Estonian House shareholders and the community-at-large were notified through a news release in the summer of 2015 that a development deal with Tribute had collapsed. The next month a proposal with Alterra was introduced and we were told that there was “no Plan B.” The result was that the proposal to work with Alterra was accepted. Nonetheless, it turns out that a prudent group of shareholders and community stakeholders were working on a contingency plan just in case the Tribute and Alterra projects failed. As the Estonian Centre Due Diligence report explains: “In 2014, Tartu College, Estonian Credit Union, and Estonian Foundation of Canada began negotiations with Create TO (previously Build Toronto) to purchase 9 Madison.” (p. 5) There wasn’t a specific mandate to begin negotiations on alternative plans while the Tribute deal was going on, nor was the purchase of 9 Madison a stated contingency when Alterra came into play. However, pragmatic people took the initiative to look beyond the opportunities immediately before them to consider “what if.”
Those 3 organizations recognized the tireless work that “Tulevik” committee members were doing as did a majority of shareholders. That same level of commitment and work is recognized today with the current Madison plan. But planning for even the remotest of possibilities is a responsibility we should all embrace. Without the 3 Orgs taking steps with Create TO as early as 2014, the Madison Project may have never been an option for our community. Now many have determined conditions exist that warrant the same type of initiative to look at options.
While the Estonian Credit Union and Estonian Foundation of Canada were direct stakeholders in both the Tribute and Alterra proposals, they looked to mitigate risk. The configuration of the current building and client access to ECU offices is admittedly not the best. Both Tribute and Alterra development deals offered ECU a solution to those issues, much like Madison does today. For its part, the credit union had determined that: “EH in its current state however still presents significant risk to the operations of the Credit Union and is not sustainable for the Credit Union’s future operations and growth potential.” (p.6) But aside from those configuration and access challenges, the credit union also has to measure financial risk.
The due diligence report notes one strategy being considered is the “…possibility of starting construction before the sale of the Broadview land assembly closing.” (p.17) In essence, the 4 Orgs would commit to Madison before the deal with Revera is finalized. That strategy would necessitate advancing the funding schedule and, for a period of time, increase financial exposure. But does that calculated exposure lengthen the timeframe for Madison to become sustainable? The due diligence report suggests: “It will take a few years for the Centre to achieve economic sustainability (revenues covering costs).” (p.21) How are ECU and the Foundation managing themselves around those economic risks?
Financial costs and exposure may outweigh the benefits Madison can offer to the credit union and other tenants. Perhaps, revisiting an alternative configuration and revenue model at Broadview could satisfy all the organizations that currently use the facility. We already know that Madison and “TC would not have enough room for all the organizations currently at EH.” (p. 6) Do the 4 Orgs leading the Madison Project necessarily need to preempt alternatives and hasten a move, especially before the Revera deal is closed?
Shareholders and stakeholders of Estonian House are taking the same cautious approach that our Credit Union and Foundation took in 2014 looking at 9 Madison. Many are considering and weighing options recognizing that if, in the unlikely scenario that Revera elects to walk away, we may have alternatives that allow our community to build upon the value we already have overlooking the valley.
To be continued ...
The Tulge Külla Steering Committee
Related: https://www.eesti.ca/what-if-r...
