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City puts squeeze on shell corporations over derelict properties

Since the city tightened its property standards bylaw last summer, its lawyers have won 100 per cent of cases involving rundown structures
102AlbertStE
The city has recently successfully charged the owner of this down-at-the-heels building at 102/104 Albert St. E. Other prosecutions are continuing against additional local properties believed linked to the same owner

In the months of June, July, and August, the City of Sault Ste. Marie has laid 26 charges in relation to vacant properties believed to be owned by shell corporations.

Jeffrey King in the city's legal department says 11 such charges were laid in June, five in July, and 10 in August.

A shell corporation exists only on paper and has no employees or active business operations.

It may exist for entirely legitimate reasons, but shell corporations are also sometimes used to conceal ownership of assets.

Meanwhile, King says the city has laid 30 other property-related charges over the same three months that don't involve shell corporations, just garden-variety landlords.

King adds that since the city tightened its property standards bylaw and prosecution procedures last summer, its lawyers have won convictions in 100 per cent of cases involving rundown structures.

In a report prepared for Tuesday's city council meeting, King provides the following list of recent convictions:

  • 102/104 Albert St. E., owned by 12951274 Canada Inc. (1 Hunter Hamilton) – vacancy bylaw provisions – building order – convicted $1,000 plus victim fine surcharge and court costs (hereinafter referred to as “plus plus”) – first offence
  • 427 Sherbourne St., owned by 12864843 Canada Inc. (1 Hunter Hamilton) – property standards provisions (steps) – building order – convicted $2,000 plus plus – first offence (albeit second technically if you look at directorship of the numbered company) – prosecution continues with respect to various properties under this ownership and should see penalties continue to increase
  • 38 Copernicus Dr., owned by 370893 Ontario Ltd. – vacancy bylaw provisions (interior work) – 15.2 building order – convicted $1,000 plus plus – first offence
  • 22 Manilla Terrace – Northern Caboodle Inc. – vacancy bylaw provisions – building order – convicted $2,000 plus plus – first offence
  • 60 London – individual ownership – two joint owners each charged $400 plus plus on first offence – vacancy bylaw provisions – building order
  • 368 Cathcart St. – individual ownership – two joint owners each charged $400 plus plus on first offence – property standards bylaw provisions (exterior cladding) – building order
  • 431 Charles St. – individual ownership – owner charged $200 plus plus on first offence – property standards bylaw provisions (derelict vehicle) – building order

"City council equipped bylaw enforcement and prosecution with a strong tool last summer. The above convictions and fines are testimony to this fact and continued enforcement will send a strong message to deter repeat offenders," says King.

"Staff will continue to monitor trends in relation to grass in general as provincial movements are seeing the benefits of allowing growth to exceed the bylaw restriction to assist plant pollination."

"As of the date of this report, we do not see the need to make any amendments to the city's property standards bylaw or yard maintenance bylaw," King advises Mayor Provenzano and city councillors.

Speaking this week at a meeting of Ward 2 council candidates, Coun. Luke Dufour talked about problems with the city's old property standards rules.

"The property standards bylaw that Sault Ste. Marie had in 2018 was only based on the Ontario Building Code."

"The Ontario Building Code is only concerned with structural stability of buildings," Dufour said.

"When the city went to prosecute the [old Sault Area Hospital's] owner under that bylaw, the whole prosecution was based on the question of structural stability."

"This left the owner able to hire an engineer who was able to write a letter and say: 'Oh, the building's not falling down. That ended the case."

The problem, Dufour said, is just because a building's not falling down doesn't mean it's okay.

The city drafted a new property standards bylaw that allowed it to crack down on buildings that posed a health hazard, he said.

That has allowed the city to get court orders and to demolish some buildings downtown.

"In northern Ontario, we're really vulnerable to these kinds of owners coming up and taking control of our market without any intention of investing or renting."

"They're basically squatting on it like it's an asset, so they can trade it later on... whatever they're going to do with it," Dufour said.

Tuesday's City Council meeting will be live-streamed on SooToday starting at 4.30 p.m.

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David Helwig

About the Author: David Helwig

David Helwig's journalism career spans seven decades beginning in the 1960s. His work has been recognized with national and international awards.
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