The future of a long delayed project by Milton-based Village Developments Inc is up in the air after the project was placed under receivership, according to court documents obtained by STOREYS.
Vector Financial Services Limited, a Toronto-based private mortgage brokerage, lender, and administrator submitted a receivership application in late-March, after millions in loan debt related to the Milton project -- a six-storey residential development proposed for 485-511 Ontario Street South -- went unpaid. The receivership was granted by the Ontario Superior Court on June 14, but did not come into effect until June 30.
RSM Canada was appointed as the receiver.
The project was first proposed to the Town of Milton in June 2020, according to a Council report, and the plan for the site was a six-storey, U-shaped residential building consisting of 297 units and no commercial component, with "families and mobile seniors" being the target demographic, according Village Developments' website. The site, which is currently occupied by three single-detached homes, is a short five-minute drive away from Milton Mall.
The plans also called for 80 vehicle parking spaces on the surface and 376 parking spaces underground.
Village Developments was expecting to begin construction in Spring 2021, but building never commenced "in any material fashion," according to Vector Financial's receivership application.
According to case documents, Vector Financial and Village Developments reached a loan agreement in December 2021 for the principal amount of $10M. The two parties agreed to amend the terms of the loan four times in 2022, before Vector finally issued a formal demand letter for payment in February 2023.
According to an affidavit sworn by Vector Financial's Managing Director Noah Mintz in March, Village Developments then requested a two-month extension, and Vector said it would consider a formal forbearance agreement extending the maturity date to May 10 if Village Developments agreed to prepay an initial reserve amount equivalent to three months interest by February 23.
Village Developments said it would not be able to pay the amount until March 3, and then requested that the forbearance agreement include an optional extension to August 2023 if Village paid $337,500 by May 3.
After the revisions were made, the two parties reached a forbearance agreement on March 7, with Village Developments expected to pay the initial reserve amount on the same day. Mintz says that when Village Developments provided a signed copy of the forbearance agreement, Vector was told payment could not be made until the next day. The next day, Village Developments then said it not could pay until March 14.
Thus, Vector opted to exercise the power it had under the loan agreement to seek a receivership over the mortgaged properties.
Court documents reveal that Vector's mortgage was first-ranking and that Village Developments also holds a second-ranking mortgage of $1.64M, a third-ranking mortgage of $912.5K, a fourth-ranking mortgage of $1.62M, and a fifth-ranking mortgage of $1M with various other parties. According to Mintz, those subordinate mortgages are all at a standstill or postponed in favor of Vector's first-ranking mortgage.
Mintz also notes that construction on the project was delayed "due to holdups in obtaining a zoning by-law amendment, amongst other things" and that "site plan approval has not yet been issued by the Corporation of the Town of Milton."
Village Developments had sought to rezone the site from Residential Low Density to Residential Medium Density 2 in order to facilitate what was proposed, but City staff were "of the opinion that it is more appropriate to zone the lands Residential High Density in order to align with the policies of the Official Plan and better reflect the proposed land use and density."
That zoning by-law amendment finally came on May 29, two weeks before Vector's receivership application was granted, but there remains little to no evidence that Village Developments will be able to carry on with the project, as Mintz says in his affidavit that he believes Village Developments doesn't have any "firm sources of funding."
Although the Ontario Superior Court granted Vector's receivership application on June 14, the receivership was not set to come into effect until June 30, with the judge overseeing the case saying Village Developments intended to secure refinancing in order to pay the amount owed before then.
That did not happen, and the receivership is currently in effect.
It's unclear what the plan is now, but receiverships in real estate often end with the receiver selling the mortgaged properties, and that could very well be the case here as well.