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Joo Kim Tiah, right, the head of the Holborn Group, talks with Donald Trump Jr., left, and Ivanka Trump at the Trump International Hotel & Tower in Vancouver, on Oct. 27., 2014.Jeff Vinnick/The Globe and Mail

A high-profile Vancouver development company that has been at odds with the city more than once is now suing it over the empty-homes tax.

A company controlled by Joo Kim Tiah, the head of the Holborn Group, is challenging Vancouver’s decision to assess a $144,700 empty-homes tax on the dilapidated and vacant former hostel downtown that it bought in 2006.

It’s not the first time that Vancouver has seen a legal challenge over the precedent-setting tax that had generated $60-million in net revenues as of last fall for its affordable-housing fund. But the new lawsuit has unusual grounds.

In the suit that was filed mid-April, the lawyer for 500 Dunsmuir Property Ltd. says that, although the property was used as a residence for decades when it was owned by the Salvation Army and later when it was leased by BC Housing from 2009 to 2013, it was deemed uninhabitable and boarded up at the end of that term.

As well, the suit argues, the city’s current zoning doesn’t allow residential use on that site any more so, when it is eventually redeveloped, that won’t be a permitted use.

Vancouver created an empty-homes tax in 2017 amid rising concerns about condos and houses that had been bought by foreign investors being left empty. The goal was to motivate owners to rent them out or sell them to people who would live in them. It ended up catching both foreign and Canadian owners of vacation, second-home and investment properties.

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Holborn has gone through two appeals with the city, arguing that “the property was not zoned for, and therefore incapable of, occupancy for residential purposes.”

But it has been rejected both times. The vacancy-tax review panel at the city dismissed a request for review this February.

The city has not yet filed a response and city officials would not comment on an unresolved legal case, but the Dunsmuir Property lawsuit says that the city argued, in debating the case, that “the existing zoning does not restrict the occupancy of the existing building on the property.” As well, a review officer stated that the building could still be used for residential occupancy under the bylaw that allows single-room hotel-type rooms to continue on a site even after the zoning has changed until a new development or rezoning has been approved by the city.

Holborn officials did not respond to a request for comment, nor did their lawyer. It’s not clear whether the property has also been assessed or paid the empty-homes tax for 2019 and 2020.

The city’s property-tax records indicate that no taxes are outstanding for the 500 Dunsmuir address, which had a general tax bill of $69,000 on the property that was assessed at $15.2-million for that year.

If it has not been paid the last two years and will be again this year, the costs are mounting.

The 1.25-per-cent additional tax on the property in 2019 would have amounted to $194,000; in 2020, $333,037. (The property was valued at $26.6-million in 2018, but only $15.5-million in 2020.)

If Mr. Tiah’s company is unsuccessful in challenging the empty-homes tax charge, it will have to pay an extra $440,000 for 2021 taxes because the rate is rising to 3 per cent for that year.

Two homeowners and one development company filed lawsuits against the city in 2019 because of the empty-homes tax, saying they had been charged unfairly.

The developer Pure West Financial Holdings Group was still pursuing the challenge as of February this year, when it filed its latest petition to the court over the tax being assessed when the company had been held up in its redevelopment of a site because of late city permits.

The two homeowners got consent orders from the city in February and March last year where the decisions of the vacancy-review panel were overturned. One was exempted from paying the tax; one got permission to get an extension to file his empty-homes tax declaration.

Vancouver has seen 1,956 people file complaints about being improperly assessed the empty-homes tax up to November, 2020. The majority of the complaints were accepted but 645 were not.

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