Peter's site  

www.MadmanPierre.com

Carling, Ft. Mac project status

WHO CREATED THIS PAGE:

This page is maintaned by Peter Horwood, one of the members of the E&Y Carling committee on the the development of the Ft. Mac project. These are my opinions/understandings unless otherwise noted. I will be allowing the opinions of other people, including most specifically the Committee as a whole, and Danny Cheng, in these cases, I will indicate whose opinion it is.

WHO IS THIS PAGE FOR:

This page is designed for INVESTORS who have invested in the project. Note that I am one of the original investors in this project and I was elected to the advisory committee acting on behalf of all investors. This is not one of my companies, and it never was a company that I started or managed etc.., I am working with the inspector that was put into place by the Alberta Courts. I am doing this page as a courtesy for the investors. I do not receive ANY financial or other compensation for the work I have done, the work I am doing, the work I am planning on doing. The only compensation I am anticipating is, if and when we the investors are paid out, I will receive my payment along with the rest of the investors.

For the most part, I do not have time to address individual investor questions. I may however, at my discretion, address them by making an update to this page.

If you wish to be notified by email when changes are made to this page, you may sign up at the bottom of this page or send me an email or phone call requesting to be added. I send notification when it changes with substance. If someone points out a typo, I will probably fix it, and I will probably NOT send you an email saying that the page was updated.

Below, there are 3 sections.

1. 'Current Status' (which includes a history of the current status)
2. 'Frequently asked questions', such as 'Why do you call it 'the municipality' and not 'the city', and 'What is taking so long'
3. A section that you can fill out if you wish to be notified by email when changes are made to this page.

SOME ABBREVIATIONS:

E&Y - Ernst & Young. Receiver for Integra and through that, a stakeholder in the Ft. Mac project
DC - Danny Cheng
CRA - Canada Revenue Agency (They keep changing their name - apparently people come to hate each of their names, most people know them as "Rev Canada" or Revenue Canada, but that is one or two names old now.)

CURRENT STATUS:

2010.08.30 I have nothing to report at this time. Just updating every 2 weeks as promised.

2010.08.17 DC reports that progress is continuing. We are waiting to hear back from the other potential JV option. And E&Y has sent out a letter, the detail of which you can find below. The next sentance is from E&Y, with our thanks.:

Please be advised that a copy of the report along with all related documents have been posted on the Inspector’s website at www.ey.com/ca/carling. Shall you have any questions or concerns, please do not hesitate to contact Ms. Betty Trinh at 403-206-5116.

2010.08.03 E&Y has the documentation for the court prepared and will present it to the judge when able. Discussions with possible JV's has started.

2010.07.21 As noted previously, a meeting was held today to which all investors were invited. We were pleasantly surprised at how many showed up, and that makes the results more likely to be approved by the judge. 70% of the investment was represented either in person or by proxy. There were presentations from E&Y, the investors committee and DC on what steps transpired to get us where were are today (much of which is below in this web site and in the package that was sent out by E&Y) as well as where we are today. A motion was tabled to give the investors committee the power to negotiate and approve a agreement, mostly like a JV agreement. It was passed unanimously with 2 abstainers. The good turnout combined with an overwhelming agreement means the judge is likely to approve the decision of the investors.

Given the overwhelming results, the investor committee won't be waiting for the judge to approve the decision, rather we have started t put things in place. There is no guarantee that a deal can be struck in time, (and there is no definition of 'in time' as it will depend on outside influences, in particular the 1st mortgage holder), but the investors committee now has the power that lets us try, and try we will.

Further, I made a promise that for the next 90 days, I will put up an update at least once every 2 weeks. If you see that I have missed it - please email and remind me to rectify it immediately. Note that some updates may simply be 'no change', and, as discussed at the meeting, obviously no information that we think might jepordize negotiations will be posted. In the past, I have never changed or deleted anything I have placed on this page, I am reserving the right to remove anything posted that the committee decides is inappropriate or might jeapordize negotiations.

2010.07.19 In the letter recently sent out by E&Y, it was stated that when (if) a JV proposal was available, it would be put on my web site. Unfortunately, there has been a chicken and egg problem. The JV DC has been working on needs to know if the investors are on side before working out the details - and, we the investors can't give that goahead without giving the investors the details. So Wednesday is an important day for all investors to be present so the possible directions can be discussed. The meeting will also have the history of what has happened since the last investors meeting - essentially as spelled out in the letter sent out by E&Y.

This is a very frustrtating (for the investors committee, as well as investors and all other parties) situation, and while there are some possible strategies, we (the investors committee) feel it is very important to hear from the rest of the investors at Wednesday's meeting, and it is likely that the court will look at the level of representation before deciding whether to accept any votes taken at this meeting. So if you can at all, please come to the meeting. If you can't, please pick someone that can take your proxy vote. You can fax that to E&Y or you can give it to the preson for them to take to the meeting with them. But we very much would like the representation of as many of the investors as possible. Doing nothing has, in my opinion, a high risk that any chance of recovery will be lost

2010.06.30 A letter is going out today from E&Y Advising of a meeting july 21st 2010 at 2:00PM. The specifics of this meeting are yet to be worked out, but if you can block out your calendar - that would be good. We anticipate having to make a major decision. They are sending the letter out by email for those that they have email address for, and by express post everyone.

2010.06.15 Update of court. Today several investors were in court to testify at the requirement of CRA. Those who testified, as i understand it, are not permitted to talk to those who have not yet testified. Also, the CRA lawyer decided that he wants my testimony later if/when there is an actual trial - this 12 day court hearing is just a 'preliminary' trial to see if the judge will permit an actual trial. Also, those of us there to witness were not permitted to hear the opening address which is where CRA spelled out to the judge what they are hoping to accomplish. So, I know nothing about what CRA is after, and I don't expect to be told until much later. From my perspective - I wasted the whole day, although we had some fun discussions with others up until the point where they went to testify. At this point, I don't think it has any bearing on our current situation - which is still pending - no change yet.

2010.06.06 Minor update. As far as I know, things are mostly the same, progressing but slowly. E&Y informs me that they are planning on having the court approve the meeting that will be called in the letter, and after they receive a court date and approval the letter will be sent out.

2010.05.17 Minor update. First, I understand the mortgage holder is holding off foreclosure for a short time longer. E&Y is preparing a report to all the investors and will be calling a meeting of all investors at the investors committee request, more when that goes out. And finally, a few people (me one of them) have been called to witness at a trial. As I understand it, it relates to CRA and Carlng/Cheng/Wong. Based on what CRA told me when they asked questions earlier, I don't think it will affect the Ft. Mac project, but there is no guarantee that CRA was telling me what they were really after, so we will have to wait and see. The date I have been called to witness, and at least one other that I am aware of, is Jjune 15th.

2010.04.28 Major problem. The mortgage holder has decided to foreclose. He phoned me minutes ago to let me know. I have left messages for the investors committee, and I am attempting to get  a hold of the Ernst & Young member. The info below is the best I have at this moment and I will edit it for correctness (and send out update notifications) as I get more accurate info.

As you are probably aware from my previous updates, the mortgage holder has been 'holding off' for more than a year, and, as I have indicated, the financial hurdles have been the ones that worry me the most.

DC has been given 'about a week' according to the mortgage holder to come up with the money ($2.8M) or they are foreclosing.

In concert with this, DC has been attempting to raise construction financing, and the banks have told him they want him to 'clear up the title first'. This means that the $2.8 and the other instruments on the title would have to be cleared, it looks like about $4-5M would have to be raised to do this.

DC is attempting to solve this, but it looks to me, like he is going to fail.

That leaves a couple possible scenarios as far as I can figure out:

1. The property is successfully foreclosed on and we all lose 100% of our money.

2. Terms are reached to 'buy us investors out' by a 3rd party. There is a possibility that an offer that we get 80-100% of our principle might be obtained. But then we would have to agree - in a very short time period (days or hours).

3. We the investors 'buy out' the property. The exact $ amount to be determined and I don't have a clue yet what this would mean to people buying it out vrs investors who don't participate in the buyout..

DC is trying to come up with other options. He says he is willing to do anything he or we can find that pays out the investors, he is willing to take any plan that ends up with him getting $0. I am also trying to find alternatives, I will be talking with the rest of the investors committee and E&Y to see if we can come up with any viable options .If you have any to suggest - please get them to me ASAP, I promise to pass any along.

If you have a preference for any of the 3 options - let me know. And most specifically, If you would be willing to participate in option 3 - let me know.

2010.04.20 Yesterday (2010.04.19) the Municipality responded to the changes submitted by Carling in February. Their comments still for the most part seem minor, but they are still not in complete agreement also, as you can see in the letter, it has now been circulated past just the municipality, it has come back from related companies (TELUS, ATCO Gas, ATCO Electric) having reviewed it as well. My guess is this is a good sign! If you want to read the details download and read the following pdf Circulation Comments 2010 April 19 DC has committed to getting these latest requested changes to the municipality as soon as possible. The biggest one is financial (#8) DC believes he has a solution that the municipality will agree to, if not, that will be the next big hurdle (and as I have indicated before, the financial hurdles are the ones that worry me the most but so far DC has found a way through each of them). DC says he is also working on a backup plan in case the municipality doesn't agree.

My apologies for not putting an update stating the revisions had been submitted, I thought I had done that update back in February, but obviously I forgot to.

2010.01.30 The municipality has returned their comments, and they were very minor - basically, DC has to resubmit with metric measurements and a few tweaks including:

- adding some labels and dimensions

- including some addition drawings (that I understand already exist)

- update tree planting details with details the municipality attached to the letter. Basically the municipality has apparently made a change to how the landscaping details are to be done, and they included what needs to be attached.

- answer a couple questions about sizes and purpose for one area

- provide a cost estimate for landscaping

- site servicing and grading plans

. The key paragraph, in my opinion, in the letter from the municipality is:

'Once the drawings are revised and deemed complete for circulation, the permit will be circulated for a two week period. I am not anticipating major changes after introducing this revised plan at the Co-op meeting. Comments were favourable in regard to the new configuration."

My next planned update will be to say when the revisions have been submitted. I suspect 1-2 weeks. Of course I hope it will be sooner.

2010.01.28 After a long period of time with no status changes, this is the second update in a week and a third is expected soon:

Danny Cheng (DC) says that various details have been sent to the municipality periodically over the past few months for discussion. Monday January 27^th 2010, detailed plans, based on these discussions were sent as preliminary ones for the municipality to comment on what else is needed. The investors committee have just seen the plans that were submitted and I have put them on my web site for those that want to purview them.

The municipality had an internal meeting on Wednesday about the plans.

They are supposed to comment with minor changes soon. These will be done and the “real” submission will happen. I intend on putting another update on this web site after I hear the comments from the municipality.

The planner that made the demands for this version (2 shorter towers instead of 1 large tower) is still the planner.

Discussions so far have determined that the property is Zoned for 107 units, the plans are 108 units but the existing planner has said she will OK that variance. Possibly this was as an apology for scuttling the 1 tower design.

DC says that the DP (Development Permit) has been paid from money he secured elsewhere. But, while it is paid for, he has not received or had it approved.

DC is hoping that it will not have to go to public hearings (which will delay things by at least a couple months.) but the decision for public hearings or not is up to the municipality. DC feels that since it meets all the new bylaws and new restrictions, with the single exception of the 1 additional unit, he feels they won’t take it to public hearings – but he is not sure and not in control.

If no public consultation, Building permit will still take at least 1 month. DC says the worst case is probably 2 months after DP.

The mortgage broker until November has been making the mortgage payments, due to the past years economy, his is no longer able to make the interest payments. A friend of DC paid December’s and he is hoping to receive $30,000 from his friend or friends to pay Jan, Feb and March. ($10,000 per month for that portion of the mortgage.)

The owner of New City, the mortgage holder, died a few months ago. The new owner is starting to demand that the loan be paid out.

The new owner wants payout by end of March 2010, quite likely earlier if the payments are not kept up to date. This is obviously potentially a problem.

Danny feels that if the DP has gone through, they will wait longer than March 2010. And if they won’t, with the DP in place, DC feels the property value is significantly higher and so it will be easy to get a new loan on it. There is essentially $2.5M owing currently on the loan that would be required to be “bought out”.

A Third plan being floated (by one on the investors committee) is to offer extra x% to the loan holder and the mortgage broker, who has been paying the interest, to wait 6 additional months before being paid out. DC is considering this as a strategy.

Another company is in the works based not even on the DP to buy out the mortgage, but this is currently a very long shot.

Other options are also being looked for.

If you'd like to look at the building plans, you can download them from my site here:

../Business/FtMac/607 A-01 Site Plan .pdf ../Business/FtMac/607 A-18 Overall Section .pdf ../Business/FtMac/607 A-02 Landscaping Plan .pdf ../Business/FtMac/607 A-02A Landscaping specs .pdf ../Business/FtMac/607 A-03 Lower Parkade Level .pdf ../Business/FtMac/607 A-06 Upper Parkade Level .pdf ../Business/FtMac/607 A-09 PLAZA LEVEL .pdf ../Business/FtMac/607 A-12 West Bldg Typical Floor .pdf ../Business/FtMac/607 A-13 East Bldg Typical Floor .pdf ../Business/FtMac/607 A-14 North Elevation .pdf ../Business/FtMac/607 A-15 East Elevation .pdf ../Business/FtMac/607 A-16 South Elevation .pdf ../Business/FtMac/607 A-17 West Elevation .pdf

2010.01.22 I wish I could give a positive, or even a negative update. And I'm sorry I don't have time to respond individually to all the emails I receive asking for updates. As it sits, the status is still unfortunately at the same stage: Danny Cheng continues to work on getting a twin tower solution that the municipality will approve. He has sent me updates of discussions and status of changed plans, but really, they are incremental and no one change has been worthy of putting up an update.

In addition, he has been looking at some ways to pay us the investors out earlier in the project - but the project would still be needed, and until there is "a project", these suggestions are just speculative, nothing more.

Further, the loan on the property is still, for the time being, graciosuly being postponed by the lender, though I have heard rumors (but nothing confirmed) that this may come to an end, in which case there will be significant repercussions that we may or may not be able to do anything about.

THE REASON FOR THIS UPDATE: The holder of the mortgage has asked to meet with Danny Cheng in a couple weeks and some or all of the investors committee will be attending that meeting with him. I will do my best to give an update as soon after that meeting as it makes sense to give an update.

I have received many emails asking why *I* have not started to construct, some of them quite rude. I have, as my notes above state, ignored or deleted all of these unanswered. I have also received many polite emails, averaging 1 a day, asking for an update and I am sorry that my personal time is not sufficient to answer them, and so I have chosen to answer none of them rather than give some investors special treatment. I have chosen to mainly update this web site when there is a change - good or bad, or new information that would be of value to investors to know.

The investors committee has as its primary power, the ability to control the spending of money on the project. Right now, as indicated months ago below, there is no money left in the project. Current costs have been paid, as I understand it, by 'friends' or 'family' of Danny Cheng. And of course, we have no control over those monies, other than, if there is a claim to repay them, they come after the investors unless previously approved by the investors committee. If as/when a construction mortgage is put in place, the investors committee will have the ability to veto any specific mortgage and will be able to control the spending of that money.

2009.09.18 Danny Cheng has been up to Ft. Mac this past week (there were delays at the municipality end). The NEW planner has decided to NOT approve the project as is. The planner who HAD decided to approve it has gone on maturnity leave and the new planner has said that it must be changed from 1 tower of 16 stories to 2 towers of 8 stories or 1 tower of 8 stories. Danny Cheng is working to try to get it resubmitted as 2 towers of 8 stories ASAP. There are some hurdles to this, but he is fairly confident that they can be figured out fairly quilcky.

Apparently the landscape revisions have been accepted and approved.

2009.07.19 The following email was received by Danny Cheng. Cheng has contacted them subsequently and is setting an appointment as they requested.

Hello

I wanted to let you know that I forwarded on the landscape revisions plans to our Parks Dept. for their approval on Friday.  With only minor engineering revisions, we need to think about scheduling an appointment here in our office to sign the Development Agreement.  I am meeting this week with Subdivision staff, Christy Fong, to discuss what off site levies and letter of credit are required.  I would like to recommend that we start planning a meeting here week of Aug 24^th to sign the Agreement and deliver fees.  We can have the permit and the agreement all wrapped up in one meeting if Parks and Engineering get their approvals to me by Friday.

Please advise.

Regards,

Tracey Tester, BES, MCIP

Planner III

Current Planning

Regional Municipality of Wood Buffalo

2009.06.24 There has been a minor positive change it appears in the status. The planner from the municipality who was managing the project is apparently now on materity leave and the new planner, Carling reports, is more productive. The municipality has now said that the engineering requirements look like they are OK and they have provided Carling with requirements for the landscaping plan. Carling is working to quickly get them this. Apparently, one of the delays the last couple months was that the municipality planning department moved location, but it appears that that move is now done. While this is progress, I am not even going to try to give any timeframe going forward (so please don't ask!) after all, in Feb, the municipality indicated 2 weeks from receipt of engineering, and it is long past 2 weeks from February. We will have to wait and see whether this is the last item the municipality wants, and if so, how long it takes to get the various permits so that financing can start to be secured.

2009.04: (Sorry, for a couple days this said 2008.04, typo, it is 2009.04)The permits have continued to move slowly through the municipality. Many phone calls have been left with the municipality trying to get them to move or at least tell why there are continued hold ups. It appears to be that they are moving towards approval, but they are doing so very slowly.

See comments below with respect of my opinion on this type of delay.

Carling needed to pay some fees. These fees have been paid by Carling (even though the official pot of money is now empty.)

The 1st mortgage holder, true to his word, is allowing the project to continue even though there is no money left to pay the monthly mortgage payments.

2008.02: The permits have not yet been approved by the municipality. The municipality wants to have specifics on how the utilities are going to run THROUGH the property to the properties that are being developed behind this property. However, the city has not yet given what they want and where the want the utilities to come out on the back side. In other words, the city hasn't approved it because they don't know what they want behind. This is of course very frustrating.

The city, a couple days ago, said they would get this information to Carling in the next couple weeks. Carling has infromed the committee that, once the municipality informs Carling what they want, it will only take Carling a day or two to send the municipality the revised plan.

The municipality has said that, once they get Carling's reply, it will only take them (the municipality) 2 weeks to approve the building permit.

To date, the mortgage (they only significant expense) has been kept up to date. However, Feb 2009 is the last month that there is money for this. The person managing the loan has informed Carling that they will give an additional loan to pay for ongoing interest expenses once the money runs out as long as the loan is kept paid while Carling has the money to pay them.

Danny informs us that he has set up as far as he can go to arrange land and development financing and he is continuing to have talks with the companies that he is going to be asking to provide construction bids. However, none of these can enter real negotiation until the building permit is in place.

2008.12.17: The permits have not yet been approved by the municipality. The following was a summary I received from a meeting in Ft. Mac

…  so far the meeting ran well, they only has last three more items they need, 

1/    they need the civil engineer to design the Penhorwood street and the side walk in front of our property.

2/    they need the lighting design for the out side of the building i.e. street light and the platform light.

3/    the equipment of the playground, i.e facilities of the playground, we can get the quotation of the supplier, and they will provide all the detail of the equipment to us,

after this they will issue the development agreement to us, they don’t need the council approve, this is all internal matter, that all good news.

2008.12.08: The permits have not yet been approved by the municpality. Carling has been working with the municipality to get things going ASAP. This also means that future financing has not been secured because the financing companies are requiring this stage before seriously considering the next stage of financing. Carling is hoping that the Municipality is going to give final approval at a meeting later in December (wating for an municipal employee to get back from holiday to schedule the meeting)

ANSWERING QUESTIONS I'VE BEEN ASKED:

Q. What comes after the municipality approves:

- Interim financing needs to be secured. Carling reports it has been talking with potential supplieres of this financing but they are waiting for the municipal approval before taking any action.

- Secure "presales". To get construction financing, the potential suppliers of construction financing have informed Carling that presales will be one of the most significant prerequisites to securing construction financing.

- Start to arrange construction financing so that, when presales are close to sufficient, it can be put in place ASASP.

Construction won't likely start until after construction financing is completely in place.

Q. Why is the municipality taking so long?

I don't know. But I have talked with a previous employee of the department in the municipality, and he said - it is business as usual, they aren't dragging their heels any more than usual - big projects like this have so many people that have to agree, and with vacations and other priorities, big projects like this just take a lot of time.

Q. What is your level of optimisim? Can you guarantee I'm going to get my money back? Am I going to lose everything? What are the chances we will get eveything we are owed? (And many other questions like this)...

First of all, I can't speak to any guarantees. What I can say is that my biggest concerns currently are whether the financing can be secured. I am not yet overly concerned about the state of the economy (this stamement is written December 2008). Remember that, from the investors perspective, we don't care whether the project makes $8M or more after we are paid back. All we care is whether the project makes enough for us to get paid back. Carling and E&Y of course care about the estimated $8M or more profit. So as long as the profit doesn't drop down that far, we still get paid. So, my biggest concern is whether the project can get construction financing. When (if) that happens, I will be much more optimist, and until that happens, I will do what I can reasonably do to see it happen.

Q. Why do you keep saying "the municipality" instead of saying "the City of Ft. McMurray"

Because the REGIONAL MUNICIPALITY OF WOOD BUFFALO is the municipality that is both the city of Ft. McMurray (Ft. Mac for short) as well the surrounding rural areas. So it is "the municipality", not "the city" that I am referring to.

Q. I'm going to be in Ft. McMurray - Where is the project going to be:

If you are visiting Ft. Mac. The proposed highrise will be on Penhorwood street - across the street from the college.

Q. I'm going to Ft. McMurray - what if I went in to the Municality and ...

• told them to get off their behinds and get this approved
• pleaded with them - let them know there are investors that are hurting
• told them to stop fighting inside and just approve it
• And a couple other questions similar to these

I don't think this would be a good idea. The municipality doesn't care about those and it seems to me, all we are likely to do is tick them off. But that is my opinion, you are of course free to do what you want! But if you want my opinion,, the municipality is acting like they always do and they aren't trying to "hurt" us or get back at or hurt Carling or E&Y or Integra. btw ... I talked in October 2008 to a person that used to be (until January 2008) working for The Municpality in the section that approves projects like this. I explained what I was seeing and hearing, his reply was - that's just business as usual with Wood Buffalo, they aren't singling you out.

DO YOU WANT TO BE EMAILED WHEN THIS PAGE CHANGES?

If you would like to be notified when this page changes, please provide me with your email address. I promise I will only purposely use these email addresses for notifying about changes in this web site and when all the investors have recieved their money back or other ending scenarios occur, I will delete this mailing list and not contact you again. If you have only a fax number or phone number or address, I am sorry, I will not be providing update info through this method, in those cases, I suggest you check this web page monthly or when you want to.

If you fill in this form, if I don't recognize your name as one of the investors, I will email you within about 10 days asking you to confirm that you want to be on this list.. (I'll batch them)

*Your email address:  

*email again:

*Your name and any other info you want to send me: If you are putting in someone else's email address because you think they will want to be on this list, please let me know who YOU are as well as who THEY are, so I can send an appropriate email to them. Note: I have received several 'requests' that contain junk in this field. If you are not going to give me your name, I will assume you are a computer spider that is faking the request and trying to get a list of valid emails and I will IGNORE your request. In other words, I won't contact you if you don't give a name that looks legitimate.