Toronto's Tartu College and its affiliated organizations are unique cultural and educational accomplishments in the Estonian community abroad. They are also more enduring than many other undertakings of the once refugee community, now Estonian community abroad, for Tartu College was established as a functioning part of the economic product of Canada, the home of Tartu College.
At the inaugural public ceremony marking the opening of Tartu College (September 19, 1970) I mentioned among other points that every society reaches a certain intellectual and financial balance: the development of one either benefits or demands that the other reach the same level. Thus it was, that during the 1960's the academic organizations of refugee Estonians had re-established themselves and were in a state of readiness to consider the acquisition of a common home. The first step towards finding a solution was to be found through a regulated approach.
During the 1960's, the Canadian Government offered to help finance the building of University student residences by providing long-term loans at a low rate of interest. My architectural firm, (Elmar Tampold, J. Malcolm Wells, Architects) designed and arranged to build such student hotels and residences for student co-operatives and non-profit collectives across Canada. We also co-authored a reference book on the subject, "The Beds of Academe".
At that time I was also a member of the working group founded to establish a common home for the Toronto Estonian academic organizations. It might be said that the will of my fellow members of that group was stronger than the collective skills and knowledge of the group. I was concerned that we would not be able to finance and manage our real estate long-term.
Professional and financial success encouraged me to present to our organizations in mid-summer of 1967 a proposal to plan and construct a high-rise university student hotel, where one floor would be designed as our academic home (Akadeemiline Kodu). I had already earlier made an offer to purchase a parcel of land in the proximity of the University of Toronto that would be ideal for such a project. The proposal as made was not limited to the possibility of constructing a building but offered a completely worked out financial solution, that would ensure the expected incomes from the high-rise building would grow as fixed capital or principal and would also pay for necessary upkeep. This meant, as well, that the founding capital, 10% of the entire cost of the project, would initially be acquired as a loan.
The entrepreneurial proposal was as follows: the architectural firm's fee would be 6% of the cost of the project. The builder would receive 3%. If the architect and builder were willing to loan their fees to the project for a certain period, then the balance of the required funding capital was only 1% of the cost of the project, required from the future owners as a long term loan!
My condition was that every single academic organization would join in the enterprise to give the Academic Home a solid national and patriotic base.
So it came to be that monies accrued, initially as promissory notes from members of academic organizations - fraternities and sororities - these at a rate of 7% on $400, 30 year promissory notes for a total of $65,000 - after construction had started and $60,000 later for organizational uses. The balance of the required monies, $275,000 came from the returned loans, earmarked to pay for the architect's and builder's fees, which Tartu College (the organization had at this point received a name) committed to the repayment of the loan over a period of 22 years. These promissories were also rated at 7%. The total cost of the project, including purchase of the land parcel ($450,000), reached almost $4 million. It remained the responsibility of the architects to resolve all property and finance related questions consisting of and including:
- a $400,000 bank note to the CMHC on a loan application to guarantee an as of yet non-existent 10% seed capital, arranging and personally backing a $150,000 bank loan for Tartu College start-up funds and providing bridge financing up to $1.2 million during construction.
I provided an additional personal $400,000 temporary loan for two years to Tartu College when CMHC did not advance sufficient funds on the first mortgage draw to cover the full cost of the land. The title of the land was transferred to Tartu College at the same time. (This must be a first in Toronto Real Estate history!)
The designated space intended for the Academic Home could not be financed by the student loan general agreement. Had it been done so, it would have become part of the residence and accessible to the university students. To solve this issue, I gained an agreement with the builder that resolved the issue. Namely, that he build our floor in return for his right to use part of the street level floor for fifty years. This meant, once again, that from the anticipated rental income, to be gained from one quarter of the planned floor space, construction costs were covered. This above mentioned agreement provided the academic home with a debt-free floor space of 10,000 sq. ft. available for rent-free use in perpetuity without restrictions. In addition, management and running costs were covered by Tartu College.
Unfortunately, unexpected labour strikes extended the scheduled construction of Tartu College to the extent that the builder was faced with economic hardships and the architects had to take over the responsibilities promised by the builder. No other alternatives were available to guarantee completion of the project. Understandably, these types of developments were unexpected and unpleasant lessons and it must have been a coincidence but the builder's name was Murphy!
The original arrangement with the builder to construct our non-mortgaged area of 13577 sq. ft. was a delayed payment of his income. The architect's involvement became a capital investment of $250,000 for building and $100,000 for tenant improvement costs. Note that only 3577 sq. ft. of built area is income producing and presently leased back to Tartu College at 1/3 the going market rate.
(To be cont’d.)