Left in the lurch
Wade Wagstaff figured he had secured six months of work for his crew of seven people.
The owner of the Penticton-based Grizzly Excavating Ltd. said he jumped at the chance to bid on work at the proposed hockey dorm site on Eckhardt Avenue, because it would bring months of stability to his company during uncertain times for the construction industry.
“My contract was for $300,000 to do the site excavation and structural fill up to (a certain amount) of cubic metres,” Wagstaff said, adding that his crew began excavation work Nov. 23 which cleared the path for other contractors. “Basically it was a big bathtub, and there was no way to get rid of the mud and water. So we were there to haul mud and ensure they could keep moving forward and working.”
Wagstaff said he began to realize there were problems with Okanagan Elite Hockey Association project when the first of the bills came due, and payment didn’t appear.
“There were verbal rumblings that there would be cheques floating sometime between Jan. 3 and 15,” he said, adding that one of the project principals, Loren Reagan, gave him a payment timeline. “He gave me verbal assurance that cheques and money would be flowing by early January when I saw him on site one day.
“Those days came and went. I started following up daily. Every day that we were given, it kept coming and going. There was no money to be seen.”
In the meantime, Wagstaff said his staff tried to accommodate the schedules of out-of-town contractors coming on site.
“There were a lot of hours spent over and above the contract,” he said. “Even though we weren’t getting paid, we were still good enough to go by and make sure the fences were secure, trailers were secure. We went above and beyond because a lot of parties that were involved were from out of town, which we did not bill for. It was in good faith.”
On Jan. 11 — after each Grizzly Excavating crew members put in between 220 and 240 hours of work — work stopped on site. “It’s been devastating,” Wagstaff said.
The company has moved to place a lien on the property, he added, and the contractors are banding together to resolve the situation — which has been made complicated as a result of the land ownership status.
In November, Reagan and then-partner Mike Elphicke agreed to purchase nine lots from the City of Penticton for $925,000, and a $50,000 deposit was paid. Financing for the purchase fell through three times, and on Feb. 1, Penticton council voted to keep the deposit because the sale wasn’t completed. Now contractors are in the position of placing a lien on city-owned property, although they were contracted by a private developer to do the work.
After Monday’s council meeting, Mayor Dan Ashton reiterated that the city will not sell the property to cover the construction bills accrued on site, and that the city is “not in the business of protecting contractors that have entered into an agreement with other people.”
Ashton added, however, that the situation weighs heavy on his mind. “I go to sleep every night thinking about it and I wake up in the morning thinking about it … Our jurisdiction is to protect the citizens of Penticton. Do I feel for those contractors? Absolutely.”
The city’s lawyer Richard Thompson confirmed Tuesday that the city filed a “notice of interest” under the Builders’ Lien Act on the Eckhardt properties with the Land Title Office in November, which stipulates the land is not bound by liens unless the improvements in land are undertaken “at the express request of the owner.” Thompson added that “express” requests are narrowly defined in law as those in writing and requiring a contract between the land owner and lien claimant. Approving an earthworks permit would not qualify, he said.
Wagstaff said apart from the lien process, he’s not sure what other recourse is available. “I think it protects your rights against the property in question so you can get your ducks in order, the i’s dotted and t’s crossed. It gives you a year to act on the lien as far as pursuing payment,” he said, adding his requests for copies of permits issued have been denied by the city.
“Things got incredibly far along for having no money and no paperwork in place. We’re all going to take the hit for somebody else’s actions. At least at this point we are,” he said. “Who knows? This could be the demise of my business, and I had nothing to do other than being told to go to work.”
John Bowser, the project manager at Task Management charged with overseeing the project, said his company has placed a lien against the property along with 13 or 14 vendors, including consultants, contracted for the project. All told, $1.6 million in improvements have been completed and remain unpaid.
“This type of predicament is new ground for our firm,” Bowser said, noting he has 43 years of experience in construction and done several large-scale projects for both public and private sectors. “When you come up against something like this, it’s challenging.
“I used to say to people that sometimes construction is the easy part of the project. This is a project that epitomizes that.”
Bowser said there are several people trying to resolve the matter, and he hopes that in a year, Penticton residents will have a good news story on their hands.
“Right now, the job is not proceeding, the money is not in place, the land hasn’t been bought, but the permits are ready to go. The construction manager and contractors have done their job and are ready to go, the city has done their job because we’ve worked with the city hand in hand to get this so the project can proceed consistent with the requirements of the building code and local planning authorities,” he said. “We haven’t circumvented any processes, we just shortened it and that was with the spirit of co-operation of both mayor and council, planning and permitting.
“There’s no skeletons here in the process. Everybody has performed except for one party.”
The Okanagan Hockey School said last week that it remains open to discussion with potential developers looking to purchase the land and build a dormitory. Reagan has stated before he is working with new investors to back the project. Ashton has said there is no proposal in front of them and clarification of outstanding issues would be required.
Bowser said he recognizes the concern in the community, but local leaders have “got to get everybody back to where there’s some calm. Once you establish that, then you can get people thinking again and the ideas flowing.”
In the meantime, he said Penticton would do well to rally around smaller contractors involved in the project.
“All the contractors involved in this contract are very good at what they do. There was no problem with delivery, they met the requirements of schedule right up to the stoppage, and it’s unfortunate we’re in the position we are in right now,” he said.
“Wade’s a first-class contractor. He’s honest, puts himself out there. Young, home-grown guy with a young family. If there’s other people in the community looking for work, doing some construction, then Grizzly Excavating should be the one you call.”