Cost increases leave future of Finnish Resthome expansion in doubt

The Ontario FInnish Resthome Association (OFRA) says that "unforseen challenges" have become an issue in the redevelopment of its long-term care facility, Mauno Kaihla Koti (MKK).

With a goal of beginning construction this month on an expansion which would include 128 new Class-A beds, the expansion would address what's been a growing demand for long-term care services.

With an initial construction cost for the redevelopment project being $30 million prior to the pandemic, shifts in the construction landscape meant a series of disruptions, including supply chain issues, labour shortages, and fluctuating material costs, which caused construction expenses to escalate.

Near the end of the pandemic, construction cost estimates for the project rose to just over $50 million, which placed strain on the organization's financial planning and resources.

Meanwhile, OFRA remained committed to its mission of providing high-quality long-term care services to the community.

The situation took another hit during the recent tendering process with qualified contractors.

Bids received for the project doubled the revised cost, bringing the total to approximately $100 million.

This surge in construction costs, combined with dramatic increases in interest rates, presented OFRA additional challenges.

Even with a grant announced by Ministry of Long-Term Care in November 2022 for homes deemed ready to construct by Aug. 31 the sudden cost increase has meant OFRA is in a position where securing a mortgage to fund the project exceeds the organization's available collateral.

The OFRA's intention is to proceed with the redevelopment project when conditions are more favourable and will continue to work closely with the Ministry of Long Term Care (MLTC) to explore options that will enable the project to move forward.