Following the May appointment of a receiver over three of its development properties in Ottawa, another Ashcroft Homes project has come under receivership after construction setbacks and litigations with the City added overwhelming costs to what was supposed to be a 2,000-home subdivision.
Ashcroft Homes — an Ottawa-based residential developer that's been in the game since 1992 — had envisioned a "self-contained community [...] surrounded by beautiful fertile farmlands and miles of country roads," according to the developer's website. If completed, the development known as Eastboro would have spanned 200 acres and delivered a mix of townhouses and single-family homes to the Orleans site, bounded by Renaud Road, Navan Road, and Mer Bleue Road.
Initially, it was smooth sailing for the Eastboro development. RBC advanced a $75 million loan in May 2021, construction began soon after, and Ashcroft was able to build 25 units comprising one block of six townhomes and 19 single and semidetached houses. But in July 2023, workers hit a snag when poor soil conditions were discovered upon trying to install a large storm water trunk main along Navan Road, and plans had to be reassessed, at great cost to the developer.
Engineers determined that the solution lied in running the concrete storm drains along the road, for which new road closure permits were required. As a result, it was estimated that costs would increase by a substantial $20 million.
Ashcroft promptly applied for the permits, but due to a dispute between the developer and the City surrounding who would pay for the site's stormwater system, the City delayed issuing permits until the dispute was resolved. At a City Council meeting this July, the City entered into a Front-Ending Agreement with Ashcroft to repay $30,213,280 for construction, land, engineering, and project-management costs pertaining to the stormwater sewer, and subsequently, the road closure permits were issued.
But despite the win, in the meantime, debts had been building and causing trouble with RBC, and 83 customers who had placed deposits on lots were left in the lurch.
The Receivership
Concerns first arose in July 2023 when construction was halted to tackle the storm water trunk issue. Following the setback, Ashcroft Homes failed to make interest payments, totalling $4,084,482, failed to provide financial statements as required, and suspended work on the project without funding cost overruns and margin deficiencies equal to $28,901,900 from resources outside of the Eastboro Development, outlines RBC's receivership application.
In mid-February 2024, RBC sent Ashcroft a Default Letter but tried to work with the developer to understand how they planned to restart and successfully complete the development, as well as how they would fund the project and resolve discussions with the City regarding the road closure permits.
When Ashcroft homes failed to assuage RBC's concerns over the following months, the Bank demanded full repayment of all outstanding debts within 30 days of May 8, 2024, which the developer failed to do.
In total, Ashcroft Homes owes RBC approximately $80 million, made up of $64,700,677 in outstanding principal, $4,084,482 in interest and unpaid fees, and $10,482,197 under two letters of credit issued in late-June 2021. Adding to the damages, RBC's application includes the fact that the developer is insolvent and owes $272,159 in municipal property taxes.
For RBC, the risk was too high and the Bank applied for receivership on September 5, 2024.
"The Eastboro Development remains in a state of ongoing uncertainty [...] homebuyers have faced material delays in the closing of their units, and most importantly, the Debtor remains unable to obtain funding," said RBC's Senior Director of Special Loans and Advisory Services Sylvia Kovesdi in her affidavit. "The project is a failure."
Justice Rees sided with RBC and appointed MNP as receiver over the property on October 17, 2024, to market the lands for sale. When STOREYS contacted Ashcroft Homes' Chief Financial Officer Manny Difilippo to inquire about the potential for the project to escape receivership, Difilippo declined to comment.
In a Notice to Unit Buyers posted by MNP, buyers were informed that "all purchase agreements remain in full force and effect, subject to the terms of the Receivership Order," and that "all deposit funds that were in the possession of [Ashcroft Homes] are now under the control of the Receiver." In the meantime, MNP shared that they are in the process of investigating the availability of Tarion deposit protection for those who purchased presale units.
