Vancouver moves to expropriate two derelict Sahota-owned hotels

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Vancouver is taking the unprecedented step of expropriating two derelict hotels that provide housing to some of the city’s most vulnerable residents after more than a decade of failed attempts to get the owners to repair the buildings and improve the squalid living conditions.

On Friday, the city notified the Sahota family it wants to seize ownership of their Balmoral and Regent hotels after a proposal to purchase them for an undisclosed amount garnered no response.

The move, made public Monday, follows a Globe and Mail investigation that found hundreds of bylaw infractions and repair orders had been inadequately fulfilled or ignored outright over the years, leading to unsafe and unsanitary conditions in the buildings, which housed about 300 people. The family owns three other single-room occupancy (SRO) hotels – century-old buildings with tiny apartments and shared bathrooms – that are part of a local real estate empire of rundown rental units estimated at more than $200-million.

The city has expropriated properties in the past to make way for the construction of parks or roads, but it says this is the first time it has gone after real estate to punish a problem landlord.

“This is an extraordinary case,” said Paul Mochrie, Vancouver’s deputy city manager. "The underlying signal [to problem landlords] is clear: We desperately need low-income housing in the city of Vancouver – we’re in a housing crisis and private single-room occupancy hotels form a really significant component of the housing stock for low-income residents.”

The Sahota family controls nearly 500, or about 16 per cent, of the roughly 3,000 privately held SRO units in the city’s stock. A large portion of Vancouver’s poorest residents live cheek-to-jowl in these rooming houses, many built a hundred years ago for single loggers and fishermen – blue-collar workers who adorn either side of the city’s coat of arms. The family has a lengthy track record of bylaw violations and its buildings show up regularly on the city’s rental database, which tracks rental properties that have bylaw violations.

Gudy Sahota – one of three reclusive siblings who control the family’s real estate holdings – did not answer two separate calls requesting comment Monday and the family’s lawyer Michael Katzalay did not return a request for comment on the city’s move.

The family now has a month and a half to request that B.C.'s Attorney-General appoint an inquiry officer to review the city’s attempt at expropriation, Mr. Mochrie said.

If they do not file such an appeal, then the city would pay the Sahotas an amount based on the independent appraisals recently made by a private firm, he said.

Related: B.C. welfare payments unaccounted for in Sahota hotel records

Read more: For low-income residents in Vancouver, a different kind of real estate crisis

He would not give a ballpark figure for these amounts, but noted the Balmoral lost more than 70 per cent of its assessed value and fell to $2.7-million last year after it was evacuated the year prior. The most recent assessment for the Regent – calculated before its units were shuttered and rental income lost – was $10.7-million.

If the city is successful in taking over the two buildings, then it would likely be “several years” and millions of dollars before the rotting structures are repaired or bulldozed and replaced with new social housing units, he added.

In the meantime, trial dates are set for October relating to the hundreds of previous bylaw violations at the Regent and Balmoral, with Mr. Mochrie saying the city could recoup up to $10,000 an infraction.

On Monday, Mr. Mochrie said the city is studying whether it should change this approach to problem landlords and instead focus on issuing smaller daily fines to bring rental units back up to maintenance standards, as nearby New Westminster did with two Sahota buildings years ago.

Wendy Pedersen, a long-time housing activist in the Downtown Eastside working with the SRO Collaborative advocacy group, reacted to Monday’s news with jubilation, but cautioned that more needs to be done to ensure that these vital rental units are reopened at welfare rates as soon as possible.

“We need to help the city follow through on this commitment,” she said. “Because expropriation is the very best thing that we can do at this moment and it will send a strong message to slumlords everywhere that when tenants organize and the community backs them up that we can win.”

She said former Sahota tenants plan to continue with their proposed class-action suit, which she estimates could involve more than a thousand renters. She added that the vast majority of the 100 tenants that were moved out of the Regent last month are now “happy and healthier” in their new social housing units, which are run by non-profit organizations.