commercial tenant in the building, Silent Noise Jewelry.
Silent Noise owner Gadi Nussen declined an interview request but did tell a local website he had spoken to a representative of Ernst and Young and was told a buyer needs to be found for Sopa Square within 30 days.
He also said that workers on the site had been told to stop work.
Nussen said when he moved his business into the building last month, there weren’t any issues. He received an occupancy permit right away.
Brennan said it’s his company’s aim not to disrupt Nussen’s business.
In November, the Capital News reported an estimated 10 per cent of the businesses lined up to occupy space in the building had pulled out because of the long delays in completing the building.
The Sopa Square project has been beset with problems from the start.
First there was a lengthy delay in starting work on the project, then safety concerns about one of the cranes on the site shut down construction work for a lengthy period. The original developer ran out of money and after sitting idle for a while, the project was revived when a second developer took over.
Sopa Square was first approved for construction by the city in 2008. It was to have 48 townhouse units and 51 condominiums, as well as $40,000-square-feet of commercial and retail space on the ground level and 14,000-square-feet of office space on the second floor.
In September, Epic Real Estate Solutions won a contract to manage Sopa Square’s sales and marketing program for the future residential units.
Company president Mark West said at the time his company was getting plenty of interest in the development.