The Condemned

The Penhorwood condos in Fort McMurray are collapsing, raising fears about shoddy construction. Will the government’s proposed fixes of the system prevent future problems?

Sep 1, 2011  

by Anthony A. Davis

Illustration by Gary Sawyer

At around midnight on a Friday in March firemen hammered on the doors of the 168 units in the Penhorwood Condominiums. Tammy Connor and her husband John were sound asleep. Connor has difficulty describing that night and its consequences. “It’s been pretty traumatic to be honest, she says. “I told (John) not to answer it because I didn’t know who it was. They said it was the fire department, and so my husband opened the door.”

A fireman handed them an evacuation letter from the city and told them they had 15 minutes to collect medication, documents and over-night bags and get out. “I just looked at my husband and both of us scrambled,” Connor says. “He was in one room and I was in the other. We were yelling back and forth at each other [about] what we were throwing in bags.” The Connors, along with their West Highland Terrier, Ramsey, and a stream of 300 other residents quickly filled up the nearby sports centre.

Completed in 2003, the 168 units in Penhorwood are a collection of seven light-grey, three-story buildings in Fort McMurray. They are generally small, starter condos occupied by young couples, pensioners and single working people, many of whom are renters. They cost in the neighbourhood of $2,000 per month. But the authorities came knocking on that late March evening because they had deemed the entire complex unsafe, and Tammy and John Connor and the rest of the residents of Penhorwood haven’t been back since. They may never be able to return.

Critics say the Penhorwood debacle exposes a faulty building inspection system in Alberta, and that, especially because of boom-time construction from 2002 to 2006 (when there were 201,042 housing starts), there are likely more crumbling residential complexes out there. In June, three months after Penhorwood – but not because of it, the Alberta government insists – the province announced significant fine increases for builders discovered to have violated the Alberta Building Code. The government also asked the Safety Codes Council, which accredits the inspection officers who do residential inspections in Alberta, to conduct “a broad review” of its training system and inspection regime. And Alberta Municipal Affairs, the ministry responsible for the Alberta Safety Code and the inspection system, plans to make home warranties mandatory on all new homes and condos.

While residents of Penhorwood knew their condo association had been in litigation for several years with the condo developer, Prairie Communities Corp., over alleged deficiencies like heating, roofing and cladding problems, it wasn’t until the night they were evacuated that they knew there were also serious structural issues. The buildings, they were told, could collapse. Right then, at that very moment, Connor knew she wouldn’t be going home soon. “I was in shock,” she says. “I was afraid.”

Repeat that basic story 167 times and you get a sense of the scale of this disaster and the enormous financial and emotional toll it is taking on Penhorwood renters and condo owners, and even on Fort McMurray itself. The Connors now live in a townhouse where the rent is twice what their mortgage is, a mortgage they are still paying. Some families have had to declare bankruptcy. Connors says she knows of pensioner couples living in dingy accommodations because they are too poor to pay both a mortgage on an unliveable condo and rent on other living quarters. One young woman who lived in the building told television reporters two weeks after the evacuation that she was homeless and had to send her baby daughter away to be cared for by relatives because she had lost everything and had nowhere to go. “We need somebody to help us,” she pleaded.

The Penhorwood case is not a simple one, and many facts remain to be proven in court. But even before the buildings were evacuated on that cold March night, residents were involved in a lawsuit with developer David Marshall of Prairie Communities Corp., the Rural Municipality of Wood Buffalo (RMWB), a slew of engineering firms and the inspection agency contracted by the municipality, Alberta Permit Pro. Permit Pro’s inspections missed serious problems. Since the evacuation, the condo association’s lawsuit has been amended from $5.5 million to $60 million, because, the association contends, Penhorwood is in such bad shape that no one will ever be able to live in there again. It may have to be torn down.

In the meantime, Marshall, who says he’s retired from the building industry, is filing a $59 million countersuit against the condo association. In it, he claims that the board could have mitigated many of the problems but refused to do so, preferring instead to use tactics that resulted in an unnecessary evacuation and a bigger lawsuit. Reached near Las Vegas, where he was vacationing, Marshall acknowledges there were structural issues at Penhorwood involving missing “squash-blocks” from I-joists, but says that his offers to fix the problems were rejected.

Al Penner, a condo board member and developer, was involved in selling 72 Penhorwood units. He says he has volunteered hundreds of hours to help Penhorwood residents “because this type of occurrence and the one in Calgary across the street from my office are an embarrassment to my industry, and I believe people in my industry have an obligation to attempt to ensure that people are stopped from doing this.” Penner’s office is across the road from the Bella Vista Condominiums, which, the CBC has reported, require major renovations because of building code violations. Owners there are facing remediation bills of between $77,000 and $189,000 each.

Penner says he believes condos are a good investment and living choice for Albertans, but “the risk of more poorly built condos is huge. If I personally felt this was an isolated incident, I would not have devoted much of the last six, seven years of my life to this as I have.” It will take the courts until at least 2012 to sort out the facts in the case, but it does call into question what some see as a flawed provincial inspection system.

British Columbia has already been down this road. Slews of leaky condos built in Vancouver in the 1990s forced the B.C. government to offer interest-free repair loans to buyers. In all, it’s estimated that there could be more than 80,000 leaky condos in B.C. The scandal spurred the B.C. government to create the Homeowner Protection Office in 1998 to improve the quality of residential construction and enhance protection for consumers buying new homes. The total cost of those repairs is estimated at $4 billion.

Photographs by Greg Halinda

Christine Burton, a condo owner, lawyer and president of the Penhorwood condo association (PCA), says a “long chain of command” failed her and other condo buyers in Fort McMurray when structural engineers, geotechnical engineers, the architect and others used their professional designations to sign off on various Penhorwood components they said met Alberta building and safety codes. Safety Code Officers (SCOs) with Alberta Permit Pro later accepted those signoffs without checking the components. “That’s where it starts to breakdown, when those things aren’t done properly,” she says. “But the buck also stops with the building inspectors, who have obligations that they meet code.”

In Penhorwood’s case, it was crucial I-joists that were the straw that broke the condominium’s back. I-joists have, in many construction projects since the 1990s, replaced two-by-ten or two-by-twelve boards as the I-joists that support the floors and walls of wood-frame buildings. These I-joists, weighing as little as one-third of the boards they replaced and using far less wood – thus being better for the environment – are “stronger than a solid piece of wood,” says Penner.

However, on the ends of these I-joists, especially where they bear the heavier weight of walls, it’s necessary to install so-called “squash-blocks” alongside the ends of the I-joists to reinforce them at the load-bearing points. Made of short lengths of sturdy wood, these squash-blocks are hammered in place and take the brunt of wall loads, preventing the I-joists from deforming at their ends. Without them in place, the I-joists can bend, sag, crack or completely fail, seriously affecting the structural integrity of a building.

Marshall says the I-joist system he used was designed by a company called Nascor, and that his framers built the joists according to plans. But Marshall contends that Nascor’s supplied software led to a failure to place some crucial blocks. Nascor’s own inspectors gave the Penhorwood project the nod, but the problem, Marshall says, was not the kind of thing later inspectors would readily notice. But “it failed, and I offered to the condo corporation for us to go in and fix those blocks or to fix those joists…We offered that and we were turned down.”

Brian Alford is President of the Safety Codes Council (Alberta). His organization has been managing the safety code system in Alberta since 1991. It is unique in Canada as the only non-government, non-profit organization that accredits the municipalities, agencies and corporations that sell permits and inspect the work carried out under those permits.

They also certify and train the SCOs who do the inspections. But Alford admits that while houses are often inspected three or four times during construction phases, it is standard practice in many cases for inspectors to examine larger buildings such as condos and apartments – projects that usually have engineers involved – after cosmetics such as drywall and paint make it difficult to see any structural defects. As a result, inspectors tend to rely on signoffs by engineers before issuing occupancy permits. Those engineers, Alford says, “take responsibility within the act for the work that they are contracted to provide.”

In the Penhorwood case, the safety council (one of the few organizations not being sued by the condo association) “has yet to determine where the fault was,” says Alford. “But if it was with inspectors, then we will take action. If we found that an SCO was negligent or deficient in his or her duties we could take action, up and to the cancellation of their ability to be an SCO.”

Penner contends that when municipalities themselves are laissez-faire about inspections, inspectors, as alleged in the 33-page statement of claim the PCA has filed with the Alberta Court of Queen’s Bench against 26 defendants, start relying too heavily on engineers to be their eagle eyes. And in the case of the municipality’s contracted inspection agency, Alberta Permit Pro, that’s what the condo association says happened.

The bulding boom decade, with its promises of easy money and the resulting pressure to put up projects as quickly as possible, may have been a factor in inspection sloppiness if the PCA’s allegations prove true. An affidavit from Al Penner filed in support of Penhorwood’s lawsuit alleges that: “On September 18, 2003, Russell Dauk and Dan Whelton of RMWB and Dan Kuhn of Permit Pro admitted to Al Penner that they had been ‘…forced into a dangerous level of tolerance with developers because of a housing crisis.’”

“Speaking purely as a developer,” Penner says, “the reality is I have been aware for some time that there are opportunities for unscrupulous developers to slide stuff through the system. Responsible developers don’t slide stuff between the cracks, but the cracks do exist.”

Both the municipality of Wood Buffalo and Alberta Permit Pro are named as defendants in Penhorwood’s $60 million lawsuit. “The building inspectors’ role is additive to the professionals, not in lieu of it,” Penner says. “In my last communications with Alberta Permit Pro they took the position that we’ve got engineers and architects that signed off on things, therefore our backs are covered. Those were the inspector’s very words to me. Of course the professionals are taking the same position saying the ‘building inspectors signed these occupancy permits, so our butts are covered because he signed off.’” Penner contends that makes for a circle of mutually assured security for the developers, builders and inspectors. But, as with Penhorwood, it can literally leave home and condo buyers out in the cold.

The question now facing Alberta home and condo buyers is a simple one. If building and inspection problems exist, as the problems at Penhorwood and Edgewater projects seem to suggest, will the recent announcements by Municipal Affairs minister Hector Goudreau do anything to fix them?

“The vast majority of homes in Alberta are built well and stand the test of time,” Goudreau said on June 7 when he announced a mandatory home warranty program for future residential homes and buildings built in the province. Currently, only about 80 per cent of new homes and condos are covered by warranties, a form of insurance the builders buy from private insurers.

Some critics, including Tang Lee, a University of Calgary professor who has been teaching architecture for three decades, believe the mandatory warranties do more to protect the builders who pay for them than buyers. But Ivan Moore, the assistant deputy minister of Municipal Affairs, contends that private sector companies underwriting warranties will help weed out bad builders because the insurers don’t want to have to pay out for big repairs down the road. If warranty companies refuse to provide warranty certificates to builders with bad reputations, they will not be able to get building permits in Alberta.

The big stick of fines will also reduce sloppy work, Moore says: the maximum fine for a first offence will increase from $15,000 to $100,000 and for subsequent offences from $30,000 to $500,000. “We took a multi-faceted approach, because what we found when we looked at these issues is that there is no silver bullet, no single response to this.”

He notes that since B.C. brought in a similar warranty program after its leaky condo scandal, “the overall quality of construction has gone up measurably, and they have seen their mandatory system weed out those bad actors.”

Moore concedes that “there is room for improvement in the inspection system. We are taking it on with the Safety Codes Council in terms of looking at how to focus on critical items better.” He says the government also wants to help educate buyers and owners so they know better how to ensure they are buying quality accommodations and are better prepared should issues arise.

Al Penner and the Penhorwood Condo Association aren’t expecting the recent changes made by the government to completely address the problems they’ve had to deal with. Instead, they think that a positive verdict for them in the courts is what will really clean up the building and inspection regimes in the province. “All we need is some case law,” he says. “If this one goes through in the end, to say you are responsible, you the developer are responsible regardless of the fact that your engineers certified this, and your building inspector certified it. You are still responsible. You cannot say it’s not my fault because it passed inspections. And similarly, the professionals who sign off on these things, and the jurisdictions having authority, are all equally responsible…someone has to get slapped by the courts.”

Former Penhorwood resident John Matthews penned a sad, resilient folk lament about the collapsing condos called Castle Down, complete with pictures of cracked walls and bending floor joists.

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