British Columbia

Vancouver council votes unanimously to expropriate 2 DTES hotels for $1 each

The two buildings once housed around 280 low income residents but have sat empty since the city shut them down in 2017 and 2018 due to unsafe and unsanitary conditions.

The family that owns the Regent and Balmoral hotels argue the city hasn't been negotiating in good faith

The Balmoral and Regent hotels sit across the street from one another on Vancouver's Downtown Eastside but have been shuttered for over a year due to structural concerns and health and safety violations. (Justin McElroy/CBC)

What is a shuttered downtown fixer-upper worth these days?

According to Vancouver city council, $1.

In a unanimous vote on Wednesday, council approved expropriating two Downtown Eastside buildings — the Balmoral and Regent hotels — for $1 each

The two buildings once housed around 280 low income residents but have sat empty since the city shut them down in 2017 and 2018 due to unsafe and unsanitary conditions.

Mayor Kennedy Stewart said negotiations with the buildings' owners — the Sahota family, who have been in bylaw and legal battles with the city for many years — proved unfruitful, requiring the expropriation vote. 

"Council has been working for a long time in good faith with the owners of those properties to try to get them upgraded, and that wasn't happening," said Stewart. 

"Look, the Downtown Eastside is a community in crisis. And I think expropriating these hotels will help aid that crisis."

Several councillors said they were moved by speeches from the public, many of whom had dramatic stories about the poor conditions of the hotels, along with allegations of neglect by the owners. 

"There's a human responsibility we get to fulfil today. It is a moral and it is an ethical decision," said councillor Sarah Kirby-Yung.

"Nobody should have to live in those conditions. We need to provide some dignity."

City staff said it was a landmark decision.

"[Expropriation] is used quite frequently for lineal process. rapid transit projects, road alignments," said Andrew Newman, the city's associate director of real estate services. 

"But for the purposes of this expropriation, which is providing housing accommodation, we're not aware of any incidences, certainly in Vancouver, where this has occurred."

Bad faith negotiations?

But the lawyer representing the Sahota family argues it's the City of Vancouver that has been failing to work in good faith to resolve the situation. 

"The owners have been stuck in limbo," said Evan Cooke.

He said the Sahotas wanted to negotiate with the city, have offered to sell the building to the city and have received offers of up to $25 million for the properties but have been unable to move because of the expropriation claim. 

"There's been no attempt to negotiate with these owners on the basis of the actual market data."

City staff told council the offer was based on the fact that either renovating or demolishing the buildings would cost more than the approximately $3.2 million each one is currently assessed for. 

Cooke argues the offer is politically motivated. 

"There have been historical frustrations within the city with the maintenance and standards at these two buildings ... which is perhaps understandable," he said.

"But it's actually not relevant to the question of the scope of the city's legal authority or whether it has the right to pay less than market value of the properties." 

A man walks in front of the Balmoral Hotel on Hastings Street in the DTES in Vancouver, British Columbia on Friday, Sept. 6, 2019. (Ben Nelms/CBC)

What happens next? 

Prior to the vote, Cooke said the Sahotas would file a court challenge and injunction against the expropriation if the city moved ahead.

But Jeff Frame, a B.C. lawyer specializing in expropriation law, said it would face an uphill battle because of the broad powers cities have to expropriate property. 

"There's really not much an owner can do to challenge an expropriation. People have tried before but it's almost never succeeded," he said.

However, under the Expropriation Act, the owners will have one year to bring a claim for greater compensation — and Frame believes the Sahotas will have a more successful case there. 

"It just strikes me as kind of a slap in the face of an owner," he said. 

"The cost of cleaning up a contaminated property ... is certainly not new and it's understandable. It's just the idea that a property could be in such bad shape in Vancouver to reduce it to zero is, I think, a pretty tough sell to almost anyone."

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