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Vancouver didn’t negotiate in good faith before expropriation attempt, Sahotas claim

Workers prepare to board up the Regent Hotel in Vancouver's Downtown Eastside, B.C., June 20, 2018.

Rafal Gerszak

Counsel for Vancouver’s Sahota family says that the city failed to negotiate in good faith when it took the “draconian” step of attempting to expropriate two rundown hotels on the city’s Downtown Eastside.

A lawyer representing the family has asked for the B.C. Attorney-General to appoint an inquiry officer to review the city’s efforts to buy the properties. The requests also say the owners are prepared to post a bond to ensure the necessary repairs are done and prevent the expropriation.

The requests, dated Aug. 24, also maintain the city has not done all it could to enforce its own bylaws, adding that “to interfere with the Owner’s private property rights is draconian, given the city has other, less invasive and less authoritarian, remedies.”

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The owners also say they are in ongoing negotiations with a non-profit agency that would take over management and repairs at both buildings.

A Globe and Mail investigation earlier this year found hundreds of bylaw infractions and discovered that repair orders for both buildings had been inadequately fulfilled or ignored over decades, resulting in unsafe conditions in the buildings, which housed about 300 people before they closed. The family owns three other single-room occupancy (SRO) hotels – century-old buildings with tiny apartments and shared bathrooms – along with other real-estate holdings worth an estimated $200-million in total.

The city announced plans to expropriate the Regent and Balmoral hotels – SROs used for decades as low-cost rental housing – in July, after ordering both buildings be closed for health and safety reasons. The Balmoral was shut down in June 2017, while the Regent was closed a year later in June 2018.

Under B.C.'s Expropriation Act, owners of properties targeted for expropriation have the right to ask the provincial Attorney-General to appoint an inquiry officer to review the process.

On Friday, the Ministry of Attorney-General confirmed it had received notices of request for inquiry for the Regent and Balmoral. Under the act, the Minister has 21 days to appoint an inquiry officer, who would then conduct an inquiry and produce a report with recommendations for how the city could proceed.

The Balmoral and Regent have different corporate owners but both of those corporate entities are owned by siblings Pal Sahota and Parkash Kaur Sahota, the requests state. The Sahotas have proposed one inquiry for both buildings because the facts and legal issues are similar and the parties to both matters are the same.

In both requests, the owners claim the city failed to negotiate fairly before moving to seize the properties.

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“The city did not make good faith efforts or present a fair market offer to purchase the [Regent], nor did the city give the Owner an opportunity to present any counter-offer prior to serving the Expropriation Notice,” says the request related to the Regent.

A similar request for the Balmoral says, "The offer to purchase did not reference the city’s intention to expropriate if the negotiations failed, and there was no rationale provided for the low price on offer.”

The Regent’s current assessed value is $12.2-million, up from $10.7-million in 2017. The Balmoral’s current assessed value is $2.7-million, down from $10-million in 2017, reflecting the city’s order to close and loss in rental revenue.

The city would not disclose how much it offered the family for the two buildings.

A spokeswoman for the city said that it is prepared to defend its actions.

“We believe the city has acted within its legal authority," city spokeswoman Lauren Stasila said in an e-mail, "and that this process, which is intended to result in the transfer of these two properties to public ownership after decades of mismanagement by the building owners, will be resolved in our favour,” she added.

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Reached by telephone Sunday, Gudy Sahota, another sibling involved in the family’s real-estate holdings, declined to comment. A lawyer representing the family in the expropriation process did not immediately respond to a request for comment.

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