The Skky Hotel is in the red, and local contractors are feeling the pinch.
“They owe us a lot of money,” said Kilrich Industries Ltd. manager Gary Boyd.
“It’s a substantial amount.”
Boyd, who’s sent Skky Hotel owner Frank Calandra a legal letter asking him to acknowledge the debt, didn’t want to discuss the details.
“Frank and his bookkeeper came and saw us,” he added. “They’ve never hidden on us.”
The bill at Kilrich is $86,000, said Calandra, sipping wine in the Skky Hotel restaurant Wednesday evening.
There’s another $20,000 owing at Home Hardware.
And there’s $23,000 outstanding at Griffiths Heating and Sheet Metal.
Renovating the old Airport Inn to create the Skky Hotel was supposed to cost $1.5 million, said Calandra.
Instead, it came in at more than $4 million.
“So I’ve been scrambling,” he said.
Bills were three times higher than the original quotes, he said.
“The electrical quote was $70,000, and I paid that,” said Calandra.
“Then they billed me an extra $140,000 on top of that.”
“It’s not easy to build in the North,” said Richard Runyan, who’s helping with the hotel’s management.
“I was new so I didn’t know anyone, and I didn’t get the best contractors,” added Calandra.
“It’s difficult to find good workers—they had to redo things again and again.”
And contractors refused to be paid by the job, he said.
“In the Yukon, they want to be paid hourly, so there’s not much incentive to get the job done quickly.
“I was paying $15,000 a week in salaries—it’s not the most pleasant experience when you feel you’re being ripped off all the time.”
Calandra acquired the hotel by accident.
“An uncle of a friend of mine (Mike Palma)” needed some money for his hotel project in Whitehorse, said Calandra, who was working as a corporate lawyer in Toronto at the time.
Calandra’s company, Stacroz Investments Inc., lent Palma the money.
But things didn’t go as planned.
Palma, a Dawson businessman in his 60s, was one of 22 men linked to an eastern European crime operation.
The Insurance Corporation of BC is trying to recover thousands in what it says are phony claims from the ring.
Investigators allege the ring operated from a garage owned by Palma in Surrey, BC, according to CBC Radio One reports.
“Investigators claim the defendants staged fake car crashes and thefts, then switched identification numbers on rebuilt vehicles in order to sell them.”
Just days after the lawsuit was filed in August 2006, Palma transferred his Surrey garage and six Dawson City properties to Giuseppe Villacci, a Toronto businessman.
Court documents filed by Palma claim he was repaying a longstanding debt to Villacci, a nephew.
It was around this time that Calandra, whose company also owns a property in Dawson, ended up with the old Airport Inn, after Palma defaulted on his loan.
Tony Villacci, another nephew of Palma, has been helping out with the Skky Hotel renos.
But that’s not the end of it.
Calandra is also Palma’s lawyer.
“I’m defending Palma in his lawsuit in Vancouver,” he said.
In exchange, Palma was contracted to oversee the Skky Hotel renovations.
“I did my part,” said Calandra.
“But he’s not doing his job.”
Not only was the hotel $3 million over budget, construction took a year longer than it was supposed to.
“If I’d opened last year at this time, I’d have financing and we wouldn’t be talking about debts,” said Calandra.
But as it stands, the hotel, which opened in February, is facing its first summer on the cusp of an economic downturn.
“Part of the problem is that with the world financial crisis, banks aren’t lending,” said Calandra.
“I couldn’t get any mortgage financing.”
But Bayview Loans and Mortgages Ltd. has lent the project money on five different occasions between December 2006 and November 2008, according to Skky Hotel’s land title certificate.
The Bayview mortgages total more than $2.5 million.
Calandra had to borrow money from friends and family to finish the project, he said.
His dad, a barber, has invested more than $1.3 million in the hotel, according to the land title.
“As soon as I get financing I’ll clear up what’s owing,” said Calandra, who figures he’s paid up to 90 per cent of his bills.
But several Whitehorse contractors have already filed liens against the hotel.
Independent Electric has a $142,916 lien on the building, while Keith Plumbing and Heating has filed for $117,607.
There are also two liens from independent contractors who, combined, are owed more than $70,000.
Part of the problem is Palma’s company, Palcol Build and Design, said Calandra.
Palcol took on another project—building a house for a family with a handicapped son in the Mount Sima area.
Palcol was working on both the Sima home and the Skky Hotel simultaneously.
And a lot of the money owing is for goods that were purchased under the guise of the Skky Hotel, but were used for the other property, said Calandra.
“I was in Toronto at the time, and didn’t know it was happening,” he said.
The house at Sima was never finished, and the construction was abominable, said local contractors who asked to remain anonymous. (Because most of the contractors, and the man who hired Palcol to build his Sima house, are in litigation against Calandra, none were able to talk on the record.)
Although Palcol was paid in full, thanks to funding from Yukon Housing Corp., Palma’s company did not pay local contractors for their products.
“I get a double whammy,” said Calandra.
“I’m going to end up paying for stuff that went (to the Sima property).
“And it’s my fault for trusting the wrong people.”
It gets even more confusing—Palcol is not registered under Palma’s name.
The company’s sole director is Jozsef Suska.
Suska is also listed as owning Trans Alaska Industries, in Dawson.
Its corporate summary describes Trans Alaska as a laundry business and internet cafe.
Palma’s past Dawson businesses, which included Goldrush Auto Sales, Midnight Sun Taxi and Creation Construction, no longer exist.
Another former business, Creative Construction, is now listed under Michelle Palma’s name.
“There have been lots of unfounded rumours and innuendo,” said Calandra, offering up some appetizers at Skky Hotel’s Volare Euro Bar And Cafe.
“But whoever’s owed money from me will be paid in full,” he said.
When Calandra first flew into Whitehorse to foreclose on the property in 2006, it was a sunny July day.
“The sky was blue, and I could see all the cars going up and down the highway, and I thought it was a great location, and I fell in love with the place,” he said.
“I thought the town could use a beautiful new place, and the territory was in the midst of a big building boom.
“Now we’re opening in the middle of a recession—the timing is not the best.”
There have also been rumours rooms are $300 a night, he said.
“And this is not the case.”
A room with a king bed is $119, while a room with two doubles is $129 a night.
“We’re the same as the Westmark, or the Best Western or the High Country,” he said.
The chic rooms come with white duvets, fancy “rain” showerheads and Skky insignias on everything from the drain plugs and chairs to the toothbrushes and headboards.
Volare’s chef is a family friend from Toronto, who specializes in Italian fare. The bar was imported from Europe, and the espresso machine is from Italy.
“It was not my goal to be a hotelier or restaurateur, but once you’ve invested that first million, you can’t walk away,” said Calandra, whose law practice in Toronto has become dormant because of the hotel’s demands.
“I have to make it a success because failure is not an option,” he said.
Contact Genesee Keevil at
gkeevil@yukon-news.com