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For low-income residents in Vancouver, a different kind of real estate crisis

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A security guard checks the run-down shared bathroom at the Sahota-owned Regent Hotel.

DARRYL DYCK/THE GLOBE AND MAIL

Shelly Ingram says she never gets used to the sound of mice falling through the gaping hole in her bathroom ceiling and landing with a thump in her empty bathtub.

When one drops, her partner, John, will rush across their tiny bachelor suite to try to catch the creature, but most times the rodent has already bounded up over the side of the aging clawfoot tub and scurried into a hole in the wall at the base of the sink.

Thankfully, they’ve never been hit by a mouse while taking a bath, perhaps because they rarely wait the three hours it takes to draw enough tepid water to fill the tub from the aging hot water pipe.

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“We’re supposed to be able to use it,” says Ms. Ingram, who moved into the dingy suite in Vancouver’s Regent Hotel last summer after a months-long search for affordable accommodation. But water comes out of the tap “sporadically,” she says, and some days, not at all.

 

Still, she and her partner consider themselves lucky: They don’t have to use the communal washrooms down the hall, where the toilets are often jammed with paper and feces or discarded needles. Shower drains also get blocked and tubs are unavailable, taken over by residents washing dishes or people sneaking in off the street in search of a few hours of sleep in relative warmth and safety.

Bathrooms aren’t the only problem at the Regent, a single-room occupancy (SRO) hotel on Vancouver’s Downtown Eastside owned by the Sahota family, three reclusive, elderly siblings who own and operate some of the city’s most derelict housing. Bedbugs and rats are constant concerns. In some rooms, walls are damp to the touch, hinting at leaks behind them.

MINI-DOC: INSIDE THE REGENT HOTEL

Watch: Residents of this Downtown Eastside hotel show The Globe and Mail the decrepit conditions they live in, amid the stench of sewage, black mold and bathrooms in disrepair.

Such decrepit, unsanitary housing might seem in stark contrast with the image of Vancouver, which routinely tops global livability rankings and is known for its verdant parks and majestic mountain views. But these deplorable conditions are routine in many SROs – particularly those owned by the Sahota family, some housing advocates say – and are well known to city officials. Last December, citing its continuing efforts to step-up enforcement in SROs, the city flagged 426 bylaw violations against the owners of the Regent.

Yet it’s unlikely the citations will change much. In a pattern dating back decades, the family, who own five Vancouver SROs, tends to respond slowly to violation notices, if at all. Many repair orders are followed by fines for bylaw violations. City officials have touted various efforts to bring the Sahota-owned buildings into line over the past 20 years, including fines and court injunctions to force necessary repairs. More recently, the city has stepped up the frequency of inspections in an attempt to identify problems early and address them. But the steady stream of bylaw violations has continued.

“It’s a travesty that they [SROs] have been allowed to continue to rot ... for at least four or five decades,” says John Shayler, who worked with the Downtown Eastside Residents’ Association, a housing advocacy group, in the 1970s and 80s.

Mr. Shayler says that owners get away with providing reprehensible living conditions because the city ultimately doesn’t want to shut down their buildings, potentially displacing hundreds of residents who would otherwise be on the street.

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With support from housing advocates, tenants of two Sahota-owned SROs, the Regent and the Balmoral, have launched proposed class-action lawsuits that name the Sahotas and the City of Vancouver as defendants and allege that municipal officials have ignored problems with properties owned by the family. (The Sahotas have challenged the suits, arguing that the proper venue to hear such disputes is B.C.’s Residential Tenancy Branch and a decision on that jurisdictional matter is pending.)

A non-profit housing organization struck a deal with the Sahotas in February to manage the Regent and, given its dilapidated condition, has been boarding up rooms and quietly moving tenants out of the building.

Ms. Ingram and her partner don’t know when – or whether – they’ll be asked to move. All they know is that, for now, living conditions at the Regent remain grim, as they do at other Sahota properties in Vancouver. And the Sahotas, who keep a low profile in Vancouver and who refused to talk to The Globe and Mail for this piece, show no sign of loosening their grip on the city’s SRO market.

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A woman sits on a window terrace at the Sahota-owned Regal Hotel.

BEN NELMS/THE GLOBE AND MAIL

“This is a Sahota building”

Parkash, Gurdyal and Pal Sahota aren’t the city’s only landlords with problem buildings. Other SRO owners, as well as non-profit agencies and the province’s own rental units, show up on the city’s database of bylaw violations for issues such as blocked fire escapes, rats and missing smoke alarms.

But the number of SRO units the Sahota family controls – nearly 500, or about 16 per cent of the roughly 3,000 privately held units in the city’s stock – and the volume of violations, make the Sahotas stand out. A large portion of Vancouver’s poorest residents live cheek-to-jowl in these rooming houses, many of which were built a century ago for single loggers and fishermen – blue-collar workers who adorn either side of the city’s official coat of arms.

The Sahota family entered the SRO business in the 1970s, at a time when single-resident units were emerging as one of the few housing options available to the city’s most vulnerable residents: pensioners, people on social assistance and individuals living with mental illness or substance-abuse issues. (A 2013 study of about 3,000 SRO tenants in the Downtown Eastside found 95 per cent had substance dependence and nearly half suffered from psychosis.)

 

Family patriarch Ranjit Sahota, who died in 1999, launched the business by buying distressed assets and renting them to tenants at the lowest rung of the market.

In addition to five SRO hotels – composed primarily of three-meter by three-meter units that typically feature a sink, a table and a bed – the Sahotas have accumulated a portfolio of single-family homes and apartment blocks over the years, all of which have skyrocketed in value as Vancouver housing has turned into a global commodity.

SAHOTA FAMILY’S RENTAL PROPERTIES IN VANCOUVER

Assessed value in millions of dollars, 2018

$5M to $10M

$10M to $15M

$15M and over

$5M or less

Regal Hotel:

$8.9M

Balmoral Hotel:

$2.7M

Regent Hotel:

$12.2M

Cobalt Hotel:

$10.4M

Astoria Hotel:

$7M

GRANVILLE ST

Balmoral Hotel

Astoria Hotel

E HASTINGS ST

ROBSON ST

Regent Hotel

PRIOR ST

Regal Hotel

Cobalt Hotel

TERMINAL AVE

MAIN ST

0

550

m

5

Top five properties by assessed value

2

3

$33.1M

525 5th Ave. E.

1

E 1ST AVE

2131 Pandora St.

$16M

2

W 12TH AVE

4

1

MAIN ST

$14.3M

450 Nanaimo St.

3

$13.4M

447 6th Ave. E.

4

$12.2M

160 E Hastings St.

5

Vancouver

W 49TH AVE

MAP: MURAT YÜKSELIR, RESEARCH: STEPHANIE CHAMBERS / THE GLOBE AND MAIL,

SOURCE: TILEZEN; OPENSTREETMAP CONTRIBUTORS; HIU; GOOGLE STREET VIEW

The family’s holdings – about 40 properties in and around the city, worth an estimated $218-million – are controlled by a network of companies that all trace back to the address of the home shared by siblings Parkash, 88, Gurdyal, 80 and Pal, 79.

As their portfolio has grown, the Sahotas have embraced the buy-and-hold philosophy. To cite two examples, The Regent, which the family bought in 1989 for $1.5-million, today has an assessed value of $12.2-million; another property, Rosemary Mansion in tony Shaughnessy, was acquired for $2.1-million in 1999 and sold five years later for $11-million. Yet, despite the value of their holdings, they appear to spend little on their properties.

At City Hall, where records document hundreds of complaints against Sahota properties, the family’s name has become entwined with problems.

“As you are well aware, we have been dealing with the 140-unit Balmoral for quite some time,” city manager Sadhu Johnston wrote in a May 26, 2017, e-mail to Mayor and Council. “This is a Sahota building.”

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Yet despite their poor conditions, demand for the Sahotas’ SROs has grown, largely owing to dwindling supply. Development in downtown Vancouver and rising real estate prices have been pushing SROs out of the market for decades, dating back to the lead-up to Expo 1986, when some owners evicted long-term tenants in the hope of landing higher-paying guests.

In 2003, with the 2010 Olympics on the horizon, the city passed a bylaw designed to prevent the loss of low-income housing by fining landlords $5,000 for each room taken out of existing SRO stock. In 2007, the city raised the fee to $15,000, then hiked it again in 2015 to $125,000.

But the fines haven’t prevented some landlords from quietly doing so-called “stealth” conversions and offering lightly improved units to students and young working people in Vancouver’s overheated rental market.

And rents in remaining SROs have edged up, reflecting tight vacancy rates in the city and the shortage of lower-cost affordable housing.

Wendy Pedersen, a long-time community activist who has fought to keep SROs affordable for people on social assistance – the monthly shelter allowance for a single person is currently set at $375 – feels the city has failed to use the tools at its disposal to hold landlords of problem buildings accountable and allowed them to profit at tenants’ expense.

“Decades and decades of … not taking people’s complaints seriously, not answering their police calls, their cries for help in every which way,” is how she described the city’s response to the continuing deterioration of housing in the low-income neighbourhood, home to about 15,000 people.

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June 1, 2017: A resident of the Balmoral Hotel tears up as she describes the hardships she faces after water damage in her room, which she says smelled like urine.

RAFAL GERSZAK/THE GLOBE AND MAIL

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June 2, 2017: Vancouver police guard the entrance to the Balmoral after the city issued residents an order to vacate the building, which had been deemed unsafe to life in.

RAFAL GERSZAK/THE GLOBE AND MAIL

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June 11, 2017: People gather on East Hastings Street to set up a barbecue in support of Balmoral Hotel residents facing eviction.

RAFAL GERSZAK/THE GLOBE AND MAIL

Maintenance on the cheap

Most days, the three elderly Sahota siblings can be found visiting their various rental buildings or working in the garden of the ramshackle home they share in Vancouver’s upscale Kerrisdale neighbourhood. Dressed in thrift-store clothes, they could easily be mistaken for their tenants.

Since they began amassing properties, the Sahotas have appeared to skimp on long-term maintenance. When they’ve done repairs to buildings, they’ve often relied on tenants or unqualified contractors to do the work.

A front-page story in the Vancouver Sun in 1987 reported that Pal Sahota had exploited refugees by hiring them to do repair and maintenance jobs at the Balmoral Hotel, another of the family’s SROs, for wages of 32 cents an hour. He pleaded guilty to five counts of violating the Immigration Act and was fined $2,500.

In 1999, a lawyer for the city recommended near-constant vigilance over repair and maintenance issues with three low-rent apartment buildings in East Vancouver that the Sahotas had owned since 1976. But she advised against revoking the Sahotas’ business licence because doing so could put “a large number of people out on the street.” In an inter-office memo, she referred to potential political fallout if enforcement were to result in buildings being closed and people losing their homes.

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In 2007, long-time residents of the 50-unit Sahota-owned Pandora SRO were forced to grab everything they could and flee their homes after the roof collapsed and flooded hallways and several rooms. The tenants were awarded $170,000 in total damages, which was upheld by a B.C. Supreme Court judge who found the Sahotas’ actions “transcended simple negligence and amounted to a reckless disregard for the welfare of the tenants.”

Ten years later, in June, 2017, city officials grew so alarmed by fire and structural problems at the Balmoral, they deemed it unsafe to occupy, giving tenants 12 days to vacate. That move triggered a scramble by city, non-profit housing groups and the province to find new homes for about 150 people who had been living in the crumbling building.

The Sahotas’ lack of responsiveness to maintenance concerns places city officials in a bind. Under Vancouver bylaws, the city could do the necessary repairs to their SROs and bill the family, but it has avoided doing so out of concern that the bills wouldn’t be paid. That would leave the city with a portfolio of aging, neglected buildings – and city taxpayers on the hook for repair bills.

City managers recognize Sahota-owned buildings are in poor shape and say they are trying to work with the owners to tackle the problems.

“We are on the ground, in the buildings, on a regular basis,” Kaye Krishna, Vancouver’s general manager of development, said in an April interview.

“Some buildings are worse than others and the two Sahota buildings are consistently at the top of the worst,” she said, adding that the Regent and Balmoral are “by far and away” the worst buildings in the city.

The city is conducting more inspections, filing more charges and ordered them to use qualified contractors, Ms. Krishna said.

“We are actively managing and trying to hold them accountable to actually deliver the work,” she added.

Ben Afful says the Sahotas hired him in November to make city-mandated repairs at the Regent. Mr. Afful’s company, Linea Construction, gave the family a quote of $1.6-million to repair the basement, main-floor bar and dozens of rooms at the shuttered Balmoral – vacated under city orders two months prior – but he never heard back.

Then, a month later, Gudy Sahota asked if he could do some work at the Regent two weeks before an inspector was scheduled to return to the premises. With his eyes on eventually winning the larger Balmoral contract, Mr. Afful agreed to do the work for $56,000 with a $12,000 deposit.

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Contractor Ben Afful got a closer look at the Sahotas’ maintenance practices when he was hired to make repairs at the Regent Hotel in November.

RAFAL GERSZAK/THE GLOBE AND MAIL

The odour of urine mixed with garbage on his first walk through the eight-storey hotel shocked Mr. Afful, who has renovated single-family homes and luxury condos in and around Vancouver for the past 19 years.

With only $4,000 of the promised $12,000 deposit in hand, Mr. Afful and an associate began replacing sinks and doors. Over two weeks, they fixed seven rooms.

One woman on the seventh floor told him she had felt sick for months from making tea in her room. “I said, ‘First of all, you [should] never drink hot water because it comes from a rusty boiler downstairs, but the other thing is the faucets are corroded so you get all this bacteria that loves to feed off the mould and you’re drinking this,’” he said. “So we replaced it with a new vanity and sink and faucet – she couldn’t stop talking about it any time we saw her in the hallways.

“They’re not asking for gold toilets - they’re just asking for fresh water.”

The night before the December city inspection, Pal Sahota asked Mr. Afful to accompany the official on their tour of the Regent – an odd request that is not an industry norm for contractors, Mr. Afful said.

As he walked through the building the next morning, he says he was surprised to see the inspector checking a list of deficiencies twice as large as the one the Sahotas had given him. Gudy was pointedly glaring at him, meanwhile, he says, as if he hadn’t bothered to do all the necessary work. When he left the property, Mr. Afful says he told the Sahotas he was going to double the cost of the job to cover the vastly expanded scope of work needed to be done.

He says never heard back from either Pal or Gudy and now feels as if he was used to create the impression of a “flurry of activity.”

That approach, he says, enables a landlord to suggest to city inspectors, “We are doing what we can. We’re trying to get the guys to do the work.”

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The Sahota-owned Astoria Hotel. The Astoria was one of the SROs targeted by Vancouver police’s Project Haven, in which undercover officers posing as drug users rented rooms with welfare cheques.

BEN NELMS/THE GLOBE AND MAIL

Problem buildings, troubled tenants

Poorly maintained buildings such as the Balmoral and Regent are just part of the story. Advocates say some private SRO owners, including the Sahotas, fuel a cycle of violence, poverty and addiction in the neighbourhood.

Back in 2005, the Vancouver Police Department (VPD) tried to disrupt that cycle with an undercover program they called Project Haven. The VPD said its project – in which undercover officers posed as drug users and used welfare cheques to rent rooms in three SROs, including one, the Astoria, owned by the Sahotas – determined that owners, managers or desk clerks at all of the sites were complicit in drug trafficking, the movement of stolen property and welfare fraud.

“The criminal networking in each premise was elaborate,” the VPD said at the time.

More than a decade later, similar concerns have emerged in the Regent class action suit and in a second suit launched on behalf of tenants of the Balmoral.

Ajantha “Sam” Dharmapala worked for the Sahotas as a desk clerk and bookkeeper from 2008 until 2016. Since then, he has been a vocal critic of his former employers and become a driving force behind the Vancouver Tenants’ Union. Mr. Dharmapala describes conditions in Sahota SROs as “third-world.”

In an affidavit filed as part of the proposed class-action suit by Regent tenants, Mr. Dharmapala alleged Gurdyal Sahota has been involved in “numerous” criminal activities in and around the Regent Hotel, including systemically receiving goods known to be stolen from Home Depot and local hospitals.

“Gurdyal Sahota would not directly tell people to steal these items … but he would ask the ‘right’ people whether they had any pillows or sheets to sell right now, and then those people would come back a few hours later with pillows or sheets,” Mr. Dharmapala alleged in the affidavit.

Records reviewed by The Globe include a receipt from Jan. 5, 2014, stamped with the Regent Hotel’s information and signed by Gudy Sahota. It states $17 was paid to someone who “acquired” 34 sheets and towels from the laundry room at St. Paul’s Hospital.

To date, the Sahotas have not directly responded to those allegations, says lawyer Jason Gratl, who is representing the class-action plaintiffs. None of the allegations have been proven in court.

Housing activists also express concerns about hotel managers and clerks exploiting residents by buying social-assistance cheques at less than their face value, a practice documented in Project Haven.

A 2007 Hotel Analysis project – which involved the city, the VPD, as well as provincial ministries of labour and employment – uncovered similar scenarios. At one building, inspectors found 43 client cheques went to the hotel, but only 33 ministry clients were living there – indicating the hotel owner had pocketed provincial funds without providing housing in return.

Activities at Sahota-owned SROs remain a concern for the VPD.

According to figures released through a freedom of information request, there were 845 calls for service to the Regent from the beginning of 2017 to February 22, 2018. The biggest proportion of those, 105 calls, involved an unspecified disturbance. There were three calls related to overdoses, seven involving a sudden death and one related to shots fired.

At the Balmoral, there were 248 calls over the same period - during which, for more than half the time, the hotel was closed on city orders. Thirteen calls involved a weapon, one an overdose and six reports of assault.

The problems are not lost on Janice Abbott. She’s the chief executive officer of Atira, the non-profit housing group hired in February by the Sahotas to manage the Regent. Because Ms. Abbott is wary of being responsible for a building that is beyond her organization’s capacity to fix, she opted to sign only a short-term six-month contract. Ms. Abbott says she can’t explain why the Sahotas suddenly handed over management of the property to a third-party operator, but she and her staff hope to address as many issues as they can while the Regent is in Atira’s hands. In the weeks since the contract began, she has been in touch with city, health and police officials. She alerted them to suspected drug dealing and health concerns, including what appeared to be sewage leaks in some rooms, as well as to the presence of an underage girl she’d seen hanging around the building.

SROs can be magnets for vulnerable young people, who may be drawn to the buildings to see parents or other family members and are then exploited or assaulted. One long-time tenant, Jack Gates, says he has seen rooms rented out by the hour, for what appears to be sex work or other transactions.

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Jack Gates sits in his room at the Regent Hotel.

DARRYL DYCK/THE GLOBE AND MAIL

If Sahota-owned SROs are known as the worst of a bad lot, the other end of the spectrum can be found at Ross House, a small privately owned SRO owned by architect Charles Haynes.

After his 19-year-old son, Ross, died of a drug overdose in 2000, Mr. Haynes wanted to help people struggling with drug addiction. He bought a run-down rooming house and turned it into an SRO. Today, he takes pride in ownership of Ross House, replacing cheap wooden doors with fire-proof doors he bought from a demolition sale at UBC. Hallways gleam with fresh paint and bathrooms are spotless. A communal kitchen is bright and clean.

Mr. Haynes charges rents in the $400 to $660 a month range – higher than what most welfare recipients receive, but significantly lower than average rental prices in the city.

Many of his tenants have significant mental- and physical-health issues. “These people are hard to house and if they went out of my building, I think they would die,” Mr. Haynes says. Recently, citing burnout and other business interests he wanted to pursue, he put the building up for sale.

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The Regent Hotel. The city of Vancouver says it will seek more money from the provincial and federal governments for new funds for SRO housing.

DARRYL DYCK/THE GLOBE AND MAIL

The future of SROs

The city’s long-term goal, set out in various documents including a 10-year housing plan released last year, is to replace aging SROs with social-housing units that have private bathrooms.

Housing advocates say all three levels of government need to be engaged to help fix the problems presented by the city’s SROs. Under the former Liberal government, the province spent millions to buy and renovate SROs. The federal government also got involved, chipping in nearly $30-million for a $147-million SRO Renewal Initiative that renovated a dozen or so buildings over the past five years.

Last year, the federal Liberal government announced a 10-year, $40-billion national housing program. But the plan counts on the provinces to kick in billions and some elements won’t take effect until after the 2019 federal election.

The city says it will seek money from provincial and federal governments for a new SRO fund. In its October budget submissions, it asked the province for $80-million for this. The province didn’t come up with SRO funds in its February budget, but the federal housing money could still come into play.

Meanwhile, the squeeze on existing SRO rooms remains intense. “The combination of increased development interest in SROs and the rising costs of properly managing and maintaining 100-year-old private SROs at rents affordable to those on income assistance has created an untenable situation for many SRO owners,” a 2017 city report says.

Nathan Edelson, a former city planner, says it’s time for the city to consider much larger penalties or even expropriation to deal with problem SROs.

“Ideally, the units should be in public hands or owned by non-profits or at the very least, managed by non-profits and having the books open,” Mr. Edelson says.

Mr. Dharmapala, the former Sahota employee, believes that aging SROs should be taken out of the hands of private citizens and run by non-profits that are better equipped to help the down and out. “These people need more support, the government has to take care of these people,” he says.

The Sahotas “take advantage of the tenants because nobody cares. The system creates people like the Sahotas.”

With reporting from Stephanie Chambers.

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