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Canada New Westminster did what Vancouver couldn’t: Fix up the Sahota family’s problem properties

A security guard stands on one of the lower floors of the Regent Hotel in Vancouver, B.C., June 28, 2018. All residents have been placed in other housing after the city ordered to cease occupancy of the Regent.

Rafal Gerszak/The Globe and Mail

The City of New Westminster officials had had enough after staff investigated complaints of leaky pipes at the rundown apartment block and discovered vermin, a punctured roof and an elevator that wasn’t working.

For seven years, the 41-unit property, owned by Vancouver’s Sahota family, had consistently been caught violating municipal maintenance standards. Repairs, once finally made, were done by unqualified contractors who made matters worse, a report to New Westminster’s city council found in the spring of 2012.

The problems mirrored the experience the City of Vancouver had in trying to improve living conditions at five single-room occupancy hotels owned by the family. But New Westminster’s approach was markedly different from how the City of Vancouver has responded over the years.

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In New Westminster in 2012, city staff ordered daily inspections of the problem building and another Sahota-owned property across the street. Inspectors issued $200 tickets for each outstanding infraction – racking up a total of $9,000 of fines over roughly two months in 2012. By July of that year, the Sahotas had sold both properties, going against the “buy and hold” philosophy used by the family to build a Vancouver-area real estate empire worth an estimated $218-million.

The same year that the Sahotas sold the New Westminster buildings, Vancouver issued just $2,000 in similar fines across the whole city. Despite up to hundreds of violations in any given year, a city spokesperson says it issued a total of $6,800 in these penalties across all of Vancouver in 2014 and about $15,000 the following year – the most up-to-date data available from the city.

In Vancouver, authorities took a different approach, focusing on inspections and urging landlords to tackle maintenance issues. But despite such efforts, Sahota-owned buildings continued to rot, resulting in the city ordering two of them to close because of life safety concerns – the Balmoral last June and the Regent this month – displacing more than 200 vulnerable residents.

As the last of the Regent’s tenants vacated the building this week, Vancouver is looking at either buying both hotels or starting the unprecedented process of expropriating them, which experts say could result in a costly and lengthy court battle with the family.

“The residents of the [Regent] wouldn’t have been in the situation they are now if the city had used their [ticketing] powers 10 years ago,” said Nathalie Baker, who has practised municipal law in Vancouver for the past 15 years.

It’s not clear how much money the city has received from fines paid due to penalties levied against Sahota-owned single-room occupancy hotels – city officials say “system issues with the file management software” prevent them from providing such a tally.

Instead of issuing tickets, Vancouver has preferred to seek redress through the courts. The courts, says a city spokesperson, are “a more appropriate tool for buildings and owners with more systemic challenges” because a judge can award much greater penalties of up to $10,000 per infraction.

More than 400 such violations against the Regent alone are currently making their way through court, but the city also can’t say how much the family has been forced to pay the city back through these court orders.

But Kim Deighton, New Westminster’s director of licensing who was a junior bylaw officer at the time of the 2012 enforcement actions, said her city’s aggressive ticketing has had proven effects on problem landlords even if no one knows exactly why the Sahotas quickly sold their two buildings with the infractions.

An "Order to Vacate" notice hangs near the entrance of the Regent Hotel in Vancouver's Downtown Eastside, B.C., June 21, 2018. Residents will be placed in other housing after the city ordered to cease occupancy of the Regent.

“It’s pretty dramatic when you’re sitting across the table from someone and you hand them $6,000 worth of fines,” she said of meeting the family after an enforcement blitz in April, 2012. “At some point, you got to look at your books and decide if this is a money-making venture or not.”

Since the two buildings sold, no new enforcement files have been opened at one and the other had a couple violations in both 2012 and 2013 before the new owners brought it up to code, Ms. Deighton said.

Ms. Baker said the New Westminster experience shows tickets – not court orders – are an effective approach to turning buildings around because they cost almost as much or more as the original penalty to fight.

Randy Shaw agrees. He’s a lawyer who helped overhaul how San Francisco regulated its decrepit SRO stock in the 1980s and 1990s.

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Early sanctions for each and every violation is the best way cities can keep low-rent buildings from falling into disrepair and, he maintains, avoid the worst-case scenario of losing those units due to safety concerns – as has happened with the Balmoral and Regent.

“They need to have a code enforcement scheme so that if a window’s broken or there’s dirty hallways or mould and you don’t repair it in two weeks, there’s a sanction,” said Mr. Shaw, who in 1980 founded the Tenderloin Housing Clinic, a non-profit advocacy organization he helps run in the heart of San Francisco.

To adopt this approach, the San Francisco’s housing authority had to shift inspectors away from visiting every single apartment block every year to only visiting those units or buildings that generated complaints, a move the majority of landlords supported, Mr. Shaw said.

“We had landlord groups saying ‘Why is the city sending inspectors out where there were no reported violations?’ ” said Mr. Shaw, who visited Vancouver’s SRO hotels two years ago and was shocked by their condition. “The mainstream landlords said ‘Hey, go inspect the bad landlords.’ ”

Another option Vancouver has declined to use to improve conditions, Ms. Baker said, is section 23.8 of Vancouver’s Standards of Maintenance bylaw, which gives the city the power to repair rental units to bring them back up to code and then pass those bills on to the landlord.

Movers remove the last of people's belongings on the last day of the Regent Hotel occupancy in Vancouver, B.C., June 28, 2018.

Rafal Gerszak

“Do the work, bill the owner and if they don’t pay: you force the sale at a public auction, which gets market value on an open market,” Ms. Baker said.

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The one time the city did go this far, with the Columbia Hotel in the 1990s, the owner fought the process, but the Downtown Eastside building went through foreclosure before their lawsuit went to court and the city recovered its costs.

Before he became the Mayor of Vancouver a decade ago, Gregor Robertson campaigned on using that bylaw provision to get tougher on landlords like the Sahotas.

In a recent interview, he said he soon found out that the city’s legal department is reluctant to do that because there is a huge risk that the owners won’t pay for these repairs, which would cost over a million dollars at the Balmoral alone.

And if these repairs were made and the building sold in a public auction to pay off the city’s work, then the rent for the units would likely rise out of reach of their current tenants after new owners took over, he said.

Instead, he said, the city needs the province to speed up the time it takes to bring problem landlords to court, increase the fines allowed under the bylaw and, most importantly, build more social housing so that people don’t end up homeless when significant repairs are needed.

“We’ve had teams of lawyers working on this for a decade and if there was a solution for this under existing legislation we would have used that, but it’s very frustrating,” he said.

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“I know people in the community have opinions on ways that this might work. Believe me, I would love to transform these decrepit buildings and improve living standards if we had the legal tools to do that, but our hands have been tied.”

With research from Stephanie Chambers

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