Finnish Resthome CEO ‘very disappointed’ over skyrocketing construction costs

Ontario Finnish Resthome Association officials are still reeling from figures provided by contractors showing costs for a redeveloped long-term care home, Mauno Kaihla Koti (MKK), to be three times higher than first hoped for.

“We were very disappointed,” said Paul Belair, Ontario Finnish Resthome Association CEO, speaking to SooToday on Wednesday.

It was hoped by OFRA officials that work on the redeveloped MKK would commence by September 2023.

Plans for the redeveloped long-term care home called for an increase from its current number of 63 beds to 128 beds.

However, as reported earlier, OFRA was recently informed that an original, pre-pandemic $30-million estimate for the project, already having jumped to $50 million due to supply chain issues, labour shortages, and fluctuating material costs, has now increased to approximately $100 million.

“Our motivation in wanting to do the project in the first place was to improve the quality of life for residents and to welcome in more residents as well,” Belair said.

“We wanted to have a much nicer, better facility because our seniors deserve that so when the bids came back at roughly double what we were expecting them to come in at, it was shocking to say the least.”

The increase presents a severe problem for the MKK project, despite having received an Ontario Ministry of Long-Term Care top up grant in Nov. 2022.

OFRA says the sudden cost escalation has left it in a position where securing a mortgage to fund the project exceeds the organization's available collateral.

“We did have a third party quantity surveyor do an estimate of the project and they estimated it at around $30 million which we could do and that was just before the pandemic,” Belair said.

“The pandemic is technically not over, but near the end of that three year span we got another estimate done fearing that prices had changed, and we were right about that. They went up to about $50 million and that was about the limit that we could handle within the organization given available collateral and what the bank would support.”

Then, bids from two contractors - one for $95 million, another for $101 million - were presented to OFRA.

“We still don’t have a satisfactory explanation as to what caused that,” Belair said.

He said OFRA is in the process of communicating with the bidders about the high costs.

“We feel our supporters, our many donors who have been very generous over the years toward this campaign need an explanation and to date we really don’t understand why the big jump.”

Belair said he wouldn't speculate as to why and is waiting to hear explanations from the contractors themselves.

Belair was asked where he sees OFRA’s project going from here.

“We have communicated the outcome of the tender to the ministry and our desire is to work closely with them to identify a way forward from here. I can’t really say much beyond that because those discussions are in the very early stages right now. All I can say is we’re talking to them about it.

“The Alternate Level of Care pressures at Sault Area Hospital have been present for many, many years now. It’s an ongoing concern not only for long term care operators like OFRA but for the hospital itself and for home care, the entire health care system, really. What it basically means is that there are patients in the hospital for whom there is a more appropriate setting for their care but because of lack of availability they end up staying in the hospital longer than they need to be and it’s happening all over Ontario but it seems to be more prevalent in the north.”

Though Belair did not have Finnish Resthome waiting list figures on hand, he said “there is a wait list historically for the Finnish Resthome and for all other long- term care facilities and they remain pretty long. A prospective resident’s best bet is to put their names on as many lists as possible in the hope that one of them will come available sooner than the others.”

Belair said OFRA has not given up on the project.

“We’re making plans for next steps. Our intention is to move forward with this project but we obviously can’t do it under current circumstances. We need this situation to change in order for us to proceed with the project. Hopefully we’ll find a path forward here. We just don’t know what it is yet.”