Commonwealth Campus Corp. president Dan McLaren filed an affadavit on Monday in support of taking to trial foreclosure proceedings Northern Development Initiative Trust launched in November against the company over the loan it issued to assemble downtown land for redevelopment.
While NDIT is seeking repayment of $1.45 million, McLaren says Commonwealth has suffered damages conservatively estimated at $500,000 due to the way NDIT handled the matter, related to assembling land for the Wood Innovation Development Centre.
In addition to facilitating the purchase of the now demolished Prince George Hotel, where construction of the six-storey WDIC is to begin towards the end of April, Commonwealth also purchased six adjacent lots plus property at 231-233 George St. to house displaced residents of the hotel with money loaned by NDIT.
In his affadavit, McLaren says Commonwealth would not have made the move if not for assurances from NDIT that it would in turn purchase the sites from the company once they had been cleaned up.
"When these assurances proved to be false, NDIT assured Commonwealth that alternative plans were being made to recruit purchasers of the lands, and told Commonwealth that it should not attempt to sell the lands itself," McLaren says.
"Commonwealth has since discovered documents that show NDIT's assurances were untrue and that NDIT misled Commonwealth about its commitment to their joint undertaking."
In all, Commonwealth borrowed $3.1 million of which $1.6 million was to facilitate purchase of Prince George Hotel, which was subsequently demolished and sold to the City of Prince George. The remainder was used to purchase the eight other lots that Commonwealth continues to own. McLaren said the combined market value of these properties now sits at less than $1 million, which he said is "considerably less" than the $1.49 million Commonwealth paid for them. McLaren says Commonwealth was shut out of bi-weekly meetings NDIT was having with key public stakeholders and was also asked to hold onto the land despite opportunities to sell or lease portions to other groups and individuals.
When he learned that the budget for WIDC would be $17 million to $19 million, McLaren became worried in part because he "believed that construction of the WIDC on a scale large enough to occupy the lands acquired by Commonwealth would require a budget tens of millions of dollars larger."
The budget was subsequently raised to $25 million but McLaren said that still remained "completely contrary" to assurances he had received from NDIT CEO Janine North and Aaron Sinclair, a financial consultant NDIT had retained to work with McLaren.
McLaren said he did not inquire earlier because North said "she did not want Commonwealth involved directly with government officials and had assured me that such inquiries were not necessary.
"In hindsight, it appears that if I had made these sorts of inquiries, I would have learned the truth about funding for the WIDC and not caused Commonwealth to purchase the lands," he continued.
None of the allegations have been proven in court.
Last week, NDIT filed a notice of hearing asking that a B.C. Supreme Court master consider its petition on April 8 and suggests that while NDIT will require five minutes, Commonwealth will need 90 minutes to state its position.
By that date, the amount at issue will stand at nearly $1.5 million, according to a requisition filed by NDIT. Interest on the loan is 6.8 per cent compounded monthly, working out to $278 per day.
