Rising costs stall historic downtown Calgary conversion project, contractors unpaid

Work has been paused on the conversion of a historic downtown Calgary office to residential units because of rising costs, and contractors say it has been months since they’ve been paid.

The redevelopment of the Barron Building officially launched last year, following years of preliminary work to build a parkade below the building.

Built in 1951 at 610 8 Avenue S.W., the Barron Building was Calgary’s first skyscraper and was obtained by the Strategic Group in 2009.

The company was working to convert the former office space into 118 residential rental suites and 8,580 sq. ft. of street-level retail space, while maintaining its historic features, like the exterior facade and terrazzo flooring near the main elevators.

The revamped building was set to open in 2024, but now, work on the building has stalled.

A spokesperson for Strategic Group confirmed to Global News construction was paused so the project could undergo “a value engineering process” to address climbing costs.

“As we began construction to convert the historic Barron Building from office space to modern residential apartments, we learned that costs were much higher than we had anticipated,” Strategic Group said in a statement.

During the pause, Global News has learned some of the contractors brought in to do the conversion haven’t received payment in months.

Con-Forte, a local company specializing in concrete formwork, signed onto the project in January 2023 to do work on the parkade, elevator core, and stairwells.

The company’s vice president of operations, Kyle Lucas, said they’re owed $327,000 after payments stopped late last year.

“When you invoice, you’re typically 60 days from when you started the work that you’re invoicing for, so come Nov. 31 when we weren’t paid, the questions went in,” Lucas said. “Jan. 1, all of a sudden that next draw doesn’t come, and neither does the one previous, it just kind of stacks up.”

According to Lucas, the work stoppage has resulted in layoffs and challenges for his company, which is working on other ongoing projects around the city.

He said some workers are on-site at the Barron Building “demobilizing” equipment and materials that continue to incur costs.

One of several contractors involved in the project, Con-Forte has also issued a builders’ lien against the property in an effort to recoup some of the money.

“It doesn’t make it easy on a smaller operation, that’s for sure,” Lucas said.

Strategic Group tells Global News it will pay its contractors, and said it expects the value engineering to take between 40 and 60 days before construction can get started again.

“As construction resumes, all our construction partners will be fully compensated for the delay,” Strategic Group’s statement said.

“We look forward to the completion of this special project and welcoming Calgarians to new homes in the Barron Building.”

The building is one of several downtown offices to residential conversion projects in the city’s downtown core.

Although the City of Calgary is not involved in the operations of the project, the previous city council agreed to earmark $8.5 million towards it through an incentive program and the city’s Historic Resource Conservation Grant Program.

However, none of that funding has been spent on the project.

“Under the terms of The Barron Building Residential Conversion Grant Program, funding is disbursed when an occupancy permit has been issued to the developer and construction is complete,” the city’s downtown strategy director Thom Mahler said in a statement. “This protocol ensures accountability and adherence to program guidelines, ensures project completion and delivery of housing.”

Ward 7 Coun. Terry Wong, who represents the area, said the project’s successful completion is important for downtown revitalization, and the city’s goals for tower conversions.

“There’s a lot of tradespeople, a lot of companies, a lot of industries that are dependent on this project and getting paid accordingly,” Wong told Global News. “Similarly, there’s a concern about reputation when you talk about conversion projects. We don’t want to see any of those projects fail.”

According to the Government of Alberta website, the estimated cost of the Barron Building conversion is pegged at $100 million.

It’s unclear when work will resume on the project.

&© 2024 Global News, a division of Corus Entertainment Inc.