January 25, 2018
How much money is OBUC looking to make from this project?
Unlike a private developer who must purchase the land and typically wants to achieve a 12 to 15 percent profit from its development, OBUC is contributing its land and only seeking for rents to cover all expenses related to the project including mortgage, property management, maintenance (including some church maintenance), existing OBUC debt and program support.
OBUC’s congregation set the mandate that the project must be financially self-sustaining. Continuing reviews of OBUC’s financial model by BC Housing’s experts and others provide assurance this will happen.
There are community concerns that this project isn’t financially viable and that mismanagement could result in debt of $150K per congregation member. Is this true?
No, this is not true.
A comprehensive financial model has been developed and reviewed by BC Housing to meet their stringent requirements for a project planning loan. This model helps test scenarios and approaches to managing or mitigating issues and safeguards viability. Once completed, a professional property management firm will manage the housing, governed by a non-profit housing society established separately to the church. Rents will be insured and thus guaranteed, thereby avoiding liability to the congregation.
OBUC is committed to responsible fiscal management of its property, assets and existing programs.
Is it true that OBUC is far down the planning road, having already completed extensive financial modelling and design concepts?
No. We are in an initial planning stage and still reviewing multiple initial block design options. Required technical detail, unit mix, design elements etc. have not been identified and the detailed project financial work can’t start until design options are refined.
A financial model was developed starting in March 2017 to estimate potential viability of a wide range of estimated possible development variants, to satisfy the church Board on viability and risk. This was shown to BC Housing to secure a project planning loan. Architects HDR|CEI were only hired in September 2017, and their initial work only commenced after the November 2017 sessions with our neighbours and congregation.
While we’re progressing, we are still at the start of our consultation with neighbours and the Oak Bay community in determining how we achieve our goals, alongside those of the broader community.
Is OBUC just looking to turn a quick profit?
No, we are not looking to turn a quick profit; our goal is to be self-sustaining for the foreseeable future.
We’ve been open and transparent that we are facing increasing financial pressures, mostly due to declining traditional congregation funding support. By replacing older buildings we can eliminate those rising costs and improve these facilities and the programs they support. The church is contributing the land in return for these improvements. As noted above, the rental project will be financially self-sustaining.
Why doesn’t OBUC subdivide and sell the lots for single family homes and invest the profits?
This approach is significantly less viable, difficult financially and riskier as market units increase parking requirements (costs) and traffic volumes – an issue for our near neighbours. Because church parking is still required, the cost of providing it in this approach would significantly erode or eliminate revenue. Further, this option does not support the growing need for affordable housing in our community.
Previous land sales by the church have not been successful in providing a sustainable solution.
Why not just leverage the revenues from the Thrift Shop activities?
While the OBUC Thrift Shop provides a good annual income, the church is currently struggling to make this work in the longer term. Further, the building it currently occupies (Gardiner Hall) is not seismically sound and needs significant investment.
How much will rents be?
Rents will meet BC Housing and CMHC affordable housing criteria and vary by suite size (bachelor, 1, 2 and 3 bedroom unit mix). Rents have not yet been determined.
Did the project get $500,000 of taxpayer money to run a PR campaign to influence the outcome?
The money received from BC Housing is a loan, not a handout of taxpayer dollars. The $500,000 loan must be repaid by the church whether the project goes ahead or not.
A comprehensive financial model was developed for BC Housing to meet their stringent requirements demonstrating the project is viable before a project planning loan was approved. It is reasonable that the project would spend some money on communications.
Did the United Church BC Conference Property Resource Team decline to fund a development feasibility study, finding the project unlikely to be successful based on zoning and density?
The BC Conference Property Resource Team declined to get involved with the Feasibility Study because they did not have the resources to assist with it in the required time period; however, they have been available to us for advice whenever needed. They did NOT decline because they decided that the project was unlikely to be successful based on zoning and density.