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Vancouver tenants allege bad-faith eviction by developer owing millions

Last Updated Sep 15, 2020 at 5:24 pm PDT

Sarah Lindsay poses outside the Connacher House on East Broadway in Vancouver, her home of 17 years. (Kelvin Gawley, NEWS 1130 photo)
Summary

East Vancouver tenants being pushed out to make way for residential development

Multiple lawsuits allege developer owes millions, but it says it can afford to build new project

Renter fears being pushed back into homelessness and drug addiction

VANCOUVER (NEWS 1130) – Sarah Lindsay has been homeless before.

She spent her teens sleeping in abandoned buildings, in cemeteries, on rooftops and on cold concrete – where only the “warm blanket of heroin” could get her through the night.

Now, after 20 years of sobriety and stability, the 38-year-old antiques dealer fears she’s being pushed back to the brink of that life.

“It’s terrifying,” she said. “I never thought, as an adult, I would have to go back to that.”

Lindsay and her neighbours – a Filipino-Canadian couple in their late 60s – fear they’ll be homeless as of Sept. 30, when they are set to be evicted from their East Vancouver homes.

And the tenants believe they’re being pushed out of their homes under false pretenses.

They’re being displaced to make way for the latest development in East Vancouver’s rapidly gentrifying Mt. Pleasant neighbourhood. But if allegations made in a series of lawsuits are true, the company’s ability to build the project may be in doubt.

‘It’s so inhuman to evict tenants’

Developer PortLiving began purchasing properties at the south-west corner of Carolina Street and Broadway in 2018. Soon after, it announced plans for a six-storey, 65-unit residential building with artist studios.

The fourth in PortLiving’s Midtown series, Midtown Heritage is named for two buildings that have been around for more than 90 years: Connacher House, the two-bedroom heritage home where Lindsay has lived for 17 years, and The Carolina, the corner building with a now-empty sushi restaurant on the ground floor and two apartments above.

PortLiving plans to renovate the Carolina and move the Conacher House to the other side of the land assembly, replacing a bottle depot slated for demolition.

Nelia and Wilfredo Guevarra, both 67, have lived in The Carolina for 24 years. Nelia said her desperate search for a new home has been fruitless. The COVID-19 pandemic is a “very dangerous time” to be facing potential homelessness, Nelia said. “It is so inhuman to evict tenants.”

PortLiving initially gave Lindsay and the Guevarras a four-month eviction notice in December, giving them until April 30 to get out. But B.C.’s partial ban on evictions during the pandemic forced the company to relent.

With the moratorium set to lift Sept. 1, PortLiving sent the Guevarras a letter on July 29, with a “kindly request” to vacate the property by Sept. 30. The developer warned it would hire a court bailiff to enforce the eviction if necessary.

The owner of the Mt. Pleasant Return-It Depot next door, Andrew Lee, has feared losing his business, which provides income to some of the neighbourhood’s poorest residents, since PortLiving bought the property in 2018.

The Return-It Depot on Carolina Street is slated to be demolished to make way for a new development.

PortLiving hired a consultant to help Lee find a new location just a block away. But he said the developer has broken a promise to let him stay on Carolina Street until he gets a permit to renovate the new space.

Lee fears he could lose his licence to operate a Return-It franchise during the lag time between his eviction and the opening of his new location, which he said could take months. Requests for a one-month grace period have fallen on deaf ears, he said.

“I’ve tried to really work with them and tried to be reasonable; I thought they were reasonable,” Lee said. “It’s just really heartbreaking and they have no mercy.”

Lindsay, meanwhile, is trying to move to Vancouver Island, where she hopes to reopen the antiques store she was forced to close during the pandemic. A moving company quoted her $5,300 to transport her valuable collection – a bill she said PortLiving had promised to pay before changing its mind.

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“They’re just backing out of everything right now and they’re not helping us in any way,” she said. “These are not good people. This is not a company that has the best interest of Vancouver at heart.”

Vince Tao, a member of the Vancouver Tenants Union’s steering committee, said PortLiving has been fulfilling the bare minimum of Vancouver’s tenant relocation and protection policy. They’ve offered the Guevarras six months free rent and claim to have satisfied requirements to help the tenants relocate by emailing them links to rental advertisements for homes they can’t afford, he said.
“We’re in the middle of a pandemic. There’s no rush to get these tenants out,” Tao said. “What we want, really, is PortLiving to come to the table and give these tenants extra time.”

Brad Berry, PortLiving’s chief operating officer and executive vice president, said the developer has “worked very hard with these tenants on solutions” and “has taken great pains” to exceed its legal obligations to them.

“The needs of these tenants is representative of an entire industry and society in need of more housing and better alternatives – a goal that has and continues to drive us and many others,” he said.

MIdtown Heritage is the fourth in a series of PortLiving developments on East Broadway.

Berry also pushed back against questions about PortLiving’s ability to complete Midtown Heritage. He said COVID-19 had hurt its revenue and increased its costs, but said, “PortLiving and its tenants, suppliers, and stakeholders are all working extremely hard on all its projects, and it would be disappointing to see any of these efforts mischaracterized.”

Berry said the company plans to have pre-demolition hazmat crews on site as early as next month.

“There have been no delays to the project that were not directly related to the inability to achieve vacant possession of the building on time,” Berry said.

PortLiving files for bankruptcy at flagship development

But just five months ago, PortLiving founder Macario “Tobi” Reyes said, in a sworn affidavit, his company was at risk of defaulting on more than $400 million in loans if it was forced to immediately pay the creditors of its flagship development, Terrace House – a mass-timber condo tower under construction in Coal Harbour.

PortLiving is the investment wing of its parent company, Port Capital Group, while Port Capital Development is its development division.

In late May, Port Capital Development and Evergreen House Development, a limited partnership created to build Terrace House, filed for bankruptcy protection under Canada’s Companies’ Creditors Arrangement Act. The filing was only tied to the one development.

In his affidavit, Reyes reported an estimated $46 million in debts, including $20.1 owed to construction lender CMLS Financial and $14.7 million to Aviva Insurance.

Terrace House is a planned mass timber luxury condo project in Coal Harbour. It’s future is uncertain since the developer filed for creditor protection.

“The financial difficulties of the Petitioners are attributable to a number of factors, which were compounded by the widespread business closures as a result of the COVID-19 global pandemic,” Reyes said, adding the pandemic had also caused investment to dry up.

Port Capital Group was granted a stay as it attempts to restructure. A court-appointed monitor is marketing the partially built project to prospective buyers and investors to either continue the project, which is approximately 20 per cent complete, or build something else on the lot.

Lawsuits allege PortLiving owes millions

Several lawsuits claiming unpaid debts and bills have also been filed in B.C. Supreme Court against Reyes, Port Capital Group and its various subsidiaries.

Studio B Architects claims the developer owes it $198,771 in unpaid invoices for designing four of its Mt. Pleasant projects, including Midtown Heritage.

Port Capital Group is also facing a second suit from Studio B under its new name, Formosis Architecture. The company claims it’s owed $369,520 for work on five PortLiving projects, including services that led directly to development approval for Midtown Heritage.

In March, Delta Pacific Landscaping filed a lawsuit against Port Capital and a subsidiary, Living Midtown 2 Development, claiming it hadn’t been paid in full for work it did on the Midtown Modern project on Broadway between Carolina and Fraser streets. Delta Pacific claims the Port Capital Group owes it $15,432 in outstanding invoices and $39,614 from a lien holdback for extra work it completed.

“There have been no questions about the quality and workmanship of the work raised by either Trillium or Living Midtown,” Delta Pacific said in its filing, referring to the project’s management company.

Midtown Modern is one of four Midtown projects PortLiving has built or plans on building on East Broadway.

In late May, GC Capital sued Port Capital Group, a subsidiary, and Reyes for more than $2.56 million. The investment firm claims the development company defaulted on a $2.5 million loan it made in 2018. “The defendants, and each of them, have neglected or refused to pay the amounts demanded.”

In separate lawsuits filed in June, two Vancouver businessmen claim Port Capital Group, Reyes and another subsidiary, Origami 2 Investments, owe them for unpaid loans. James Foley said he’s owed $373,776, while Mark Vanry is demanding $160,189.

Urban One Builders asked a judge to grant it a lien of $915,926 against the Terrace House project, claiming the Port Capital Group had made “misrepresentations” to the construction management firm about its ability to fund the project. Port Capital lists Urban One among its creditors in its creditor protection filing, claiming to owe the firm $887,921.

An Okanagan family business is suing three Port Capital Group companies, claiming they failed to pay for company shares they had agreed to buy. Roland and Hagen Kruger, along with two family trusts, claim the Port Capital firms owe them $2.25 million for the shares and $251,000 in promised working capital.

The Okanagan Wine Tour Guide published this year said the Kruger family founded Wild Goose Vineyards in Okanagan Falls in 1990. “The Kruger family continues to be active in winery, with Nikolas as lead winemaker, after a majority stake was acquired in 2019 by Portliving, a Vancouver developer raising its Okanagan profile.”

Another company, D & J Osoyoos Holdings, also claims Port Capital Group entities reneged on an Okanagan real estate deal. The holding company sued for a $50,000 deposit in February, 2019. Port Capital filed a response, claiming D & J Osoyoos had attempted to change the terms of the deal upon which there was “no meeting of the minds” or agreement. The development company said it doesn’t owe anything, noting the Osoyoos property in question later sold for $1.22 million – more than the original asking price.

None of the allegations have been proven in court. When NEWS 1130 viewed court filings, Port Capital Group had only responded to the Osoyoos case.

“There are matters such as lawsuits that are on public record and as a policy we do not issue statements on such matters for a variety of reasons,” Berry said. “In many cases such matters may have been resolved and are simply remaining on record. In most instances, we are required to uphold any confidentiality terms involved in such matters.”

‘It seems really, really problematic’

If the allegations made against Port Capital Group are true, they will have a hard time building upcoming projects, according to Tsur Somerville, associate professor of real estate finance at UBC’s Sauder School of Business.

“It seems very, very challenging for them to go forward,” he said.

And if PortLiving is, indeed, unable to build Midtown Heritage, Somerville said, “It seems really, really problematic” that it would go ahead with the evictions.

Michael Golden, a Vancouver lawyer practising rental tenancy law, said Lindsay and the Gueverras could try to argue they’re being evicted in bad faith. While it’s too late for a ruling in the Residential Tenancy Branch, the tenants could file for a last-minute stay of their eviction in B.C. Supreme Court if they can provide evidence PortLiving can’t afford to build Midtown Heritage.

But Berry, the PortLiving COO, said the project is very much going ahead.

“PortLiving and its stakeholders that are involved with Midtown Heritage are more than capable of completing the Midtown Heritage project, which will deliver more than 60 units of rental housing and live-work studios to the market while preserving the existing heritage building on site,” he said.

While the project has been listed by real estate agents as a strata condo development, Berry said “it has always been the intention, hence not a change of plans, to provide this stock as rental-use given what we see in terms of undersupply in the market.”

‘Yuppie condos’ and ‘Batman villainy’

Sarah Lindsay has begun moving her valuable collection of antiques to Vancouver Island, where she hopes to restart her life.

No matter what happens to the Connacher House in the coming months, Lindsay is still facing an uncertain future as she tries to restart her life on Vancouver Island.

While searching for a new home, she has been subjected to sexist comments from prospective landlords and home viewings where coronavirus protocols weren’t respected. With the help of friends, she’s gathered a camp stove, inflatable mattress and solar panels – enough to live in her minivan if need be.

While still living on the street, she kicked drugs and began selling items salvaged from the trash to antiques dealers – sparking a lifelong passion for oddities and collectibles. That passion turned into a career and, most recently, plans to establish a museum of all things occult and folk magic. But those plans have also been shelved by the eviction.

“I’m really proud of what I’ve built for myself,” Lindsay said. “What message does that send to anyone who wants to get themselves out of a bad situation? It’s hopeless. No matter how hard you work and what you try to do, you’re going to lose it all again.”

After spending the better part of two decades turning her home into a hub of art, community and music, she fears Mt. Pleasant will soon be as empty as the Connacher House.

“It’s all just yuppie condos, that’s all I see,” she said. “This story is like some sort of Batman villainy happening here.”

With files from Isabelle Raghem