There is no background information on the Winnipeg SkyCity Tower for Toronto investors

Winnipeg condo buyers are vying for SkyCity Centre, a 45-story tower billed as the tallest building between Toronto and Calgary.

About half of the $200 million project's units – 188 of the 388 condominiums – have already been pre-sold, with most deals going to the million-dollar show suite on Harry Street, the Graham Avenue surface car park and the Smith Street, tower to go up.

And that's not the only place SkyCity is selling. In a modest meeting room in Toronto's Richmond Hill neighborhood, small investors can grab a portion of the project in the form of a syndicated mortgage for up to $30,000.

But the ads urging Ontario investors to put their money into a Winnipeg condo tower don't indicate that developer Fortress Real Developments has yet to secure a significant chunk of public financing.

Letters sent to the city and investors tell conflicting stories about the $14.5 million in state money.

SkyCity's marketing materials tell potential investors that “municipal and provincial grants have been approved for the project, allowing construction to begin in 2016.”

However, this state funding was not provided.

In 2015, Fortress CentreVenture notified the Downtown Development Agency that it could not meet the construction deadline for the Downtown Housing Incentive Grant, which received only conditional approval. Under one condition, the fort must complete the project by January 2019 to receive $6.5 million in city funding, as well as $8 million from the province.

Then in March 2016, the fort sent a letter to the City of Winnipeg to warn that the project was in jeopardy without public money.

“While we are a long way from developing SkyCity Center, we need your help to keep the project viable,” Fortress COO Vince Petrozza wrote in a March 11 letter to Mayor Brian Bowman and other City Council members.

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“To clarify, SkyCity Center (housing) is not a project that can be implemented without a grant from the program.”

Fortress acquired the SkyCity site, the former home of the Winnipeg Tribune building, in late 2013 from Oggi Investments, owned by Winnipeg entrepreneurs Sabino Tummillo and John Garci, for $9.5 million. The 1.1 acre lot was valued at $2.4 million.

Auggie still owned the land in April 2013, when Forts originally applied for city-provincial funding under the Downtown Housing Development Grant Program, with conditional approval due in January 2019. CentreVenture managed the grant program on behalf of the company. city ​​and province by receiving, evaluating and processing applications.

In a November 2015 briefing note, after Fortress warned it would miss the construction deadline, CentreVenture urged city officials to change the bylaws governing the grant program.

CentreVenture requested the changes to keep the funds flowing to SkyCity, as well as two other condo projects that do not meet the four-year deadline: the 91-unit, $25 million Tower D Condos on Assiniboine Avenue, which is already under construction, and the 11-unit YouCube on Waterfront Drive. , a $2 million project nearing completion.

City lawmakers rejected the idea of ​​changing the law, said John Kiernan, director of Winnipeg's Department of Planning, Property and Development.

Instead, in late August 2016, city economic development and housing officials proposed new grants that would replace the expired housing program and effectively extend construction dates for all three projects.

The City Council in September approved grants of $1.9 million and $135,000 for D Condos and YouCube, respectively — but Fortress asked the city to drop SkyCity's $6.5 million grant for now.

While the city's new grant gives the Fort more time to complete the building, it removes the opportunity for condo buyers to receive a lump sum grant as soon as they move in. Instead, the money will be paid over 10 years. .

“This structure will cause difficulties when working to obtain construction funding,” said Natasha Alibhai, a spokeswoman for the fort, in a statement.

The status of the province's $8 million contribution is less clear. A Manitoba municipal government ministry spokeswoman said SkyCity met all the conditions of the initial Housing Incentive Grant program, but did not anticipate the province joining the city in offering a replacement grant that would extend the tower's construction period.

The announcements directed at investors in syndicated mortgages — a pooled type of investment — do not indicate that Fortress failed to meet the deadline for the original housing stimulus grant, and the status of the new economic stimulus grant is unknown. Some of these ads remained online last week.

These investment vehicles allow multiple people to pool their money into a single mortgage, with each investor individually registered for a piece of land. Investors in SkyCity are promised an eight percent annual return.

This is a more attractive return than what banks and other lenders can offer in the form of bonds, guaranteed investment certificates and other safe investment vehicles. Syndicated mortgages are offered on the basis that the principal value of the land in question is secured in case the project is not completed.

As surface parking, the SkyCity site is currently valued at $3.5 million by the city.

Fortress did not respond to questions about the discrepancy between what it told SkyCity syndicated mortgage investors about the state of the government financing and what Fortress told CenterVenture and the city council.

Kiernan, Winnipeg's planning director, also declined to comment on the discrepancy, but he offered a general advisory.

“It's buyer beware. People need to be careful and do their research and their due diligence,” he said. “Every individual investor should really take the time, do their due diligence, do their due diligence and get legal advice before entering into any deal.”

Three brokerage firms will market syndicated mortgages for Fortress projects. The presidents of those two firms, FFM Capital and FDS Broker Services, referred questions about marketing materials — “term sheets” in industry parlance — to Fort's headquarters.

“We are one of the three referral channels that Fortress uses to distribute its products, but we are not product designers. They are them,” FFM Capital President Tony Mazzoli said in a phone interview.

Marcus Kwami, a spokesman for third-party brokerage FMP Mortgage Investments, said the terms sheet was mistakenly stuck online until October. The firm changed the materials after CBC News inquired about them earlier this month.

FMP's new SkyCity terms were drawn up in June 2016, after it informed Fortress CentreVenture and the city council that the original grant did not meet the construction deadline.

Neither the city nor CentreVenture say taxpayer money is at stake if SkyCity does not proceed.

Kiernan, who presented the new grant to the department, said government money would not go to the fort until the tower was built.

“We want to make sure we meet our commitment on the grant. That's what we can do. We also want to protect the taxpayers' investment in this project,” Kiernan said.

CentreVenture, which evaluated and processed applications for the Old City-Provincial Housing Development Program, confirmed that SkyCity must be completed before government money pours into the fort.

“They only get grants after the project is over, so there's no real threat to the city or the province to extend the time frame in question, so we support it,” said Angela Mathison, CEO of CentreVenture.

In a March 2016 letter to the City Council, Fortress also provided a construction completion date that differed from the October 2019 move-in date in the contract signed by SkyCity condo buyers.

“Our architect has advised us that the process of preparing the working drawings and reviewing the city will take us into early 2017, when we propose to break ground,” Petroca wrote. “The construction of the project will take at least three years.”

If the project is built in 36 months, SkyCity will not be completed until 2020. The date also comes down to strong condo sales, Petrozza said.

The developer of SkyCity will be announced this month, according to Bekinis spokesman Alikhai.

“With all the components moving forward, we aim to break ground next year,” he said via email.

However, the city expects to make progress within the next three months.

The fortress paid $125,000 to get permission to start excavation and build a foundation at the SkyCity site. That permit expired in July 2016, but was extended when the fort met two conditions.

First, the firm must submit construction drawings by December 1. Excavation work should begin by January 5, 2017.

Have you invested in SkyCity or pre-purchased an apartment? We want to hear from you. Email [email protected].