akhini North residents are responsible for plumbing costs on their properties, says the lawyer who sold them the houses.
It should not surprise anyone because water-and-sewer line work was identified in the sale agreement homeowners signed, said Murray Leitch, one of the Whitehorse lawyers who purchased the subdivision in 1999.
“People buying homes in Takhini North were told about the infrastructure issues,” said Leitch in interviews last week.
When municipal authorities told residents they would have to pay $10,000 to repair the water and sewer lines under their homes, they balked.
The homeowners are contemplating a class-action lawsuit against the city, they said earlier this month.
Although the current figure of $10,000 is down from a $24,000 estimate released by the city earlier this year, it is much higher than the $6,000 figure they were given by Leitch and his partners when they bought their homes, they said.
The subdivision’s 1940-era water lines run in series, like a string of Christmas lights, and are prone to failures.
Residents were told exactly what they were buying into, said Leitch, who bought the 82-unit Takhini subdivision from Ottawa for $2 million along with fellow Whitehorse lawyers Tim Preston and Terrance Boylan using a numbered company, 18001 Yukon Inc.
“We wanted them to understand that, when the city puts its new infrastructure in, they’re not going to allow the existing serial-lighting version of water pipes and sewer pipes to remain.
“We just wanted everyone to clearly understand that they would have to hook up, and that’s what we told them.”
The original sales package included a copy of an easement agreement, which outlined the homeowners’ obligations to connect to new city systems, said Leitch.
An easement is a legal tool often used by utility companies to grant them access to private property to install infrastructure, such as power lines.
Included in the Takhini easement agreement was a $41,000 trust fund, now at about $46,000, to fix any plumbing problems on private property incurred before utilities were replaced.
A notice of the easement agreement appears on everyone’s land title and is available to any homebuyer and their lawyer at the land titles office, said Leitch.
The lawyers’ sale agreement included several clauses requiring purchaser’s signatures.
“The purchaser has received, reviewed and accepts the terms of the utility easement, a copy of which is attached to this agreement and initialed by the purchaser,” states the agreement.
“The purchaser is (also) purchasing the property as a used residential property ‘as is, where is’ without any warranty or representation by the vendor as to the condition and fitness of the property,” according to a copy of the agreement.
Before buying the subdivision from Public Works Canada the lawyers were notified by Ottawa about the state of the utilities and the fact they needed to be replaced, said Leitch.
But the lawyers were not able to fix things without the city on board, he said.
When Leitch and his co-investors approached municipal authorities in 1999 about the water and sewer pipes, they were told the infrastructure would not be replaced for several years, he said.
“We couldn’t replace the infrastructure. How could we replace the infrastructure without the city replacing their share?
“The city was not prepared to do it. They told us they were prepared to do it in a five- to seven-year window, and that’s what we disclosed to everybody.”
The city put that in writing on April 19, 1999, a little over a week before the lawyers closed their deal with Ottawa.
“Based on a review of the limited information available, the city anticipates that water and sewer reconstruction will most likely be required in the next seven years, this however is subject to change based on receipt of new information on city capital budgets,” states a letter written to the lawyers and Canadian Imperial Bank of Commerce officials by Mitch Moroziuk, then director of municipal services for the city.
“When this reconstruction takes place, one of the funding mechanisms used will be local-improvement charges.”
A local-improvement charge normally requires residents to pay for one-third of surface works construction on city property. over a set time period.
Commercial property owners are required to pay two-thirds.
In Takhini North’s case, the city indicated earlier this year they were willing to pay for road improvements as well as work on residents’ properties up front and then be reimbursed through a local-improvement charge.
Unable to begin work for several years, the lawyers opted to begin selling the houses for about $90,000. That was less than the cost of similar houses in other neighbourhoods, said Leitch.
When they started selling, they gave homebuyers an “estimate” of what they could be expected to pay when the work was done, he added.
“We gave people estimates based on the pricing that we were able to ascertain as of the time we were initially selling the units.”
The lawyers quoted a $1,500 estimate from Fireweed Heating and Plumbing Ltd. for basement plumbing, a $1,025 quote from Norcope Enterprises for work from the lot line to the house, and $3,692 for the residents’ one-third share of road and surface works.
The quotes given to homebuyers are now about 10 years old, so it is not surprising those figures have increased, said Leitch.
“Recently, as many people have seen, many things have gone up,” said Leitch. “Fuel oil has more than doubled, gas has more than doubled, electrical has gone up substantially, and building costs have more than tripled.
“I don’t think anybody was expecting that this estimate would sit in stone for endless years.”
Leitch could not comment on what second- or third-round homebuyers, who purchased their properties from people other then he and his partners, were told about the infrastructure under their homes.
“There’s a whole bunch of different issues going on,” he said.
“You have the issue of our initial sales to people we sold to, which is totally different from people they sold to and what they talked about with those people.”
Having city estimates jump around would be frustrating, but the discussions between the city and the residents have nothing to do with he and his partners, added Leitch.
The estimates originally provided covered the five to seven years quoted by the city, and only the city can comment on why they didn’t meet its timeframe, he said.
The city was on track to meet its 1999 projections, but got sidetracked with infrastructure funding applications to the federal government, said city manager Dennis Shewfelt on Tuesday morning.
“We started in 2003 and 2004 looking at the original engineering and planning for the area,” said Shewfelt.
“Coincidentally at that time the Municipal Rural Infrastructure Fund was announced and council asked that we seek some core funding through that program for the reconstruction in Takhini North.”
The Municipal Rural Infrastructure Fund is a one-third provincial, one-third territorial and one-third municipal funding partnership for infrastructure reconstruction.
The city was successful in its Municipal Rural Infrastructure Fund application and got about $3 million, but the process took time, said Shewfelt.
“That process took over a year, so we really didn’t get confirmation until 2005 that we were successful under that project, at which time we restarted the planning process with the community, which has worked through 2006 and into 2007.”
In co-operation with the community, the city hopes to begin reconstruction and new construction work in Takhini North in 2009 or 2010, he said.
Delays are leaving residents at the mercy of inflation and the city’s schedule doesn’t seem to be improving, said Mark O’Brien, president of the Takhini North Community Association on Tuesday night.
“The city didn’t want to redo their part of the infrastructure when the properties were sold because they didn’t have the money,” he said.
“The city is no further ahead now than they were then. That’s unfortunate for them and it’s unfortunate for us.”
Many residents were not clear about the implications of the easement agreement when they purchased their homes. They are wondering how an agreement drafted between two companies owned by the same people can bind homeowners who weren’t part of creating the agreement, said O’Brien.
“I would like to know who advised the city to accept the easement agreement, especially when we’re being told (through independent legal advice) this easement is not enforceable,” he said.