ELLIOT LAKE, Ont. – The doomed Algo Centre Mall was an unexpected money pit that almost ruined its owner as he desperately tried to deal with the crumbling property, his son testified at a public inquiry Wednesday.
Under cross-examination on his third day on the stand, Levon Nazarian said the family had no idea the mall was in such bad shape when they bought it in 2005.
“We were never informed about the extent of the leaks of the mall,” Nazarian testified.
“We were never even told that there were leaks.”
The inquiry into the mall’s collapse has heard the rooftop parking deck began leaking as soon as the mall was built in 1979.
Ultimately, water and salt penetration rotted steel supports, leading part of the deck to cave in last summer, killing two women and injuring several other people.
However, a Royal Bank report done before it advanced a $4.65-million mortgage when the Nazarians bought the shopping centre made no mention that any extensive repairs might be needed.
In fact, the report indicated the only major anticipated expenditures were for $335,000 to upgrade the heating and cooling systems and other minor repairs, Nazarian said.
“I find it extremely misleading,” he told his lawyer, Michael Title.
Bob Nazarian, 67, an Iranian immigrant and skilled machinist, had made millions buying apartments in Montreal and developing properties in southern Ontario.
The Algo Centre Mall, which cost $6.2 million, was his single largest investment — one that went south from the start.
Levon Nazarian, 29, a successful real estate broker, said they had no idea how financially draining the mall would turn out to be.
The family, he said, did everything it could to salvage the situation.
“This mall needed a constant injection of money to keep up with it. We couldn’t keep up with it at the end,” Nazarian said.
“My father was at risk of losing his own house. That’s how desperate it was.”
The inquiry heard how the Nazarians spent the last years of the mall’s life desperately trying either to come up with a way to finance major renovations or to sell it, but deal after deal fell through.
But the bank would not allow early discharge of the mortgage without a huge penalty.
“RBC gave us a very tough time,” he testified.
“We were desperate to sell the mall (but) we didn’t have the funds to pay the prepayment penalty.”
Within a few years of the purchase, annual inspection reports for the Royal Bank were noting serious problems with the mall, including rusted steel beams and deteriorating concrete. The bank demanded action.
The Nazarians came up with numerous plans to renovate the mall, none of which came to fruition, in part because they could not raise the money needed.
Instead, they spent an “astronomical” amount on piecemeal fixes that never worked, Nazarian said.
Renovation-project refinancing was finally approved 18 months after it was requested — the money was to be advanced a week after the mall collapsed, Nazarian said.
In his examination in chief, commission lawyer Peter Doody suggested the Nazarians were never serious about fixing the mall, but were simply trying to ward off the bank with various repair schemes.
“There was no real plan that had been solidified to fix the leaks,” Doody said. “Your real plan was to sell (the mall) as quickly as you could and get out from under it.”
“Absolutely not, sir. I find that insulting, that is not true,” Nazarian said.
He told Doody he never saw the Royal Bank inspection reports.
He also said it wasn’t his job to assess the condition of the mall in any detail as he tried to sell it, but relied on a structural engineer’s reports.
“As to the specifics, sir, I wouldn’t know, as to rusting beams or this or that,” he said.
The engineer, Bob Wood, has testified he found no structural issues with the mall just weeks before it collapsed.
Nazarian faces further cross-examination on Thursday.
Comments