Special Report: Pearl Company

Pearl Company Heritage Nomination Deferred Due to Legal Issue

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)
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.

Crushing Fees

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.

Rezoning Fees and Charges
Item Cost
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+
Development Charges $38,614
Site plan application $10,000
Revisit encroachment agreement unknown
Cash-in-lieu-of-parkland $60,000
Revised parking requirement for 25 on-site spaces $90,000
Total $211,399+

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.

Legal Use

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.

In October 14, 2010, Council voted to suspend zoning enforcement for culture industries and establish a Community Improvement Plan for the Creative Industries cluster.

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.

Justice of the Peace Ruling

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




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


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.


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.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan wrote a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. His articles have also been published in The Walrus, HuffPost and Behind the Numbers. He maintains a personal website, has been known to share passing thoughts on Twitter and Facebook, and posts the occasional cat photo on Instagram.


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By Lawrence (registered) - website | Posted November 30, 2012 at 09:58:27

Seems the City would rather this building sit empty and dark in the name of 'the law' in a sea of downtown buildings living in darkness.

I have so much respect for Gary and Barbara. Their courage, I truly believe in the end, will open the doors for others wishing to do their part to clean up this beautiful area of our city.

Thank you for what you have done for Ward 3 and for teaching us the value of following our hearts and dreams and standing up for what we believe in. As painful as this process must have been for you both (and unfortunately will continue to be for another 6 months at least), know that your trials and tribulations are our inspiration. Whatever comfort that might bring.

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By Larry (anonymous) | Posted November 30, 2012 at 11:38:32

I would like to know how many other businesses have had similar experiences with the City. I was also charged with a zoning violation. The City's bylaw, legal and planning departments did not approve of a rain barrel business operating on a property zoned for a garden centre. It did not take a competent judge very long to conclude that they were all wrong. I have since relocated a big tax paying component of my business outside the borders of Hamilton. We may need bylaws to protect local business from local government.

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By Today (anonymous) | Posted November 30, 2012 at 13:24:50

Wishing them the best in this fight. I've been to the Pearl Co. on a few occasions for events and it's a wonderful intimate venue and Barbara and Gary are very cordial people. Maybe the law needs some tweaking.

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By conservation (anonymous) | Posted November 30, 2012 at 13:28:22

Here is a letter I just sent to interested parties in a reuse of a heritage building.

Looks like there could be substantial costs, financially and emotionally to pursue proper zoning so that I can run my 1820 sash plane down a piece of wood or at Sanford ave. I spent the day looking into the world of planning and zoning and to my understanding when the building became empty it automatically went to residential zoning. Although the city advertised this property and that they say that it could be used as "creative fabrication space". It appears that is not the case.
I also spoke to the owner of a industrial heritage building a few blocks from Sanford that had spent 6 years trying to run his small business. He has been in litigation much of that time with the city attempting to establish proper zoning. Seems that I would be offered help and incentives, etc in paving a corn field, but trying to occupy an old building is a different story. The zoning policies do not encourage people to occupy heritage/old buildings, in fact I beleived that it encourages and promotes demolition by neglect.
It is better if we would be offered more assurances from the city. That is that by-law people, planners, law enforcement and solicitors are not going to be in our future. Too much adversarial contact with these ligitimized agncies would result in very very bad outcomes. I wish I had never seen those buttresses and 2 1/2" floor boards.

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By seancb (registered) - website | Posted December 01, 2012 at 09:58:29 in reply to Comment 83336

WHo causes this? Staff? Council? The city is eating itself from the inside out. What's the solution?

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By Frankenrogers (registered) | Posted November 30, 2012 at 14:25:31

It's frustrating because this is the simple stuff that the city does not do right at all.

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By The Hamiltonian (anonymous) | Posted November 30, 2012 at 17:09:12

Very good write up!

Your friends at The Hamiltonian

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By Screencarp (registered) | Posted December 01, 2012 at 00:26:08

Well that's not right. It's been non-conforming since 1976. The city need to get it's hands around such things and work out a more affordable way to rezone the building. Rezoning would protect the owners commercial interests. I don't think The Pearl Company is in any way a problem to the neighbourhood but the "legal non-conforming" thing is problematic. Settle it folks, we need things like The Pearl Company, Rolly Rockets and all. We need to preserve and rehab these buildings, and make it worthwhile for folks to do so. Use some common sense.

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By DollHouse (anonymous) | Posted December 01, 2012 at 10:07:03

That is unfair. Mr. Morelli seconded the motion to support adaptive reuse.

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By RealOrFakeDH? (anonymous) | Posted December 02, 2012 at 07:45:15 in reply to Comment 83359

But he still did nothing to help The Pearl Company with its issue. Some leader...

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By jason (registered) | Posted December 01, 2012 at 10:15:41

That judge should come here for a day trip. He'd see lots of things that are 'in compliance' with 1951.

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By Gary Santucci (anonymous) | Posted December 01, 2012 at 11:17:42 in reply to Comment 83361

It is interesting to note and it is my understanding that a young planner by the name of Paul Mallard was hired some 30 years ago to begin working on a new urban official plan. He is now Director of Planning East and was the first bureaucrat that we had the misfortune to interact with as his first requirement for us was 150 parking spots. To this day his view of urban planning is devastatingly suburban; supremacy of the motorized carriage and low density housing. It was his narrow interpretation of the 1951 by-law that Justice Casey referred to in her ruling. It is also his advice amongst others that our City Council relies upon to make decisions and pass laws.

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By quiet (anonymous) | Posted December 03, 2012 at 01:01:19

i wonder what the neighbours think of this bit of adaptive re use...
maybe some of them would rather an empty building?

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By Quieter (anonymous) | Posted December 03, 2012 at 11:49:24 in reply to Comment 83370

Yeah the crack dealers and sex workers are really bummed out about it.

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By seancb (registered) - website | Posted December 03, 2012 at 11:46:17 in reply to Comment 83370

shhh.. stop all of this economic development, it's too loud! I love sitting in silence and paying my ever rising tax bill!

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By Noisy (anonymous) | Posted December 03, 2012 at 09:10:27 in reply to Comment 83370

I would love to have anything like Pearl in my neighbourhood. Bring in light, people, trafic, life.
Love to hear people busy around me. Hate quiet, lazy, dark places, a magnet for criminals.
Thankfully we soon will have more noise, light and life from Stinson Lofts in our neighbourhood.

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By unpopular (anonymous) | Posted December 04, 2012 at 00:01:15

someone didn't like it obviously...we all know the city doesn't do anything of its own accord

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By Back room (anonymous) | Posted December 04, 2012 at 01:16:38

I would look in the direction of people like Loren Liberman and his festival of friends crew for their scorched earth treatment of Ward 3 and Hamilton. The arts community has it in for Gary and his rogue operation.

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By Tired of Barton (anonymous) | Posted May 21, 2013 at 08:22:47

I feel for Gary and Barabara and can only begin to imagine all the nightmares they have gone through. This city is needs to take a good hard look at other cities/towns that thrive through the reuse of old buildings. French Quarter New Orleans comes to mind. VEry old buildings with multi purpose usage. It is actually illegal to tear down a historic building there without major analysis and neighbourhood imput etc... As for Barton St. becoming more of a residental area. I have been at the corner of Emerald and Barton for six years now and watched this area go down hill on a slow steady pace. Far too many storefront rentals that certainly DON'T meet any kind of code. The amount of hookers, pushers, pimps and dealers is higher then it has been in the six years i have been here. I have complained numerous times to Bernie Morelli about this only to be told that he is doing a spectacular job shutting down these illegal apartments and that we should all be proud of him for his work. *cough cough.. Ya sure whatever Mr. Morelli.. i notice that YOU moved away fromt his neighbourhood and into Ancaster many years ago. Just b/c you grew up here does NOT make you an expert anymore. This area has changed drastically from the quaint neighbourhood of Italian and Portuguese folks with lovely shops, bakeries and such along the strip to what it is now. It IS NOT OK.... I pay my taxes maintain my home and give it curb appeal.. for what? the endless absentee landlords who are buying up every house that comes on the market and then doesn't care WHO moves in. We had people across the street for the better part of a year where the police were there on a constant basis. There numerious SERIOUS assaults as well as a stabbing right outside our house due to these people. This is not a neighbourhood to raise a kid in. I have considered moving but at this point in time i am worried i wouldn't get value for my home. I am curious to see just what all these VISITORS for the Pan Am Games think when they have to bus it or walk down Barton St. to get to our FABULOUS NEW stadium.. Welcome to Hamilton what you see is what you get... rundown buildings, absentee landlords, hooker, pimps and crooked city council.. Come to think of it we are becoming much like Detroit or areas of L.A without even trying.. :/

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By Steve (registered) | Posted May 21, 2013 at 10:56:56 in reply to Comment 88836

In the efforts of accuracy Clr. Morelli does not live in Ancaster.

He lives at the Newport Yacht Club, http://www.newport-ycsc.com/index.html, in Stoney Creek.

Note, back in 2011-2012 the City waived approximately $250,000 in tax arrears for the not-for-profit club to survive without charging it's members a large amount of $. They don't mention that in their "Club Story".

Again for the sake of accuracy, Clr Morelli lives at a yacht club in Stoney Creek.

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