Penticton faces legal action
The failed hockey dorm project on Eckhardt Avenue has returned to haunt the City of Penticton once more.
Earlier this month, five notices of civil claim were filed in B.C. Supreme Court over the project by contractors who worked on the project, naming the city as one of the defendants.
These contractors filed $1.6 million in liens against the properties when the project came to a crashing end last February, as backers pulled out and news broke about allegations of previous fraudulent business practices on the part of developer Loren Reagan.
Wade Wagstaff of Grizzly Excavating Ltd. has said he is owed more than $300,000 for work done on the project. While he confirmed that he has filed a notice of claim, Wagstaff refused to comment further.
“I’ve been instructed through our lawyer not to comment at this time,” said Wagstaff. “Legal action has started.”
Mayor Dan Ashton, however, was forthcoming about the city’s position. He maintains the city is not liable and is standing by the legal advice the city was given.
“I am very comfortable with the city’s legal position on the properties and, as I have said all the way along, they are going after the wrong person,” said Ashton. “They should be going after Loren Reagan.”
Along with the City of Penticton, the claims name Loren Reagan as well as Mike and Tana Elphicke, the principals of Okanagan Elite Hockey Group as defendants. Five separate claims were filed by Grizzly Excavating, Avkon Construction, Geopac Inc.,R&R Reinforcing and Task Construction Management.
Led by Reagan, OEHG was to purchase nine lots from the City of Penticton for $925,000. That was in 2011, and from the city’s point of view, it was a way to create some much needed jobs, as well as increase the city’s coffers by selling off the unused properties.
That deal was never closed; financing fell through three times before the city ended the deal on Feb. 1, 2012. However, Reagan had been allowed to begin preliminary work on the property in order to fast track the project. At the time, Ashton explained that the city was sympathetic to the developer looking to begin preliminary work before the frost to accommodate the early completion date of August 2012.
An earthworks permit was issued by city hall, allowing initial soil testing. Unfit soils from the former lakeshore and bog were removed from the site, and earth was subsequently compacted.
“Under no circumstances were they allowed to put in anything that couldn’t be pulled out of there,” Ashton said in a February interview, noting that the structural permits were never issued although some superficial frames were put in place. “There would be no hard structures done on it.”
According to the city’s own chronology of events, two stop work orders were issued on the project when work exceeded what was allowed under the excavation permit, the second coming after work started on foundations without a permit being issued.
After the first stop work order in November 2011, the city filed a “notice of interest” under the Builders’ Lien Act on the Eckhardt properties with the Land Title Office, which stipulates the land is not bound by liens unless the improvements in land are undertaken “at the express request of the owner.”
In a Feb 21, 2012 story in the Western News, the city’s lawyer, Richard Thompson, explained 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.
According to Ashton, the city has not yet been served in relation to the notices of claim.