KITCHENER - The former owners of the dilapidated Electrohome building on Shanley Street appear to have made a substantial profit when they sold the property last week to a Toronto developer.

A numbered company also known as Continental Imperial Exploration Ltd. bought the property at 152 Shanley St. in Kitchener on Feb. 27, 1998, for one dollar, and sold it last week for $1.4 million, according to land title records.

For almost all of the 21 years the company owned the neglected, contaminated property, it did not pay property tax to the city and failed to to carry out even basic maintenance such as sidewalk snow shovelling and lawn mowing, the city says.

After repeated complaints from neighbours, Kitchener began carrying out that maintenance and adding the costs to the outstanding property tax bill. The property was one of two "chronic offenders" in the city where workers carried out maintenance automatically, without waiting for a complaint to come in.

Lesley MacDonald, the city solicitor for Kitchener, said in an email that for more than 20 years, the property owner paid no taxes at all to the city.

"The City did not receive any property tax payments from Feb. 1998," MacDonald wrote. By the start of 2019, the unpaid taxes, plus the property maintenance costs, plus interest, amounted to $1.2 million.

This year, the city did receive two payments from the company: one in February for $448,798.43 to cancel the city's forced tax sale of the property, and one last week for $19,272 to cover taxes owed since the tax sale, for a total payment of $468,070.43 over the company's 21 years of ownership.

The city tried twice to recoup the money it was owed. The first forced tax sale, in 2017, was unsuccessful after the city got only one bid, for $200,000, well below the minimum $1.08 million required under provincial rules.

Earlier this year, the city tried again, this time setting a minimum bid of about $450,000. The owner paid that price, cancelling the tax sale and retaining ownership. The payment wiped out the outstanding property tax debt, effectively giving the owner a tax break of more than $750,000.

Andrew Spylo, the only director named for Continental Imperial Exploration in the provincial corporation profile report, and his son Adam Spylo, the realtor in the sale, are suing The Record over previous stories about the property. When contacted for this story, they declined to comment because of the court matter.

The four-storey brick factory has been empty since the late 1980s. It was built in 1898 and has housed several industries over the years, from furniture making to printing. It was last occupied by Art Rite Advertising Ltd., a graphic-arts firm.

The deed documenting the 1998 sale to Continental Imperial Exploration shows that an original price of $140,254.96 was stroked out and replaced with the sum of $1.

It's not clear why the property sold for just $1 in 1998. One possible explanation for the low price might be that, just before the sale, the Ministry of the Environment had confirmed that the property was contaminated with the industrial cleaning solvent trichloroethylene, or TCE. Other contaminants on the site, the ministry said later, include some metals, petroleum hydrocarbons and volatile organic compounds, including TCE.

At the time, ministry officials said the contamination levels did not pose an immediate risk to nearby residents or local groundwater, but they wanted it cleaned up to eliminate future risk. Officials were preparing to serve a cleanup order when the ownership changed, and ministry officials then advised the new owner, Continental Imperial Exploration, they intended to enforce a cleanup order.

The ministry registered a certificate on title in 2008, requiring Continental Imperial Exploration to give a copy of the cleanup order to any prospective buyer.

Residents are relieved to see the property sold, saying it has been an eyesore and a source of problems for decades. But they worry about how a new development might change their neighbourhood of quiet, narrow streets and single-family homes.

Neighbours have put up with squatters, drug dealing and public urination on the site, said Josh Dunkley, who lives across the street from the property.

They say the city should have intervened long ago. Earlier action might have meant the building, with its classic Kitchener yellow brick and painted Electrohome sign, could have been saved.

"It's a beautiful building," said Emma Bartlett. "The fact they let it fall into such disrepair and not do anything with it, it just doesn't seem fair. No. 1, the city lost out on a nice historical building, and No. 2, on a good amount of money."

Dave Dowhaniuk would have loved to see the old building converted into a community space, with a bakery or other businesses that would have enhanced the neighbourhood. "It could have been a mini farmers' market or something. Instead it's going to be another boring property manager's vision."

Shannondale Developments bought the property on Nov. 12. The Toronto firm has applied for a demolition permit and says it could take up to five years to clean up and redevelop the site. It says its plans for the property are similar to those outlined in a city-led vision, which calls for a six-storey residential building, with retail on the ground floor and underground parking.

cthompson@therecord.com

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- Toronto developer buys former Electrohome site in Kitchener