KITCHENER — The owner of a contaminated site was able to avoid paying property taxes to the city of Kitchener for 21 years, partly because the city didn't want to force a tax sale that could saddle the municipality with the problem property.

A numbered company, also known as Continental Imperial Exploration Ltd., bought the property at 152 Shanley St. in Kitchener for $1 on Feb. 27, 1998, and paid no property taxes for the next 21 years.

Mayor Berry Vrbanovic said the city didn't act sooner to collect its money through a tax sale because the law at the time would have made the city the owner of the site if a tax sale failed to find a buyer. Kitchener didn't want to have taxpayers foot the bill for any environmental cleanup.

"The legislation was such where a city — any city — could be left saddled with an environmentally contaminated property that all of a sudden would have become the burden of the taxpayers in the city of Kitchener," Vrbanovic said.

According to the Ministry of Municipal Affairs, the law changed in 2003, removing the obligation for cities to take over a problem site that didn't sell in a tax sale.

Despite that change, it was almost decade before Kitchener acted to start a tax sale. "The City commenced the tax sale process with respect to Shanley Street in March of 2011," city solicitor Lesley MacDonald in an email. The first tax sale took place six years later in 2017 but failed to yield a successful bid.

A second tax sale earlier this year was halted when the owner paid the cancellation price of $448,798.43. The payment wiped out the outstanding property tax debt, effectively giving the owner a tax break of more than $750,000.

"It's taken a long time, and it's frustrating," Vrbanovic said. "It was even more frustrating for the neighbourhood who live with it month in and month out."

The mayor said he wasn't happy that the property was neglected for so long, with no taxes paid and no action on the contamination.

Coun. Sarah Marsh, who lives near the former factory and has made the site a priority since she was elected in 2014. "Do I feel like the previous owners really got off scot-free, or somehow skirted the whole system? Yes, absolutely," she said.

But in the end, she's pleased the longtime eyesore will be redeveloped and cleaned up, bringing new vitality to a vacant site and increased assessment to the city.

She said the city's work to get a consensus vision for the site made it more appealing to potential buyers, as the vision sent a clear signal about what redevelopment the city would approve. Developers told the city "there's enough uncertainty with the property just with the contamination alone," she said.

Toronto developer Shannondale Developments bought the property last month for $1.4 million. It has experience redeveloping brownfield sites.

In the 21 years Continental Imperial Exploration owned the site, it made just two payments to the city: the $448,798.43 that cancelled the tax sale in February and one last week for $19,272 to cover taxes owed since the tax sale. The cancellation price was a combination of the property taxes owed, city costs to ensure basic snow shovelling and lawn cutting was carried out, and almost $42,000 the environment ministry spent to monitor contamination on the site, but it forgave the accumulated interest, MacDonald said.

The site is contaminated with the industrial degreaser trichloroethylene, as well as lead, asbestos, petroleum hydrocarbons and volatile organic compounds.

The environment ministry never laid charges against the owner, despite the existence of at least a dozen environmental studies on the contamination at the site. Charges weren't laid because "consultations with Crown prosecutors determined that proceeding to prosecution would not be appropriate," said ministry spokesperson Lindsay Davidson.

In 2007, the ministry ordered the owner to assess the extent of the contamination and the risk to nearby homes, and to produce a remediation plan.

The owner didn't comply with the order, which was registered on title in 2008 "so that future owners would be aware of the issues and the required action items," said Davidson.

He said the ministry "continues to take steps to ensure the natural environment is not being further impacted from the contamination."

It carried out tests in 2008 and 2010, and found no evidence of offsite impacts to human health and the natural environment. It plans another round of offsite indoor air monitoring in 2021, Davidson says.

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- Electrohome site in Kitchener was purchased for $1, resold for $1.4 million