Vancouver developer hit with $1.3 million in vacancy tax for not renting out dilapidated houses

Developer is asking B.C. Supreme Court to review the decision by the city's vacancy tax review panel that denied it an exemption during redevelopment

Published Oct 11, 2024  •  3 minute read

Boarded up home in the 5900 block of Cambie Street. Photo by NICK PROCAYLO /10106030A

The developer of two proposed mixed-use towers near Vancouver’s Oakridge Mall is asking B.C. Supreme Court to throw out a $1.3-million vacancy tax it was billed.

The City of Vancouver says the developer should have repaired and rented out two dilapidated houses while it prepared the site for redevelopment, but the developer said the homes were uninhabitable as they were contaminated by asbestos, mould and rat feces.

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Cambie and 43rd Nominee Ltd. bought the 5900-block of Cambie Street from Wall Financial Group in 2022 to redevelop the former single-family residential block into a 15-storey hotel tower, a 29-storey market strata tower, and several live-work artist studios, according to a petition filed in court.

“There were existing structures located on the lots that were vacant, dilapidated and in extreme state of disrepair,” said the petition filed by C43 Development, a company affiliated with Peterson Group Properties. “The buildings were boarded up and unoccupied at the time.”

C43 began the application for a development permit in spring 2022, but it was delayed when its former partner, Coromandel Properties, withdrew, it said.

The houses remained vacant while the developer held several meetings with the city throughout 2022, it said.

It submitted architectural drawings and discussed the various stages of construction, including landscape, structural, electrical, mechanical, envelope, code and interior design, before it submitted its complete permit application in August 2023.

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The developer in early 2023 erred in failing to claim a redevelopment exemption under the vacancy tax bylaw and received a notice it owed $634,950 on each property, for a total of $1,269,900.

It paid the amount, but later filed a notice of complaint, arguing the properties were exempt from the vacancy tax act, which requires an owner pay a tax on properties left vacant for more than six months a year.

But a vacancy tax review officer concluded they were not exempt because the exemption applies only to “properties that are unimproved with any dwelling units” while the city is reviewing rezoning or a development permit, the petition said.

The developer in May 2024 asked for further review and backed up its arguments with a risk assessment by the Board of Canadian Registered Safety Professionals that said the existing homes were uninhabitable because of “significant exposure to chemical irritants, mould, asbestos, lead, and rodent feces.”

Fire damage to a house in the 5900 block of Cambie Street, which has been assessed a vacancy tax bill. Photo by NICK PROCAYLO /10106030A

A house at 5910 Cambie St. also sustained severe fire and smoke damage, and the roof of a house at 5936 Cambie St. had collapsed, posing structural weakness and environmental hazards, the petition said.

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In August, the vacancy tax review panel, which the petition said was made up of one lawyer, backed up the review officer’s decision that the properties weren’t exempt from the tax because “the owner could have engaged in repairs and maintenance and kept the dwelling units occupied” until rezoning and permits were obtained.

The panel also said the tax should be imposed because of a procedural “oversight” by C43’s lawyer for not seeking the opinion of the city’s general manager of development, buildings and licensing on whether redevelopment was proceeding diligently and without delay, the petition said.

C43 is now requesting a judicial review of the panel’s decision based on a “breach of natural justice.” The petition argues, in part, the way the panel arrived at its decision was unfair because the developer didn’t have an opportunity to provide further input before the decision was made and that there should have been further opportunity for review or appeal under the bylaw.

It also argues the developer was “attempting to create more housing supply in accordance with the spirit and intent of the bylaw.”

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The review panel’s process was “unfair to the petitioner and denied it natural justice” and ought to be quashed, the petition said.

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