Two problematic Downtown Eastside rooming hotels in trouble with the City of Vancouver are being taken over by a respected non-profit group as of Sept. 1.

Community Builders Benevolence Group, which operates four other rooming houses, confirmed Thursday it has agreed to take over, manage and repair the Wonder Rooms on Cordova Street and the Palace Hotel on Hastings Street.

(Gordon) Wiebe, the chairman of the group, said the takeover will inject stability into the hotels and the group will work with the city to fix a very long list of deficiencies. As part of the deal, George Wolsey, the hotels' owner, has agreed to turn over 100-per-cent control, Wiebe said.

"That is one of the things we insist upon. It has to be all or nothing for us. The owners have to agree to turning 100 per cent of the operational control to the society," Wiebe said. "Absolutely this is not a sweet deal for Mr. Wolsey."

The news of the turnover was greeted with relief and approval by the city, which has been fighting a years-long battle with Wolsey to clean up the dilapidated buildings.

"This is certainly the best news we've had in a while with regards to these hotels," said Coun. Kerry Jang. "This is very positive for the residents and for the city. Gordon Wiebe and his crew have a very good reputation with us."

In July, Vancouver city council heard allegations from residents that Wolsey and his management were directly intimidating residents, trying to prevent them from speaking to council. They also heard allegations that Wolsey, a former pharmacist, was still involved in the distribution of methadone and that he evicted people from his hotels if they failed to obtain their methadone from him.

The allegations sparked city council to call for two multi-government investigations. In August, the city filed two lawsuits against Wolsey's companies seeking injunctive relief if he didn't clean up the places. City building, electrical and fire safety officials had noted 242 deficiencies with the buildings, from broken doors and windows to rat and cockroach infestations.

City spokeswoman Wendy Stewart said Community Builders will still need to comply with a voluminous number of upgrade orders from the city.

"We're going to monitor this new arrangement but sufficient progress has to be made for us to be satisfied," she said. Wolsey could not be reached for comment.

The announcement came as the provincial residential tenancy branch was to begin hearings Thursday on a group action against Wolsey. Pivot Legal Society launched the action on behalf of 12 current and former tenants of the two hotels, saying their property and privacy rights had been violated.

However, Wolsey told the adjudicator he hadn't received the necessary documents from Pivot, and the hearings were rescheduled for Monday, Pivot lawyer Doug King said.

Pivot is looking for upwards of $20,000 each for those who were evicted, King said. He based that figure on fines the branch had levied against Wolsey in two previous cases. Lesser amounts could be paid to those who weren't evicted but who suffered harassment, he said.

Wiebe said Community Builders hasn't yet drawn up a financial arrangement with Wolsey but has agreed to take over operation and services to tenants. Once the true cost of capital, operating and supportive programming costs are known, a financial agreement will be signed, he said.

That agreement is supposed to cover any mortgage, property taxes and other fixed costs for the owner, he said. In the meantime, the society has to pay for all of the repairs and upgrades.

Community Builders operates the Dodson Neighbourhood House Foundation, Jubilee Rooms, Vogue Rooms and Powell Place in the Downtown Eastside.

jefflee@vancouversun.com

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