Developer makes last-ditch bid to resurrect Yonge-Bloor tower

July 21. Toronto Star

by Kevin Donovan

Developer makes last-ditch bid to resurrect Yonge-Bloor towerA Kazakhstan-backed developer has staved off receivership proceedings with a last-minute deal to pay off a defaulted $46 million loan on land at Toronto’s Yonge-Bloor intersection.

But it’s becoming clear the original 80-storey glass tower planned by Bazis International of Kazakhstan will not proceed. What will be built on the southeast corner that the developer called the “epicentre of Canada” is unclear. Bazis has said in recent court documents the project will be downsized to 67 floors, but buyers suspect it will be even smaller, which will affect their investment.

“They fooled a lot of us based on 80 storeys high,” said Ray Tabrizi, a Toronto man who purchased a unit on the 42nd floor two years ago. Tabrizi said he paid a $125,000 down payment toward the $500,000 price. He has tried over the past two years to find out why the project was in limbo, but said the developer won’t tell him and has not returned his money, as asked.

“They kept saying the project was proceeding, but would never say when. They had a million excuses: No building permit, the ground was too frozen. Now, I just want my money back,” said Tabrizi, who works in sales with a flooring company and purchased the unit as an investment for his family.

Yesterday, a Toronto judge approved a deal between Bazis and a consortium of three Toronto businessmen owed $46 million for the land purchase. Bazis’s Canadian representative, Michael Gold, admitted prior to court that the loan was in default, but said in a statement that was “not unusual given the global lending crisis.”

No details of the deal were made public. However, Bazis lawyer Lawrence Thacker said Bazis has made “commitments to the lender.”

The matter will go back to court on Aug. 18 if the terms of the court-approved settlement are breached. The terms were to be released tomorrow morning by the court.

A Star story on Saturday revealed the project was in trouble. First the land loan was in default, then, when faced with the prospect of receivership, Gold came up with the promise of a $195 million loan from a Kazakhstan bank. That bank, called BTA, is under criminal investigation in Kazakhstan over allegations that $1 billion in assets are missing.

The lender of the $46 million stated in court documents that the BTA loan was not a credible source of funding, although Gold argued it was, saying his Kazakhstan company used it as its “house bank.”

One winner so far is the city of Toronto. According to a statement by Gold yesterday, he paid the city “more than $1 million” on July 13 to purchase Hayden Street Lane on the southern border of the large site. Gold said he needed the lane to complete the project and said this was proof he was committed to it.

Gold accused the three businessmen, led by financier Gary Berman, of trying to steal the land. The group wanted to put the property into receivership and offered $50.5 million as the opening offer in a court-approved sale they proposed take place shortly.

Joe Latham, one of Berman’s lawyers, declined to comment yesterday. Gold and his lawyers have, since Thursday, refused to answer questions about the project.

About $70 million in purchasers’ deposits is being held in trust.