Photo: CTV News

The owners of two derelict hotels on Vancouver's Downtown Eastside have launched a legal challenge against the city's plan to expropriate the buildings for $1.

The Balmoral and Regent hotels, which have been operated as single-room occupancy buildings, were home to more than 300 of the city's most vulnerable residents before the city ordered them shut down over safety concerns.

Council voted to expropriate the properties for $1 each last month, more than a year after failing to compel the owners to bring the decaying buildings up to code.

In a petition for judicial review filed in B.C. Supreme Court, Balmoral Hotel Ltd. and Triville Enterprises, allege the terms of the expropriation were "patently unreasonable, or made in bad faith," and the city breached its duty to procedural fairness.

The documents say the owners have pleaded guilty to failing to maintain the buildings but allege they have suffered "irreparable harm" because they did not have the opportunity to sell them for the multimillion-dollar market value.

The city says in a statement that it's aware of the petition and will file a legal response "in due course."

The owners allege in the court documents that they received 10 open-market offers for purchase, ranging from $7 million to $12.5 million per hotel, since the buildings were shut down.

The petition says the city made two offers to purchase the buildings, first at $6 million and then at $4 million, before the expropriation vote was cast.

But it says council's vote to spend $1 each on the expropriations "was grounded upon the incorrect assumption that the city had tried to negotiate in good faith with the petitioners and that the petitioners had refused to engage in good faith negotiations with the city."

The hotels were separately ordered shut down in 2017 and 2018 by the chief building officer after they were deemed unsafe.

When the notice of expropriation was filed in July 2018, deputy city manager Paul Mochrie said it was the first time the city had pursued expropriation with the purpose of providing public housing.

Atira Women's Resource Society, a local non-profit group, took over management of the Regent Hotel in 2018 before its closure. CEO Janice Abbott said at the time that she found mould in the rooms, ceilings that collapsed under the weight of water ingress and people living on urine-soaked mattresses.

The owners' petition identifies the shareholders and principals of the companies that own the hotels as siblings Parkash Kaur Sahota, 89, and Pal Singh Sahota, 80.