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This article was published 11/10/2011 (2116 days ago), so information in it may no longer be current.
Over the past three years, developer Andrew Marquess has been sued more than a dozen times by suppliers who claimed he owed them $1.96 million for everything from hardware to heating-and-cooling equipment.
Now, the City of Winnipeg is poised to guarantee $10 million in loans to the same developers to kick-start a $79-million infill-housing project it intends to show off as a model of industrial redevelopment.
After courts ordered Marquess to pay $1.59 million worth of settlements, Marquess says his financial troubles are behind him.
"In my mind that's the past and we're going to continue to move forward in the business," said Marquess of the financial difficulties he experienced as the owner of B&M Land, which was sued for non-payment at least 13 times since 2009.
In each case, suppliers claimed he refused or neglected to pay what he owed. Six companies eventually dropped their lawsuits, but B&M Land was ordered pay at least $1.59 million.
Marquess said he's been sued a "significant" number of times in the wake of the worldwide financial crisis that began in late 2008. He said he could not pay many of his suppliers after his company was unable to obtain financing from a private lender.
The vast majority of outstanding accounts have been settled, he said, declining to comment on the size of the remaining balance.
The developer's current company, Gem Equities, is working on a plan to build 900 new condo and apartment units in townhouses and towers alongside the first phase of the Southwest Rapid Transit Corridor.
This morning, city council's executive policy committee will consider a plan to backstop $10 million out of $14.7 million worth of loans to Gem Equities from the Federation of Canadian Municipalities. Marquess plans to subdivide the strip of land into six lots with room for 452 townhouses and two medium-rise towers with a total of 448 units.
In a report to EPC, city finance officials say there are risks associated with guaranteeing the loan because it could affect Winnipeg's credit rating. If Gem Equities defaults, the city would be on the hook for loan payments and would record it as a liability.
City council's policy is to only guarantee loans for non-profit organizations involved in community-based activities, up to a maximum of $1 million. Other western Canadian cities such as Calgary and Edmonton do not guarantee loans to private companies.
But senior city officials say the risks in this case are tempered by the fact Gem Equities won't receive a penny of the loan until the company conducts infrastructure improvements that include the construction of a new road, water and sewer lines, a geothermal heating system, a rapid-transit station at Jubilee Avenue and the remediation of soil at the former industrial site.
If Gem Equities cannot proceed with the housing project -- or defaults on the loan -- the city can take possession of fully serviced land and sell it to another developer, chief financial officer Mike Ruta said.
"At the end of the day we would be receiving some assets we would otherwise not receive," said Ruta, adding there are risks associated with any development.
The city hired one of Canada's major banks to assess the loan guarantee, Ruta said. In the end, it concluded the deal before city council is good for the city.
Ruta said he's confident Marquess is no longer experiencing any financial difficulty and praised the developer's knowledge of the real estate industry.
Deepak Joshi, Winnipeg's chief operating officer, said he was not aware of the claims against Marquess. Joshi suggested it would be unfair to be "talking about other people's past" in light of the widespread fallout from the 2008 economic downturn.
"I'm not even going to speculate as to what happened on those projects or the circumstances. There was a certain amount of financial issues happening throughout the country," Joshi said.
Marquess found himself in court as recently as August, when officials were ordered to appraise his assets as a prelude to covering a $71,000 debt to a Winnipeg window and door supplier.
But he experienced his largest legal headache in January 2010, when he was ordered to pay McDiarmid Lumber almost $1.1 million after the company claimed he had not paid for hardware and building materials. Four months later, Marquess was served with a notice of garnishment to pay back the outstanding debt.