went up due to the many multiple large projects bidding for work. More value engineering ahead. Now as you start to excavate and shore, you “discover” the remnants of an old building, formerly collapsed and buried on your site. It’s funny that your high-priced soil consultant couldn’t find that. Ouch! $500,000 in extra disposal costs, more value engineering. Oh no, now your shoring contractor has hit some large rocks, that is not part of their contract… oops, $100,000 in extras – thank goodness for that $3M in contingency. Over the next 24 months while you build the building, every one of your consultants from the de- signer, architect, mechanical engineer, civil engineer, sur- veyor, elevator company, lawyer, you name it, will screw something up. They will most certainly pass that cost on to you. Why? Their fees can’t possibly cover the extra and remember, in the development business, no one takes any responsibility for errors, except you, the developer. Hurray! You have managed to finish the building, you have spent most of your contingency, but registration is just days away. Now you can occupy your building. Pay- day! Pay back for all your hard work…..but no. Not so fast. Now you have to actually close all the sales. If you were fortunate to complete the building in March or Sep- tember, you stand a good chance of selling your unsold inventory in an orderly fashion at top price, selling into a strong spring or fall market. Of course, you will have to keep all of the inevitable “friends,” consultants, and good clients that bought suites in check to prevent a flood of assignments or flipping as they try to cash in quickly on their $100,000 profit windfall, which they believe was due to their incredible skill, knowledge, and foresight, and nothing at all to do with the developers skill and hard work in creating a spectacular building with excellent de- sign and floor plans. Even more likely, it was their dumb luck being the benefactor of a rising market. What do they say – “a rising tide lifts all boats.” If you completed your building in November or June, tough luck. You are selling now into the slow real estate seasons, winter or summer. Your inventory will take twice as long to sell, look stale to buyers (due to the longevity of listings), and eventually wear at your bottom line. Thank goodness you didn’t sell all of your product at discounted launch pricing or you’d be really screwed. Now comes registration. This is when the city allows you to transfer title to your buyers. You have completed everything needed to register, or so the city planner tells you. Oops – they neglected to tell you they are leaving for a three-week Safari in Africa (once in a lifetime op- portunity you’re told, everyone needs to do an African safari once in their life). Registration will just have to wait. Now you are into November. Tough luck, but the plan- ner is back. They discover that site servicing has a small problem with one of your consultant’s letter. Apparently, your undertaking to complete a tiny, obscure task is not enough. Even though your highly paid consultant in- formed you it would not be a problem, well it is NOW though, because this particular city employee is a stick- ler, just following the rules of a non-existent rule book – tough luck. Ok, ok – two weeks later after tidying up the one small issue, and having your engineering consultant satisfied with the content of the letter to the city (which for some odd reason, takes a full week. This may have something to do with not acknowledging that consultant in a hallway a year ago), well anyway, you are now regis- tered. Now the closing circus starts, but you have been de- layed into late November. Every buyer has an amazing reason why the closing doesn’t work for them. Nonethe- less, after threatening large fines, it appears all of your deals will close over a 15-30 day period. I can live with that. Oh no – last minute glitch. The plumber double cashed a cheque. That is to say he reported a cheque lost, pestered for a new one, then cashed both before the bank cancelled the first one. Then he has liened your building for $450,000. The plumber is unhappy because he lost money on the job and is trying to blackmail you at a perceived moment of weakness. Your bank loan is fully advanced and you need to either settle with the plumber, or pay the lien in court (plus an additional fee). Either way, closings will now be delayed. Thank goodness for being prepared (keeping a million or two on hand for just this kind of thing) – the lien is ne- gotiated and paid. Ok, closing time. Not so fast, buyers that are really investors hadn’t budgeted for the new HST. Thank you Mr. Flaherty, a new 13% per cent tax on new housing is appreciated, especially half way through a development. Apparently, several buyers are shy $15,000 or so to close. Ugh – you have to extend 25 buy- ers for a few weeks so they can source the money. Sorry bank – can’t pay you out just yet. All the delays have cost you more time. Merry Christmas! Lawyers have now gone for the holiday December 15th – January 4th. No closings till mid-January. Damn it all. Ok. Patience is a virtue. We’ll get there. January 31st – everyone has closed. Paid the bank. Fifty per cent of profits tied up in inventory and with a tax rate of 26 per cent you can’t pay any profit dividend. Stay positive. Al- right then, eight months later, it is now the end of Au- gust, the final units are all sold, we can close the books. Job well done. Not so fast. You have some upcoming issues. Tarion warranty is still holding $500,000 of your deposits, the city won’t release a $300,000 line of credit, and you will soon have one and two year technical audits to get through. Just then, the phone rings. It’s your favourite com- mercial real estate broker calling. “Hey - are you in the market for a great site?” You pause, and sigh. “Of course I am. What do you have?” This has never been an easy business. But I love it. The Canadian Design and Construction Report — Spring 2014 – 7