The Balmoral Hotel on Vancouver’s Downtown Eastside in July 2017, shortly after it was ordered closed for safety reasons.BEN NELMS/The Globe and Mail
The assessed value of the dilapidated Balmoral Hotel on Vancouver's Downtown Eastside has plummeted by more than 70 per cent, reflecting the loss of rental income after the city ordered the building closed for safety reasons this past June.
Although the land value ascribed to the property increased slightly, the assessed value of the heritage building itself fell from $7.7-million last year to just $139,600.
The city wants the privately owned building repaired so it can again provide housing to low-income tenants, of whom more than 100 were living in the Balmoral when it closed. The city has also said repairs at the building must align with single-room-occupancy (SRO) hotels run by provincial housing agency B.C. Housing and "other major SRO renovations" – standards that underpin the city's quest for a new SRO revitalization fund backed by provincial and possibly federal funds.
"Our current focus is on ensuring the Balmoral Hotel is restored to an acceptable condition as affordable housing for low-income tenants," city spokesman Jag Sandhu said in an e-mail.
The city is also seeking funding from the provincial and federal governments for a new "SRO revitalization fund," he added.
In a 10-year housing strategy announced in November, the city called for replacing half of existing SRO hotels with new self-contained social housing and setting up an SRO revitalization fund to renovate 10 privately owned buildings.
There are about 156 SRO buildings in the city. A previous fund, backed with federal and provincial funds, renovated 13 SRO buildings between 2012 and 2017. In an update last year, the province said it spent $147-million – including $29.1-million from the federal government – to renovate the buildings.
SROs provide rental housing to low-income tenants, many of whom are on social assistance and also dealing with substance use or mental-health concerns.
According to figures released this week, the assessed value of the Balmoral fell to $2.7-million in 2017 from $10-million the previous year.
While the land value increased – to $2.5-million in 2017 from $2.3-million the previous year – the assessed value of the building tumbled.
The significant decrease in value is unlikely to attract speculators. The Balmoral falls under a city bylaw designed to protect SRO units from redevelopment. Under the bylaw, owners wanting to redevelop the site into, for example, condos would have to replace the SRO rooms with self-contained social housing on a one-for-one basis, or pay a replacement fee of $125,000 for every room.
The Balmoral is owned by Balmoral Hotel Ltd., a B.C. company whose registered directors are siblings Parkash and Pal Sahota. They and other Sahota family members own numerous properties in the city, including five single-room occupancy hotels that have a lengthy track record of maintenance problems.
At the Balmoral, those problems – including fire hazards and floors weakened by water damage – became so serious that the city deemed tenants at risk. The city, B.C. Housing and non-profit groups scrambled to find homes for residents who were displaced when the building closed. Since then, it has been boarded up and vacant.
Mr. Sahota did not immediately reply to a request for comment.
Assessment values reflect market value as of July 1, 2017, but also take into account the physical condition of a property as of Oct. 31, 2017, said Paul Borgo, acting assessor for the Greater Vancouver Region with B.C. Assessment.
The two dates are intended to capture potential changes in value if, for example, a house under construction on July 1 is completed and ready to occupy by Oct. 31.
Appraisers review that information to prepare the final assessment roll in early December.
Mr. Borgo said he could not comment specifically on the Balmoral, but that significant variations can take place from year to year.
"Typically, an income-producing property, like a hotel or an apartment building, we would look at it [in terms of] its ability to produce income – just as an investor would," Mr. Borgo said. "If something changes that doesn't allow that to take place, it has to be reflected in the assessment."
Other Sahota-owned SROs maintained their market value.
The Regent Hotel, across the street from the Balmoral, was assessed at $12.2-million in 2017, up from $10.7-million in 2016. The Astoria Hotel was assessed at nearly $7-million for 2017, up from $6.1-million in 2016.
In 2017, the city filed dozens of charges against the companies that own the Balmoral and Regent hotels for bylaw violations, citing "significant safety risks and maintenance deficiencies impacting tenants." Those legal proceedings continue.
A representative from B.C.'s Ministry of Municipal Affairs and Housing said the province has not received a request from the City of Vancouver for assistance to set up a new fund for SROs, but cited several steps the province has taken on the housing front, including $291-million for 2,000 modular housing units. More housing-related measures are expected in the February budget.
Wendy Stueck