There are at least seven sites developers deserted within the city’s core that are of foremost concern.
They pose a safety hazard and in one instance, a busy downtown street collapsed when a sinkhole developed at an adjacent construction site. The crisis prompted city’s lawyers to find creative means to force developers or their financiers to absorb the cost of ensuring the sites’ safety.
“The impact on surrounding property owners, city infrastructure, and on public safety is a major concern for the city,” says Paul Frank, a lawyer with the City of Calgary’s Corporate Services Department and one of two lawyers who have been working full time on options to secure the sites.
“In the public interest, the city has had to take a number of steps. We’re the only ones in Canada with this issue.”
Currently there are seven sites in the city’s core that have been abandoned and while there are others in the outlying suburbs, the sites downtown have been the priority. One of the sites was to be two condominium towers and the hole in the ground is seven storeys deep.
City council has initiated measures to protect the public while the city’s administrators approved spending tax dollars to secure the sites. Still, $500,000 has been added to the tax roll to cover the expense of getting developers to comply, says Frank. The problem is that many of the developers are simply disregarding the city orders to comply or they can’t afford to comply.
The Municipal Government Act provides orders and costs can be recovered for unsafe or unsightly excavations. The property owner can be ordered to secure the site and pay the costs, although any costs that aren’t recovered are put on the tax roll as a lien.
Ultimately the city can take ownership of the site or sell it at auction, but the process can take up to three years.So Frank, lawyer Susan Trylinski, and outside counsel Richard Billington of Billington Barristers, have been working to find other means to compel compliance in a cost-effective manor.
In one case, the lawyers used Alberta’s unlimited natural person powers and took a developer to court to argue that a receiver be appointed to take over the site.
But in the case, The City of Calgary v. 1317853 Alberta Ltd. and a long list of other parties, the judge disagreed, awarding costs to the developer against the city. The City of Calgary is appealing the matter, but the decision stunned lawyers.
“If you take a high-level look at it, for anyone under a mortgage, a mortgage company can go in and say I want to appoint a receiver, they get it because their mortgage document says so and the Land Titles Act will allow them,” says Frank. “And that’s just for financial reasons. When the city comes in on a public safety matter, we ask for it because we can, and because we have natural person powers, but they’re reluctant to do it even though you’d think public interest or public safety will trump other issues. We have had failures, sinkholes, or voids around these sites and a seven-storey-deep excavation with shoring around it is only temporary as it’s meant to be.”
Calgary lawyers used the 1992 case, King (Township) v. Rolex Equipment Co., where the township was successful at the Ontario Court of Justice, as precedent. Frank says the city has had little co-operation or support from mortgage companies, which have the power to order a property into receivership by a responsible party that will comply. “Why does a taxpayer have to pay to make a site secure when these mortgage companies, lien holders, or owners are unwilling to do it?”
In sum, Frank says it’s been a challenging year. He was selected to oversee the work on the files because of his background in litigation and bankruptcy law in private practice before joining the City of Calgary. “It’s almost like we’re developing law here,” he says, noting that the Municipal Government Act was significantly changed in 1999. “We’ve had some successes but I guess you can say it’s been a new way to look at things.”