The Shannondale (née Electrohome, 152 Shanley St) | 8 fl | U/C

[ijmorlan]

I still want to know why expropriation wouldn’t work. I’m pretty sure back taxes have to be paid out of the proceeds of any property transfer, so presumably it would just be an administrative action involving no transfer of money (assuming the taxes exceed the property value).

I am pretty sure the city doesn't want to pay for clean-up, let alone buy it from the dead-beat owner. They already know that it's a huge expense + the "Save the Clock Tower" people who will balk at anything less than full remediation of property.

This truly is a no-win situation for the city. The current owner won't fix it.  The owner will get behind on property taxes again, obviously.

I am guessing in the not too distant future, major water damage it going to occur, OR, it will burn to the ground. One of the two.

My idea is that they would have expropriated more or less as soon as the property was derelict. The value net of outstanding taxes and cleanup should have been negative, so it should have been a non-money administrative transaction; at that point it could be cleaned up on the City’s schedule without having to negotiate with a deadbeat. Instead, it’s a problem, with the City unable to do anything, for years; then eventually the owner buys it at his own tax auction, thus eliminating much of the tax liability while still leaving it as a problem for the City.

I’m reasonably confident there is some legal problem with this. For example, perhaps it is not allowed to charge off the cleanup cost against the expropriation compensation. If this is true, the laws around cleanup and/or expropriation should be changed to avoid property owners getting away with this kind of scam. For all I know, maybe it’s not even legal to charge off outstanding taxes against the expropriation compensation, although that really would be insanely stupid.

Basically, the rule should be that either the property owner behaves responsibly, or they surrender the property. Of course the problem is that probably some person who just likes a messy yard would end up expropriated out of their home, while some well-connected wealthy landowner could still do whatever they want, but my idea is to write the law carefully, making sure that the sort of behaviour that could result in negative consequences is legitimately dangerous like leaving contamination in an abandoned building, not just accumulating projects in the back yard.

[BruceAshe]

I still want to know why expropriation wouldn’t work. I’m pretty sure back taxes have to be paid out of the proceeds of any property transfer, so presumably it would just be an administrative action involving no transfer of money (assuming the taxes exceed the property value).

I am pretty sure the city doesn't want to pay for clean-up, let alone buy it from the dead-beat owner. They already know that it's a huge expense + the "Save the Clock Tower" people who will balk at anything less than full remediation of property.

This truly is a no-win situation for the city. The current owner won't fix it.  The owner will get behind on property taxes again, obviously.

I am guessing in the not too distant future, major water damage it going to occur, OR, it will burn to the ground. One of the two.

In the near future it will be demolished. The city has a timeline for the owner to deal with it and if he doesn't they will demo it. No suspicious fires needed this time.

[danbrotherston]

Was there anything that Kitchener could have done differently to prevent this from happening? Property tax rules are provincial, right? What about allowing buildings to get to this state of disrepair? Who sets those laws?

I still want to know why expropriation wouldn’t work. I’m pretty sure back taxes have to be paid out of the proceeds of any property transfer, so presumably it would just be an administrative action involving no transfer of money (assuming the taxes exceed the property value).

Why do you think expropriation doesn't work? That's my impression of exactly what happened last time.  The city took and sold the property to pay for the taxes.

[Rainrider22]

They sold it back to the same owner at something like 30 cents on the dollar....maybe less I cant remember. Just a terrible situation...

[welltoldtales]

Honestly, there should be a massive stink made about this whole thing. The Spylo's that own the place are still out there actively engaging in development and resale of other properties. All sorts of legal rules have protected them when it comes to the Electrohome building.

So far they have taken over 800k from the public purse.
If they sit on the building they might be able to achieve the same results of having the city destroy the building because it is unsafe.

Frankly, I feel like this guy shouldn't be allowed to walk through the city without some kind of backlash at this point. Everything he has done so far is "Legal" but he is intentionally harming a nieghbourhood for his own private gain. The sidewalk had to be cleared by the city because he wouldn't pay for it while he clearly isn't short on cash. He straight up just didn't care to do it. In our attempts to protect private property we have neutered our cities abilities to use their considerable expertise to build themselves.

This means legislative change in this country. As I look around the housing affordability issue is clearly getting worse and I really only see one solution and that is for our cities to build buildings again. But they are so afraid to. So many legal challenges by private owners looking to make a buck. it's gotta change.

[danbrotherston]

They sold it back to the same owner at something like 30 cents on the dollar....maybe less   I cant remember.  Just a terrible situation...

Yes, they tried to sell it for more, and were unable too.  Then they relisted it for a price they felt it could be purchased for, which is open to the public, and a member of the public, who happens to be the owner bought it.

I'm not happy about the situation, but the fact is the property has no value, the city managed to extract some value from it, that's a win in my books.

[danbrotherston]

Honestly, there should be a massive stink made about this whole thing. The Spylo's that own the place are still out there actively engaging in development and resale of other properties. All sorts of legal rules have protected them when it comes to the Electrohome building.

So far they have taken over 800k from the public purse.
If they sit on the building they might be able to achieve the same results of having the city destroy the building because it is unsafe.

Frankly, I feel like this guy shouldn't be allowed to walk through the city without some kind of backlash at this point. Everything he has done so far is "Legal" but he is intentionally harming a nieghbourhood for his own private gain. The sidewalk had to be cleared by the city because he wouldn't pay for it while he clearly isn't short on cash. He straight up just didn't care to do it. In our attempts to protect private property we have neutered our cities abilities to use their considerable expertise to build themselves.

This means legislative change in this country. As I look around the housing affordability issue is clearly getting worse and I really only see one solution and that is for our cities to build buildings again. But they are so afraid to. So many legal challenges by private owners looking to make a buck. it's gotta change.

You're describing like...a non-trivial percentage of businesses.

[KevinL]

I think the issue with expropriation is that the public entity doing so needs to use the property for a clearly defined public project. My understanding is that a city or other government can't just take over a property, get it cleaned up, and then make it a private property again.

[ijmorlan]

Why do you think expropriation doesn't work? That's my impression of exactly what happened last time.  The city took and sold the property to pay for the taxes.

No, they didn’t expropriate it. They seized it and then went through a tax sale process, which has many rules, apparently including that they can’t sell it for less than the outstanding taxes, even if the property is not worth that much.

Expropriation means the property ownership is transferred to the City, which then pays fair-market compensation to the former owner (and note that events, as I understand it, do occur in that order: a plan of expropriation is registered in the land titles system, which transfers the ownership, and then they can fight about what the compensation amount should be).

[ijmorlan]

I think the issue with expropriation is that the public entity doing so needs to use the property for a clearly defined public project. My understanding is that a city or other government can't just take over a property, get it cleaned up, and then make it a private property again.

My idea would be that the City would do something with the property itself, essentially acting as a developer.

Heh, I wonder what the neighbourhood reaction would be if the City said “we’re expropriating and cleaning up the property … so that we can build an affordable housing apartment building”.

[MidTowner]

[quote pid='68913' dateline='1557496620']
My idea would be that the City would do something with the property itself, essentially acting as a developer.

Heh, I wonder what the neighbourhood reaction would be if the City said “we’re expropriating and cleaning up the property … so that we can build an affordable housing apartment building”.

[/quote]

I'd be in favour of that, as a resident of the neighbourhood.

The current building is generating no value to anyone. It's not even generating value for its owner at present, and is a cost to the rest of the community. I'm not in favour of expropriation generally, but in this case you can't even say that the land or building is a part of the city's tax base.

Why not affordable housing? The City has said it's an issue and we need more of it, and a very strong case could be made that this is the type of neighbourhood where it should be located. Expropriate it and set up Kitchener Housing to build on it. I'd be a lot happier walking by one of their properties every day than what is there now.

[tomh009]

I'd be in favour of that, as a resident of the neighbourhood.

The current building is generating no value to anyone. It's not even generating value for its owner at present, and is a cost to the rest of the community. I'm not in favour of expropriation generally, but in this case you can't even say that the land or building is a part of the city's tax base.

Why not affordable housing? The City has said it's an issue and we need more of it, and a very strong case could be made that this is the type of neighbourhood where it should be located. Expropriate it and set up Kitchener Housing to build on it. I'd be a lot happier walking by one of their properties every day than what is there now.

That would be awesome. Now, how can we get this idea on the city's radar screen?

[taylortbb]

They sold it back to the same owner at something like 30 cents on the dollar....maybe less   I cant remember.  Just a terrible situation...

Yes, they tried to sell it for more, and were unable too.  Then they relisted it for a price they felt it could be purchased for, which is open to the public, and a member of the public, who happens to be the owner bought it.

I'm not happy about the situation, but the fact is the property has no value, the city managed to extract some value from it, that's a win in my books.

It's more complicated than that. They went to re-list it in a bidding process, and set the reserve price. Apparently under tax sale laws the owner of the property can buy at the reserve price before any bidding happens, which is what happened here. I understand why this rule exists for someone's home, but in this case I think the owner only should have been able to buy at fair market value through bidding, rather than automatically at the reserve price.

[jeffster]

They sold it back to the same owner at something like 30 cents on the dollar....maybe less   I cant remember.  Just a terrible situation...

If I recall, the city sold the property to the highest bidder. I think 1 bid was made, and it was made by the previous owner.

I believe that the property likely has negative value -- though obviously the owner believes that they'll get back more than they paid out. What a mess, though.

[welltoldtales]

They sold it back to the same owner at something like 30 cents on the dollar....maybe less   I cant remember.  Just a terrible situation...

If I recall, the city sold the property to the highest bidder. I think 1 bid was made, and it was made by the previous owner.

I believe that the property likely has negative value -- though obviously the owner believes that they'll get back more than they paid out. What a mess, though.

sadly this is incorrect. The city was required by some archaic law that basically the previous owner had first right of refusal if they could match the tax sale price. The idea being that if an owner suddenly was able to pay their debt in arrears they could get their property back.

The reality is the guy apparently went and told people willing to pay the city MORE money that he would buy it at the listed price and then flip it to them. Some of those developers agreed. Because they would automatically lose out on any bid they made anyway.

At the design charrete there was a ton of interested buyers. But this guy basically held the city at ransom. They list too low and he would swoop in pay back the debt and then flip it for significantly more. They list too high and no one pays the city. They had to get it just right. They got it wrong and went too low (although apparently there is talk that some of the interested developers might have also scammed the guy). 

All of this comes because of a weird legal reality that this "tax-sale" becomes. We have protected him with private property and he has abused them. I highly doubt that the Spylo's will actually tear down the building at this point. They probably figure they can go through the same Tax sale loophole again unless some overly generous developer comes in with a big bid. But even that feels like slime. Because frankly. You are paying this absolute scammer.


Hence why I think this story should be massive. It should be posted everywhere about how broken our property, zoning, capitalism and city planning is. Well intentioned laws are being abused for personal gain at the expense of every citizen. $800,000 is not chump change. If this demolition joins this massive tax arrears he will be taking even more. Not to mention that I imagine he is getting some massive discount on his taxes because this thing is empty. While he drives around in a sportscar. It makes me sick.

Because of the Tax issues too the city can't expropriate the land either. they have the next month to do so but how awful would that look. Sell it for 457,000 and then buy it back from 650,000. While losing 800,000 in between. We're so screwed on this...