A failed condo retail project
As this newspaper report suggests, the ground-floor commercial units in the McLaughlin Square, a mid-size condo development in Oshawa also has difficulties being viable properties.

Oshawa condo corporation sues the city for millions
Oshawa This Week
Reka Szekely
06 June 2014

OSHAWA -- An Oshawa condominium corporation is asking the City of Oshawa for millions in condo fees for City-owned commercial units.

The Durham Condominium Corporation 56, the organization responsible for the McLaughlin Square condo building at 50 Richmond St. E., has sued the City for back common expenses, also called condo fees, dating back to the late 1990s.

The City of Oshawa owns 14 of 20 commercial units on the first level of the building. According to court documents filed by the City, the claim by the corporation totals $11,794,824 as of the end of April.

In its court filing, the condo corporation argues that according to the Condominium Act, all property owners must contribute to common expenses and an agreement between the City and the corporation that waives condo fees for the City violates the act. As a result, the corporation is seeking back expenses plus interest as well as fees for installing heat pumps in the units.

According to court documents filed by the City, the units came into the City’s hands starting in 1998 when the City initiated a tax sale for eight of them after taxes on the commercial properties hadn’t been paid in more than three years.
The City received no bid for the properties. The court documents attribute the lack of interest to the high condo fees for the units.

“The units’ monthly common expense payments were (and continue to be) greater than the gross monthly rent that could be charged for comparable commercial properties in the City’s downtown,” Oshawa’s court filing states.

In 1998, the City signed an agreement with the condo corporation. Under the deal, the City assumed ownership of the units, but gave the condo corporation the exclusive lease option on the units.

According to the deal, the City would not pay condo fees on the units but at the same time the property tax debt would stop accruing. If the condo corporation could successfully lease the unit, it would get to keep the bulk of the revenue.

“The City justified its intervention in the marketplace as being in the public interest on the basis that the City was providing support to Oshawa’s ailing downtown area without incurring added cost on the part of the City’s taxpayers,” Oshawa officials state in court documents.

The City would not have taken on the eight units if the City incurred expenses under the deal, including the payment of condo fees, the documents state.

In 2003, the 1998 deal was extended and the City bought an additional six units through a tax sale. A 2007 amendment ensured the City would not see a windfall from improvements made to the units by the condo corporation if the City sold the units.

According to the City’s legal documents, by agreeing to the deal the City did not collect at least $250,000 in property taxes.

The trial on the issue began in late May but has been adjourned until November.

Reporter Reka Szekely covers the City of Oshawa for Metroland Media Group’s Durham Region Division. Contact her on Facebook, Twitter (@rszekely)

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