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Vancouver churches leverage land to stay afloat
Congregations with financial issues look to real estate deals for solutions, but working with developers isn't always a simple strategy
Special to The Globe and Mail

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Saturday, September 7, 2019 – Page A16

VANCOUVER -- The archdiocese that owns the 120-year-old Catholic cathedral in the heart of Vancouver is pondering a very 21st-century move: selling land around the church to a private developer to help pay a massive repair bill.

In a cathedral newsletter in late August, Rev. Stanley Galvon outlines the church's problems and a possible solution. It needs $24-million to do a seismic upgrade that an engineering firm has found is necessary because of "a high risk to both human life and the building itself in the event of a serious earthquake," he wrote.

The proposed solution outlined by Father Galvon, the archdiocese's delegate for property stewardship, is to sell five of the 12 lots of land that are part of the Holy Rosary Cathedral property to a developer to cover that bill, as well as provide new space for a parish hall, offices and housing for parish priests.

That move is the latest in what has become a wave of local churches leveraging their land holdings to help with financial challenges posed by their old buildings, as well as to provide some benefits for their congregations with housing or new community facilities.

Architect Sean Rodrigues, who is responsible for infrastructure development for the archdiocese, confirmed the proposal is being considered in very confidential discussions, and no other details are available.

But in spite of Vancouver's seemingly insatiable demand for developments such as new condo buildings, the proposed solution for Holy Rosary Cathedral is fraught with challenges, say those who have watched or worked on church-developer deals.

"The biggest challenge for churches is that [if they sell], you can only do it once," said Robert Brown, the president of the nonprofit Catalyst Community Developments Society, which has done rental projects for several churches. "Once you've sold that asset, community organizations are never going to be able to buy that back. It can end up being a shortterm solution but a long-term loss."

As other church groups have found in recent years, it's not easy to work with developers.

The leaders at First Baptist Church, a historic building at Nelson and Burrard streets, found that community opposition left them embroiled in sometimes unpleasant public meetings to get approval for a planned 57storey tower designed by Bing Thom called The Butterfly.

The development - approved by council two years ago - will include 331 very high-end condos, as well as 61 subsidized-housing units for the church and money for its seismic-upgrade bill. Although church leaders and some urban experts were enthusiastic about the outcome, the citizens' group CityHallWatch questioned whether the church and community got enough benefits out of the deal with Westbank Corp.

Another church-developer deal approved around the same time did not work out.

After also going through fierce community opposition, the Pacific Spirit United Church in Kerrisdale (formerly called Ryerson United Church, now with a new name after amalgamating with the Dunbar Heights congregation) got approval in 2017 for a development that would include an eight-storey residential building on one side of the street and a five-storey addition to the church on the other, with 32 units of social housing.

But the development partner, Wall Financial Corp., decided last year that the project was economically unworkable. That came after nine years of church efforts to come up with a proposal.

"[Company president] Bruno Wall walked away because he could not market those units at the price that would make the project work," said Mark Paetkau, the head of the church's governance group. "It was based on a selling price that was no longer there."

Now, Mr. Paetkau said, the church is looking at simply selling its seven lots outright, with no complicated deal involving social housing.

"If we offer a package, the developer might pay a premium," he said.

Those planning for the future of Holy Rosary Cathedral's property will have to factor in such complications.

They'll also need to think about how much potential buyers think any project might be worth, real estate experts say.

Most developments in recent years in the city have combined residential and commercial uses.

"The market downtown is still really soft for condos," said Michael Ferreira, whose company, Urban Analytics, tracks condo developments and sales. "There's a big spread between what the presale price has to be these days and the resale market."

He said high costs are forcing the developers that are still going ahead with new downtown condo projects to market units at $500 to $600 a square foot more than a resale condo.

Mr. Ferreira said that by the time any proposal involving the cathedral land becomes official, conditions will likely have changed. But a building in that area, on the eastern end of the downtown business district, will not command the same prices for projects in the more residential areas such as Coal Harbour or the West End, he said.

"That location isn't going to garner the superluxury development."

However, with Amazon Canada coming into the former Canada Post headquarters nearby and at least two office towers under construction in the same area, there will be demand for housing, he said.

"It's prudent for them to explore opportunities," he said.

It's not the archdiocese's first effort at development. It sold its site at Robson and Cambie streets in 2014 to Amacon Development, which is building a 29-storey tower and hotel complex. The deal requires Amacon to find a replacement for the 102-bed hostel that was there.

Mr. Brown said the most successful partnerships seem to happen when the church is very clear about how the development will complement its community and social goals.

"These projects work best if the project is aligned with the mission. If all it does is generate money," that tends to be more problematic, he said.

One partnership that has drawn praise was between Central Presbyterian Church in the West End and Bosa Properties Inc.

That project, which was finished two years ago, includes 168 market rental units, 45 social-housing units and three floors of space for three different church congregations, a daycare, rooms for community services and retail.

Mr. Brown's company is working with three churches in the region - one near Oakridge in Vancouver, one in Port Moody and one in Langley - to develop housing on their sites and build new church facilities for them.

But he said the deals that his non-profit development company makes with churches allow them to retain more control over their property, and do more for their social goals, than private developers. He thinks that kind of arrangement, a lease or co-ownership, is better for the community over all because the asset stays in the hands of the church.

Catalyst becomes a co-owner of the rental units, with the church as the other majority or equal owner.

"In the projects we've done, they contribute the land, we do the development, we all share the revenue. In all, the church gets a new building with no debt and owns a chunk of the project forever."

Associated Graphic

Central Presbyterian Church, seen on Thurlow Street in Vancouver on Friday, was redeveloped two years ago to include market rental units, social-housing units, three floors of space for different church congregations, a daycare, rooms for community services and retail.


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