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Owners of 2 dilapidated Downtown Eastside hotels to fight expropriation in court

The Balmoral and Regent hotels are pictured in the downtown eastside in Vancouver, B.C., Wednesday, November 6, 2019.
The Balmoral and Regent hotels are pictured in the downtown eastside in Vancouver, B.C., Wednesday, November 6, 2019. THE CANADIAN PRESS/Jonathan Hayward

The owners of a pair of notorious Downtown Eastside single room occupancy (SRO) hotels are going to court to fight against their expropriation.

Last month, Vancouver city council voted unanimously to expropriate the Balmoral and Regent hotels for $1 each.

READ MORE: Vancouver council votes to expropriate ‘blighted’ Downtown Eastside hotels for $1 each

The hotels were evacuated in 2017 and 2018 for “life safety” reasons, after years of citations and bylaw infractions relating to what was described as “disgusting” living conditions.

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The city cited independent reports on the two properties, which found with demolition or remediation costs factored in, both hotels actually carried negative valuations.

In a petition for judicial review, filed in B.C. Supreme Court Wednesday, the Sahota family — which owns both properties — did not dispute the long list of maintenance issues with the properties.

City of Vancouver files to take ownership of Balmoral and Regent hotels
City of Vancouver files to take ownership of Balmoral and Regent hotels

But they argued the city exceeded its authority in expropriation, disputed the $1 valuation assessed to the properties, and claimed the owners will “suffer irreparable harm that cannot be compensated sufficiently within the available compensation scheme.”

READ MORE: City of Vancouver could expropriate ‘blighted’ hotels in DTES for $1 each

The issue really is not the history of maintenance issues at the buildings. I don’t think that the owners challenged the accuracy of any of that,” said Evan Cooke, lawyer for the Sahota family.

“It really comes down just to statutory authority.”

The petition echoes many of the arguments the Sahotas’ representatives made to Vancouver city council in November.

Protest block party held outside Balmoral Hotel on the eve of evacuation deadline
Protest block party held outside Balmoral Hotel on the eve of evacuation deadline

According to the petition, in 2018 and 2019 the owners received multiple offers for the properties from “arms-length” companies, ranging from $14 million to $25 million for both buildings.

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Principals of those companies include Steven Lippman and Mario and Maria Laudisio, who have faced significant past criticism of their ownership and management of other Downtown Eastside properties.

READ MORE: Owners of notorious Vancouver SROs fined just $150k over hundreds of violations

According to the petition, the arms-length offers were all far in excess of the offer the city made of $3 million for each building in the summer of 2018, and $2 million each in 2019.

The owners ignored the initial 2018 offers because at the time they were not considering selling the properties, the petition claims.

Balmoral Hotel Evictions
Balmoral Hotel Evictions

After the city issued expropriation notices in the summer of 2018, the Sahotas initially challenged it through an inquiry process, but withdrew the application in April 2019 “on the basis of the City’s agreement to enter into good faith negotiations,” claims the petition.

“The Petitioners, however, did not waive their right to challenge the legality of the proposed expropriations.”

READ MORE: City of Vancouver files 60 charges against owners of “disgusting” Downtown Eastside SRO

The Sahotas claim that the city then failed to follow up with them with its independent assessments of the properties, or to negotiate in good faith over the sale of properties.

The petition further alleges that city staff misled council by suggesting that they had.

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“City staff’s comments to council were inaccurate and untrue,” the suit claims.

Housing activists blast Vancouver City Hall for SRO hotel evictions
Housing activists blast Vancouver City Hall for SRO hotel evictions

“The petitioners, however, were completely responsive to the city and made it clear that they were ready, willing and able to negotiate the sale of the subject properties to the city,” it adds.

The petition further claims that the notice of expropriation, once registered on the properties’ titles, stigmatized the hotels and depressed their value, interfering with fair negotiations with would-be buyers.

In an email, the City of Vancouver said it was aware of the Sahotas’ court action, and would be filing a response in due course.

READ MORE: Which is the worst single room occupancy hotel in Vancouver’s Downtown Eastside?

None of the claims have been proven in court.

The city has documented hundreds of cases of bylaw violations and deplorable conditions at the Balmoral and Regent in recent years.

The owners pleaded guilty to a slew of those violations in April, after facing 60 charges related to deplorable living conditions at the Balmoral. In December 2017 the city referred nearly 500 violations related to the Regent to prosecutors.

The Sahotas subsequently agreed to pay a $150,000 fine and make a $20,000 donation to the Union Gospel Mission and a $5,000 donation to EMBERS Eastside Works.

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