Derailed Hamilton LRT land deal spurs $2.5-million union lawsuit against Metrolinx
A derailed land deal for Hamilton's cancelled LRT has spurred a $2.5-million lawsuit against Metrolinx - and scuttled the planned resurrection of a Mob-linked marijuana grow op.
CUPE Local 5167, which represents thousands of City of Hamilton workers, is alleging negligent misrepresentation" by Ontario's transit agency during negotiations over a King Street East union hall on the planned light rail transit line.
The union claims it bought and started renovating a replacement headquarters in 2017 after Metrolinx said the local's existing property at 818 King St. E. would definitely" be needed for the LRT.
But CUPE's statement of claim says it was forced to sell the east-end replacement building last year because Metrolinx did not follow through on an alleged offer to reasonably compensate" the union for relocation and renovation costs.
In a statement of defence filed this month, Metrolinx argues no agreements were ever reached to acquire the King Street property or pay for a replacement headquarters. It also denied compelling, pressuring or misleading" the union.
No claims from either party have been tested in court.
The dispute predates the Progressive Conservative government's controversial decision to kill the LRT in December 2019 - but the end of the project has now evaporated" any chance of compensation under the Expropriations Act, the union argues in its statement of claim.
Metrolinx purchased about 60 buildings along the Main-King corridor for nearly $80 million - forcing dozens of tenants and businesses to relocate - before Ontario pulled the plug on the LRT project.
Being caught in the middle" of the torpedoed project was costly for the union - but the ongoing uncertainty" is also frustrating, said Local 5167 president Jay Hunter.
Hunter noted the fate of the union's headquarters remains up in the air because the same government that cancelled the first light rail project is now considering a recommendation to resurrect a modified LRT on the same corridor.
At this point we're just waiting... we could be faced with the same scenario all over again," he said.
Other property owners and residents have also suffered as a result of the short-circuited project, said Shane Rayman, an expropriation lawyer representing CUPE 5167 and other clients along the former and perhaps future LRT line.
It's been a remarkably wasteful process, and not just for taxpayers," he said. You're turning people who did not ask to be part of this project into victims."
Spokesperson Matt Llewellyn said Metrolinx cannot comment on a matter before the courts.
But in general, he said the agency continues to work to resolve claims related to the cancelled transit project and has successfully reached agreements with some landowners to reimburse costs like appraisal and legal expenses.
The union claims its plan to buy and begin renovating a replacement headquarters in the former Boomer's bar on Kenilworth Avenue North was pronounced acceptable" by Metrolinx in 2017. CUPE also claims it was originally told the agency must" take over ownership of the King Street union hall by June of 2018.
Metrolinx, by contrast, denies in its statement of defence that it ever reached an agreement on the fundamental terms of acquiring the CUPE property or reimbursing the costs" associated with the Kenilworth property.
The latter building was infamous for hosting a marijuana-growing operation despised by nearby residents over odour problems. The one-time Boomers bar was raided by police and put up for sale after former owner Antonio Tony Large" Sergi - known to police as a minor player linked to organized crime - was gunned down in early 2017.
The Spectator reported later that year on the planned resurrection for the Kenilworth building, with then-union president Sandra Walker vowing to turn the dilapidated, stinky landmark into one of the best-looking buildings on the street."
But in May 2018 - just before the provincial election - the union said it was suddenly told by Metrolinx the relocation and renovation plans were premature and unreasonable." Moreover, there was no longer a firm timeline to take over the King Street East union hall for the LRT project.
By the end of December 2018, the union said it had discovered unspecified structural problems in the former Boomers building. With no Metrolinx compensation on the horizon, CUPE decided to sell the Kenilworth building to a realty corporation linked to a local Ukrainian credit union.
The Spectator was unable to immediately determine what plans BCU Realty Inc. has for the shuttered building.
Property records show the union bought the building for $535,000 and sold it for $625,000. But the union notes it also spent more than $353,000 on renovations, plus legal and other costs related to Boomers.
In December 2019, the province shocked Hamilton by killing the LRT project mid-procurement, citing ballooning budget estimates. The cancellation ended any ongoing property negotiations and the prospect of formal expropriation.
Metrolinx said in its statement of defence it always negotiated in good faith" with CUPE and that the union freely chose and accepted the risk of purchasing replacement real estate" without an agreement in place with the agency.
Unfortunately, Metrolinx is unable to estimate, forecast and communicate political and policy decisions, especially following an election," reads the statement of defence.
A recent provincial auditor general's report says Metrolinx spent $171 million on Hamilton's LRT project before it was cancelled. Another $22 million was still expected to be spent on contract break fees, settling outstanding claims by property owners and knocking down vacant buildings no longer deemed safe or usable.
Demolition of at least 21 vacant buildings started this month and will continue into the new year.
A decision on whether or not to resurrect LRT 2.0 - or pursue a different transit project, like bus rapid transit - likely depends on the availability of federal funding.
Matthew Van Dongen is a Hamilton-based reporter covering transportation for The Spectator. Reach him via email: mvandongen@thespec.com