The Pearl Company was nominated for a Heritage Recognition Award, but the nomination was deferred because the City is suing the business over an alleged violation of the zoning by-law.
By Ryan McGreal
Published November 30, 2012
From the Facepalm Files:
In 2011, the Pearl Company Theatre and Art Gallery was nominated for the Heritage Recognition Award for its adaptive reuse of an old warehouse at 16 Steven Street. However, the Hamilton Municipal Heritage Committee voted in January 2012 [PDF] to defer the nomination until 2013, since the Pearl was in litigation with the City over its zoning.
Jazz Connection Big Band playing at the Pearl Company (RTH file photo)
Deciding it would be inappropriate to grant an award for a property "that is possibly not complying with City by-laws", the Committee voted to hold off on considering the nomination.
The irony is that the City is pressing a legal claim against a business that is unambiguously doing exactly what the City claims to promote, i.e. the adaptive reuse of an old industrial building to support a creative business.
In a letter sent yesterday to the City Clerk and copied to local news media, Pearl Company co-owner Gary Santucci noted that a Justice of the Peace has since ruled that the City did not present credible evidence to support its contention that the use of the building is illegal. He concluded:
I have attached the relevant documents and would ask you to forward them to all of the members of the Heritage Committee so that they may immediately consider restoring our nomination for the 2012 Heritage Recognition Awards.
Santucci did not know until recently that the Pearl had been nominated or that the nomination had been deferred.
The Pearl owners, Santucci and Barbara Milne, maintain that their use of the building as a commercial theatre and art gallery is a legal, nonconforming use, while the City insists that they need to apply for a variance to have the building rezoned for commercial use.
The City charged them in 2009 with "permit[ting] an unlawful use of the premises; namely, live performance theatre and art gallery offering works for sale to the public, which uses contravene Section 10(1) of City of Hamilton By-Law 6593".
The Official Plan (OP) that Council approved in 2009 would permit the present use of the Pearl Company, but the OP is still pending Provincial approval while several appeals go through the Ontario Municipal Board (OMB) process. The process has been underway for over two years and has still not been resolved. In the meantime, the old zoning rules still apply, and staff insist on a rezoning application.
The problem is that a rezoning application opens the business up to a blizzard of permits and fees, the full cost of which would run into the hundreds of thousands of dollars.
|Site Specific Zoning Application Fees||$11,700|
|Sign on the Property Notice to Public||$900|
|Change of Use/Zoning verification fee||$185|
|1% for any work valued above $18,500||unknown|
|Architectural drawings or engineering study to prove Building Code conformity||$10,000+|
|Site plan application||$10,000|
|Revisit encroachment agreement||unknown|
|Revised parking requirement for 25 on-site spaces||$90,000|
The City has offered to defer the fee payments until final approval of the rezoning, but that doesn't change the fact that a fee total exceeding $200,000 would spell the end of the Pearl Company.
Ward 3 Councillor Bernie Morelli, whose ward includes the Pearl Company, says he can't do anything to support the Pearl Company unless they follow the rezoning application process.
In September 2010, Santucci and Milne considered giving up their struggle with the city, but the theatre remains open to this day.
In the face of this, Santucci and Milne argue that their use is a legal, nonconforming use and does not require a rezoning application. They note that the City has been collecting commercial property tax from them and that their use is exactly what the City claims to support and promote for vacant industrial buildings.
A Community Improvement Plan is defined under Ontario's Planning Act as a formal municipal plan that identifies a community in need of support and outlines what needs to change to address the community's needs. The legal framework gives municipalities flexibility to change land use rules, zoning, development charges, loans, grants and incentives to achieve the goals identified in the Plan.
However, the City's Legal department argued that this new policy would not apply to the outstanding case against the Pearl. As Bob Bratina, then Councillor for Ward 2 and the Councillor who initiated the motion, explained, "The argument was that Council should not be seen to be interfering with matters before the courts."
The only result was that the City did not lay any additional charges against the Pearl for subsequent theatre performances.
On August 10, 2012, Justice of the Peace W. Casey ruled that the City did not present evidence to contradict Santucci's argument that their business is a legal, nonconforming use and that Hamilton City Council needs to "determine the best course of action and the direction they wish to take in this section of the city."
The Justice also determined that the City was taking "a very narrow interpretation" of the use allowed the building and added, "I don't think it's possible the building could be used strictly in compliance with its uses in 1951 or even earlier, no matter who owns it."
She also ruled that Santucci and Milne had "a reasonable expectation of the presumptions of regularity given the history of the building, including the fact that this building is taxed commercially" when they bought the building.
The case was put on hold for a year, until August 9, 2013, to give Council time to address the issue.
Here is the full text of the ruling:
Information Nos. 09 1022 1023,
10 3113, 3114 and 3115
ONTARIO COURT OF JUSTICE
HER MAJESTY THE QUEEN
BARBARA MILNE, GARY SANTUCCI and 1687602 ONTARIO INC.
TRANSCRIPT OF PROCEEDINGS
BEARD BEFORE HER WORSHIP JUSTICE OF THE PEACE W. CASEY at the Ontario court of Justice, 45 Main Street East, Hamilton, Ontario, on August 10, 2012
Clayton, L - Municipal Prosecutor
Charko, R - Counsel on behalf of the Defendants
R v. Barbara Milne, Gary Santucci and 1687602 Ontario Inc
FRIDAY, AUGUSTI 10, 2012
MS. CLAYTON: I think we're here - well, I know we're here, the remaining matters on the list, Barbara Milne, Gary Santucci, numbered corporation 1687602 Ontario Inc., for your decision today on the motion that was made on an earlier date.
HER WORSHIP: Correct.
MS. CLAYTON: Thank you.
HER WORSHIP: Thank you.
COURT REPORTER: And could we just have some introductions on the record, please?
MR. CHARKO: Oh, I'm sorry. Robert Charko initial R, counsel for Barbara Milne, Gary Santucci and 1687602 Ontario Inc., and Mr. Gary Santucci is also present, acting on behalf of Barbara Milne and the numbered company, 1687602 Ontario Inc.
HER WORSHIP: Excuse me. In the back, stop talking, sir. Thank you.
HER WORSHIP: On March the 23rd, 2012, the court heard a motion by the City of Hamilton regarding the use of the property at 16 Steven Street, in the City of Hamilton, owned by Barbara Milne, Gary Santucci and 1687602 Ontario Inc. I will not review all the submissions in detail.
The motion was to determine whether the current use of this property contravenes the present zoning by-law or if it is exempted from the current status by virtue of a legal non-confirming use of the building.
In 1951 the City of Hamilton zoned the area H Commercial and it remained so until about 1976 when the zoning was changed to D zoning. D zoning means that property in a specific area can only be used for single or duplex family dwellings.
At the time exemptions to the by-law were allowed considering the nature of the specific neighbourhood, the type of businesses and size of the buildings involved. 16 Steven Street is a warehouse facility with over 12,000 feet of space and it was allowed to operate as a commercial venture.
Mr. Santucci gave evidence that he had researched the history of this property, and although the prosecution indicated that his evidence was hearsay, in the absence of any contradictory evidence from the City prosecutor, the court is prepared to consider Mr. Santucci's research as credible.
He testified that the property has warehouse space on three or four floors and has been known for years as the Canadian Pearl Company. Now it's currently known as the Canadian Pearl Company and Art Centre.
There were a number of buildings in the affected area which were allowed to continue operating as normal and were given the non-conforming legal right to do so. This building was one of them. According to Mr. Santucci's research it was quite probably the Reid Paper Box Company, although the building has housed many different businesses on each floor.
The property is currently being used as a theatre, art gallery, and an eating establishment, and although Mr. Saritucci has owned this property since 2006, and paid commercial taxes, he may, if my ruling goes against him, be required to either change his business to conform totally with the letter of the law or vacate the building.
The prosecution was focussed on a very narrow interpretation of the original non-conforming use allowed. In this case I don't think it's possible the building could be used strictly in compliance with its uses in 1951 or even earlier, no matter who owns it.
This has been a very difficult motion to contemplate. The prosecution is proceeding on the letter of the law however, the court has to concern itself with the spirit of the law.
Mr. Santucci had, upon purchasing this property, a reasonable expectation of the presumptions of regularity given the history of the building, including the fact that this building is taxed commercially.
I understand the prosecution's submissions that commercial taxation does not relate to the uses of the building, but with the greatest of respect I feel that the average person would link the fact that the building being taxed commercially at a higher rate than housing means it was able to deal in commerce.
During the course of this hearing there were references to the City of Hamilton study to create, and I'll quote, "healthy neighbourhoods". In part the motion now being studied by council includes a review of the City policies and by-laws to help grow the City's art and cultural industry.
To take away an established use of this building on what may be determined in the future to be a building designated for this purpose seems to the court to be fundamentally unfair at this time. Mr. Santucci in essence is trying to preserve what may be a cultural improvement to the area as a whole.
As indicated in Exhibit 6 this appears to be something the City itself is looking to accomplish. This court wants to be fair to both the City and Mr. Santucci, and with the present situation being in the prevue of City council, I'm going to put the hearing over for one year to allow council to determine the best course of action and the direction they wish to take in this section of the City.
I am therefore seized. Nothing will happen in this matter with this motion and we'll come back before this court on Thursday, August the 9th, 2013, courtroom 320.
MR. CRARKO: Was that 1:30, Your Honour (sic)?
HER WORSHIP: One thirty.
MR. CHARKO: And, Your Worship, in your initial submissions you indicated it was a motion by the City. It was actually a motion by Mr. Santucci.
HER WORSHIP: Oh, I see. I'm sorry. I apologize.
MR. CHARKO: Thank you.
MS. CLAYTON: Thank you, Your Worship.