Lawsuits totalling $8.7M against St. John's from former Baird Cottage owner, developer
Heritage designation cost millions in profit from scuttled planned development, claims lawsuit
The former owner of a century-old home and potential developer of the property are suing the City of St. John's for millions of dollars they claim has been lost by city council's imposition of heritage status.
Mildred Steinhauer, former owner of 154 New Cove Rd., and KMK Properties, the current owner with development plans for the property, are suing the city for $1.5 million and $7.2 million, respectively.
"By designating the property as a heritage property, the City of St. John's has effectively taken away, it has deprived the owners of all reasonable uses of the property," David Goodland, lawyer for both Steinhauer and KMK, told CBC.
'Heavy-handed approach': lawyer
Goodland said his clients — both Steinhauer and Kevin King of KMK declined to speak directly to CBC — consider the designation "de facto expropriation."
If the city feels there's a public benefit to preserving heritage properties, said Goodland, the burden of costs shouldn't fall solely to the private property owner.
"When the city wants to confer a benefit on itself, we believe it's going to come with a cost," he said.
"Someone has to pay for it, and it shouldn't be the sole property owner having to pay to confer a benefit on every resident in the city. That's the way we see it."
In statements of claim filed in the Supreme Court of Newfoundland and Labrador, Steinhauer and KMK say the municipal heritage designation, which prevents the demolition of the home on the property — known as both Baird Cottage and Bryn Mawr — has cost them millions.
"It's a heavy-handed approach to saddle a property owner with a designation that will, in some cases, and in this case, cost millions of dollars," he said. "It's unfair to ask a property owner to bear that burden."
Lawsuit claims lost profits from planned development
KMK is suing for $7.2 million — $6 million for its estimated profit for a planned 28-home development on the site and $1.2 million for its estimate of the drop in value for 154 New Cove Rd. after the heritage designation.
Steinhauer, who sold the property to KMK-affiliated company New Cove Road Holdings in mid-June for $2 million, is suing for $1.5 million — $1.2 million for her estimated share of profits from the development, and a $300,000 drop in the sale price for the property that was conditional upon the house's demolition.
Steinhauer and KMK are also each suing for costs — including a hazardous materials assessment and a $15,000 security deposit for a water deferral permit — related to preparing for the demolition.
Developer, owner waited until '11th hour:' city
In response, statements of defence for the City of St. John's note municipal regulations allow for a heritage designation without the property owner's consent. The statements of defence also say Steinhauer and KMK could have applied for a demolition permit earlier to avoid expenses instead of waiting "until the eleventh hour."
Goodland said the city was well aware of KMK's plans for the property long before the demolition application, and added the heritage designation because of public protests over the property.
"The property owner and the developer, they worked closely with the city all the way along through the process," he said.
Goodland added that the city requires several steps before the demolition application will be considered, including addressing environmental concerns and the removal of electrical work.
Property 'virtually useless,' says lawyer
"That property was pretty much a shell at the end of the day before the city, at the 11th hour, came up with the heritage designation," he said. "We have a property that's virtually useless and has no value."
The statements of claim also say the city "has historically not imposed heritage designations without the consent of the homeowner," which Goodland said he hopes the Supreme Court will consider closely.
We have a property that's virtually useless and has no value.'- David Goodland
"You have uneven treatment or consideration by the city imposed on its residents, and there's got to be some consistency," he said.
St. John's Mayor Dennis O'Keefe, one of three members of council who voted against imposing heritage status on the property, declined to comment on the lawsuit.
"It's a very delicate situation for council to deal with," O'Keefe told CBC, adding he wasn't surprised by the legal action.
In May, ahead of council's decision, Steinhauer's son Fred warned that his mother would be forced to sue the city if the demolition was blocked.
"It's not a surprise," said O'Keefe. "We'll just have to wait and see what the outcome is."
Goodland said he's filed the list of documents supporting his clients' statements of claim, and he's told the city will follow suit by the end of January, with the discovery stage of the lawsuit expected some time in the spring.
Development plans on hold
And without the possibility of demolishing Baird Cottage, he said, KMK's development plans are on hold.
"KMK has exhausted its possibilities with that property," he said. "The land with that designation on that structure there now, simply it's — I don't want to say 'worthless,' but there' s no value to it."