Housing provider sues ZW Group, Ottawa contractors over geothermal system

Legal action over faulty heating system shines spotlight on green technology

A local landlord is suing a construction project manager that it alleges installed a faulty model of an innovative heating technology into a downtown housing complex.

Centretown Citizens Ottawa Corp.,  a non-profit housing organization, owns the Beaver Barracks development project at 160 Argyle Ave. and 464 Metcalfe St. Both properties feature a geothermal system to heat and cool its buildings by drilling into the water table and harnessing the earth’s fairly stable temperature.

ZW Project Management Inc., the general contractor for the project, was notified last month that the CCOC is taking legal action against it and its subcontractors for $2 million in damages, including breach of contract, breach of warranties and/or negligence during its work on Beaver Barracks, according to a claim filed with the Ontario Superior Court of Justice on Jan. 4.

The document stated that Beaver Barracks “was not designed, constructed or commissioned in compliance with the Ontario Building Code, the city’s bylaws and/or good and prudent practices in the construction industry at the relevant time.”

In particular, the CCOC claims there were defects in the design and construction of the geothermal distribution system and piping design.

According to the document, the contractor has made efforts to fix some of the defects, but attempted repairs “have not been reasonable or effective.”

ZW Group officials could not be reached for comment. CCOC executive director Raymond Sullivan issued a written statement to OBJ.

“CCOC’s Beaver Barracks project has been very successful. Phase Two was completed last fall, on time and on budget and is fully occupied. We’re providing quality affordable rental housing to 254 households,” he stated.

GEOTHERMAL TROUBLES

While the legal document does not outline specific issues with the geothermal system, Beaver Barracks resident Milan Ilnyckyj noted problems with the heating and cooling system in a blog post dated May 2011 on his site sindark.com

In response to that post, someone claiming to be the CCOC’s Mr. Sullivan wrote: “As you may know, there was a small construction fire in the geothermal control room last December. Although we were able to get the system up and running again within two days, the fire destroyed the automated controls for the system.”

OTTAWA EXAMPLES

Beaver Barracks isn’t the only green residential project in Ottawa that has run into trouble.

EcoCité on the Canal – a condo project across from Lansdowne Park that’s since been renamed ten14bank street – was taken over by a mortgage lender after EcoCité Developments was unable to make its loan payments.

That hasn’t stopped other builders from drafting plans to use innovative technologies.

Windmill Development is about to try its hand at urban water table digging, constructing a geothermal system in its upcoming Eddy complex, and more are sure to come.

It begs the question: what does it take to install a successful geothermal system?

GOING GREEN

Denis Tanguay is president of the Canadian GeoExchange Coalition, a national body governing the heating, ventilation and air conditioning market in Canada. It offers training courses and accreditation for geothermal designers and installers. The problem is that training is voluntary, with no penalties for those who work on projects without accreditation.

“For any new technology, it’s very hard to regulate before the industry is mature,” Mr. Tanguay said. “In five or 10 years, the technology will be mainstream enough that the training comes from colleges and people come out of schools with these skills.”

Currently, the CGC has partnerships with various colleges across the country, but there is more to be done, according to Mr. Tanguay.

Without knowing the specifics of CCOC’s case against ZW Group, Mr. Tanguay said geothermal installation problems are bound to occur occasionally, as is the case with any construction work. He added that of about 18,000 geothermal systems installed across Canada (mostly for individual residences), about 100 complaints have been issued to the CGC and only about 20 are based on technical issues.

“These issues generally aren’t catastrophes,” he said. “It’s often very fixable … I’ve never seen a total system failure.”

LOCAL OUTLOOK

But despite the low number of complaints to the national body attempting to regulate the industry, a local expert noted there have been issues with unqualified contractors installing geothermal systems.

“Like anything else, if it’s a plumbing system or an electrical system, if the installer is not experienced, he’s going to make some boo boos,” says Rick Ménard, owner of Rick Ménard Heating & Cooling in Orleans, which he has run for more than 30 years.

“There’s no policeman or inspector that goes out on site to ask if they’re licensed.”

Corix Utilities, the British Columbia-based company contracted to build and manage the geothermal system in Beaver Barracks is listed as an accredited member of the CGC. A Corix official did not respond to requests for comments.

GeoLogic Heating Systems Inc. – a local company that supplied the geothermal system for EcoCité on the Canal and another geothermal project by Tega Homes in Kanata – is not listed as a CGC member. Its website says that its employees are “continually trained in industry best practices as set out by the Canadian

GeoExchange Coalition.”

SIDEBAR: PROFILE - CENTRETOWN CITIZENS OTTAWA CORP.

A community-based non-profit housing organization that owns and operates more than 50 properties in Ottawa, providing more than 1,500 units of affordable housing.

Its Beaver Barracks project was funded with $18.3 million under the Canada-Ontario Affordable Housing program and $11.9 million from Action Ottawa, the city’s program to increase the local supply of low-income affordable housing. CCOC used its own equity, private contributions and mortgage borrowing to cover the balance of the project’s $51-million price tag.

Beaver Barracks’ geothermal system includes 54 wells connected to an array of pipes, valves and electronic equipment that provide heating and cooling at a purported efficiency level 300 to 500 per cent greater than natural gas or electric equipment.

PROFILE: ZW GROUP

A 100 per cent employee-owned company based in Ottawa that has managed projects totalling more than $5 billion and ranging in cost from $500,000 to $550 million.

Local projects include a $140-million contract with the Ottawa Hospital Regional Cancer Centre, a $100-million contract with the Orleans Family Health Club and a $30-million contract for Beaver Barracks.

DEFENDANTS:

The following is a list of companies named in the claim by CCOC against ZW Group and some of its subcontractors for the Beaver Barracks development:

ZW Project Management Inc.

Barry J. Hobin & Associates

Norr Ltd.

HydroPlumb Mechanical

X-L-Air Energy Services Ltd.

Lar-Mex Inc.

R.J. McKee Engineering Ltd.

Halsall Associates Ltd.

Corix Utilities