The city will have to pay an extra $9.5 million to the contractor behind the new St. Lawrence Market north building to prevent it from pulling out of the project 鈥 which would delay its opening 鈥 and potentially filing a lawsuit against the city.
The unanticipated added costs owed to the contractor for the project that was approved more than 15 years ago are a result of changes that a former city manager improperly approved, according to city staff at a recent committee meeting.
City say that the need for the additional money was “primarily driven” by costs associated with the COVID-19 pandemic and “errors and omissions” from the prime architect, among other things.
At a meeting of city council鈥檚 general government committee on July 2, staff shed new light on the added cost.
According to Patrick Matozzo, executive director of the city’s corporate real estate management, a former unnamed city manager who was in charge of the project had a log of all the changes聽and “was waiting till the end of the project” to bring them forward, but “didn’t forecast the additional funds.鈥
Matozzo said he repeatedly asked whether there was any additional money required, but he was told by the former manager that the project was within their currently approved budget of $118 million.
“Staff at that time that were on this project should have come forward and said, ‘Look, we’re going to require additional funds,’” said Matozzo.
When the project was transferred over to the current team, “we noticed that the previous staff did not bring forward the forecast that we needed the additional funds,” Matozzo added, referring to the $9.5 million.
That added money now has to go to city council for final approval at the end of July.
At committee, Coun. Stephen Holyday (Ward 2, Etobicoke Centre) successfully asked that the report be sent to the city鈥檚 auditor general, noting his concerns that when requests are brought to committee “so late in the process,” councillors feel they “don’t have a choice” but to approve “in order to reach the end goal of the overall project.”
The project is slated to finish construction by the end of September.聽
If the contractor Buttcon Limited/The Atlas Joint Venture terminates its contract with the city, the documents show it would delay the project’s completion by two months and could cost an additional $4.5 million to $7.5 million. Additionally, the estimated revenue loss in that time period could range between $450,000 to $1 million.
At an unrelated press conference on Friday, Mayor Olivia Chow said the city will investigate how the recent oversight happened.
“We will make sure that the taxpayers are getting their money’s worth,” Chow said.
Originally approved by city council in 2008 at a total budget of $75 million, the building’s redevelopment has increased dramatically over the years.聽By 2013, inflation and challenging site conditions had聽聽to $91.5 million.
In 2019,聽the bill went up to $116.3 million, largely because of the U.S. tariffs on steel and aluminum. In 2021,聽聽to $118 million to allow workers to modernize the facility.
On Friday, budget chief Shelley Carroll, councillor for Ward 17 鈥 Don Valley North, said that the project was approved in the first place because it was always intended to pay for itself.
“We badly need parking in that part of town, and it is going to have an extensive parking garage run by our parking authority, a very profitable organization,” she said.
The added cost “may change the period of time by which it’s all paid back,” Carroll said Friday, “but it will pay for itself.”
With files from Ben Spurr.
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