Hotel housing hundreds of homeless and refugees sold to developer

Where will they go? 100,000 people already waiting for affordable housing in Toronto

The city has been relying on this hotel to help shelter the homeless. But it’s been sold to a developer after sinking into receivership amid alleged financial irregularities. (Paul Smith/CBC)

A Toronto hotel currently housing some 500 homeless people and asylum seekers is being sold to a private developer, CBC Toronto has learned.

The potential sale from the current owners, Virk Hospitality, to the Sunray Group for $20.5 million, is set to close later this month.

While it’s unclear when those living at the hotel will be moved, it could spell trouble for some of the city’s most vulnerable people, as well as Toronto’s already over-burdened shelter system, according to advocates for the homeless.

I can’t even fathom what they’ll do with an extra 500 people,” said Greg Cook, a shelter outreach co-ordinator at the Sanctuary shelter.

“We’ve been saying to city hall, we’ve been saying to the federal government, that this is a crisis.”

Neither government appears to be listening, he added.

Since 2017, the city has spent more than $5 million to shelter and feed people at the Toronto Plaza Hotel, located near the intersection of Wilson Avenue and Highway 400. The 500 residents, including families, have been living in 199 rooms at the facility.

However, Virk Hospitality was forced into receivership amid alleged financial irregularities, which resulted in the Plaza being put up for sale. While originally denying it, the city was exploring plans as recently as late last year to purchase the hotel. In the end, officials decided not to.

That cleared the way for Sunray to snap up the property.

A spokesperson for Sunray said the company hopes to redevelop the seven-acre property.

“While we have not yet closed on the transaction, we expect to do so in March. We are exploring a redevelopment of the entire site as a mixed-use development,” Sunray’s Kenny Gibson wrote in an email to CBC News.

“If feasible, we would allocate a portion of the residential units, if the redevelopment gets all necessary approvals, to affordable housing,” he added.

Sunray develops gas stations, fast-food restaurants and hotels in partnership with brands such as Shell, Petro Canada, Tim Hortons, McDonald’s, Holiday Inn and Hilton, among others, according to its website.

When will homeless and refugees lose their shelter?

As it stands, about 1,000 people turn to temporary respite centres each night as the city’s shelters operate at, or above, full capacity, according to the city’s data.

About 330 people, including families, are on waiting lists for shelter space, according to Cook.

“The system is already broken, it’s already burst at the seams. Over 100 people are dying each year who don’t have housing. The crisis is costing too many lives,” said Cook.

Sunray’s Gibson said there isn’t a timeline yet for when the hotel’s 500 residents will be asked to leave.

“We have no concerns with the guests staying at the hotel. The current ownership entered into a contract with the city for new Canadians and that contract is in force. As we proceed with redevelopment plans, we will work with the city on this current arrangement,” he wrote.

CBC News has learned the contract between the city and the Plaza Hotel expired on Dec. 31, 2018 and is now operating on a month-to-month basis.

City won’t say what, if any, plan is in place

The city won’t say what, if any, plan is in place to deal with the situation. Specific questions about where the residents may be relocated, and at what cost, were not answered.

“When the sale of the Toronto Plaza Hotel property closes, the city will be in a position to work with the new owner. We will continue to focus on helping people find permanent housing as quickly as possible,” spokesperson Greg Seraganian said in an email to CBC News.

“The city is prepared to respond should there be a need for contingency space,” he added.

Since Jan. 1, 2018, 10,085 unique refugee/asylum claimants have used the Toronto shelter system, according to city statistics. Over this same time period, 6,300 people have been supported to move into permanent housing.

Why hotel was sold

The hotel was owned by Toronto-based Virk Hospitality. Despite the city paying millions to rent the facility, the hotel still faced serious financial problems.

Virk Hospitality fell under receivership after failing to make good on mortgage payments for the hotel.

Court documents show Virk owes about $31 million to creditors. Virk’s primary director is Markham businessman Enzo Mizzi.

Justice Glenn A. Hainey determined some $3 million was redirected to other numbered companies controlled by Mizzi.

Mizzi’s lawyer told CBC News that the businessman transferred the money to help pay for renovations at the hotel.

“It was technically not permitted,” said his lawyer, Michael Simaan.

CBC News has learned that dozens of rooms at the hotel remain off limits due to mould problems.

Hainey also ordered Mizzi to return $186,000 he allegedly withdrew from a bank account that was used to pay to house and feed the homeless people living at the Plaza.

A search of Ontario’s court databases shows numerous companies controlled by Mizzi have been the subject of bankruptcy and other legal challenges alleging unpaid bills.