The construction of a high-profile downtown Winnipeg development dubbed "D Condo" is now in the hands of a third-party manager, amid concerns raised by the project's key lender over financial shortfalls and ongoing delays.

Last Friday, a Manitoba Court of Queen's Bench judge approved a request by the credit union Caisse Financial Group to have PricewaterhouseCoopers Inc. (PWC) appointed as the receiver for the 24-storey, 91-unit condo development project currently under construction at 390 Assiniboine Avenue.

In an affidavit filed by Caisse Financial Group, the credit union's director of commercial services Richard Bosc alleges that their assessment of the project shows the completion date has been delayed three years, the projected costs of construction have escalated from $33.5 million to $47.5 million, and there is a funding gap of approximately $11.9 million which Bosc does not believe the developer and its investors can close.

In addition, the credit union says it became concerned when the original architect resigned and was subsequently replaced. Upon review of the pre-sold units, Caisse Financial Group also learned that cancelled purchase offers had reduced the total presale amount below the required loan covenant and questions about Sandhu Development's ability to manage such a large scale project were being raised internally.

Bosc wrote, "Having lost confidence in 390's ability to manage the project to completion, Caisse is unwilling to make further advances unless a receiver and manager is appointed by this Honourable Court to take control and engage the expertise necessary to see the project completed."

This decision by the courts effectively removes control of the project from Sandhu Development officials, the owners of 390 Assiniboine Avenue Inc., and hands it over to PWC who will now oversee the completion of the residential tower and its day-to-day operations.

The statement of claim shows that as of January 26, 2017, the total amount owing to Caisse Financial Group under the loan agreement stood at $18.7 million dollars.

Caisse Financial Group said it would not comment on an agreement with a client.

City, provincial grants up in the air

Last September, Winnipeg city council approved a $1.9-million grant for the development, despite it missing construction targets. The grant is intended to be paid out of over a 10-year window, but only upon completion of the project.

The Manitoba government also approved an unspecified amount in the form of a grant earlier this month according to court records. However, Karampaul Sandhu, the vice-president of Sandhu Development, said that being placed in receivership would cause the two grants to be rescinded. Neither the city nor the province could immediately confirm this to be accurate.

A spokesperson for the mayor's office said "it would not be appropriate for the mayor to comment on an active legal proceeding."

Developer admits to roadblocks

The construction project at 390 Assiniboine Avenue has been place under receivership by a Manitoba judge. (Tyson Koschik/CBC News) Sandhu Development admitted in an affidavit that there were "problems" with the construction manager Accel Construction Limited, which began charging on a fee-for-service basis, rather than a fixed price, in July 2016. Accel also advised Sandhu around the same time that it could no longer guarantee the completion of the concrete structure within the planned timeframe.

Karampaul opposed the motion to appoint a receiver, claiming he was on the verge of successfully negotiating alternate financing to pay off his debt to the credit union. He proposed delaying the motion by up to two months, records show, to allow him time to finalize these new funding agreements.

CBC News reached out to Sandhu Development, their legal representative and their real-estate agent for comment, none of whom responded.

Unit owners in the dark

CBC News also contacted individuals who have pre-purchased yet-to-be-built units more than two years ago. They said they were were unaware of the financial challenges the developers have been facing over the past several months.

One buyer said owners were given the opportunity to sell their units last year in light of construction delays, but many chose to hang on to their investment.

CentreVenture, the city's arm's-length development agency, said they are aware of the situation.

"From our experience, constructing any project in the downtown is challenging," said president and CEO Angela Mathieson. "But I wouldn't say it hampers optimism."

"We're hoping that the situation can be rectified as soon as possible because the project obviously is partially constructed and I'm sure the receiver will be looking for way to complete the construction," she said.

In an emailed statement, PWC said it intends to continue construction on the project, working closely with the current construction manager and other sub-contractors. PWC receiver and manager Josh Theim said the project's activities are "not expected to be impacted and all services performed for the receiver will be paid in the normal course."