With what seemed to be the inevitable redevelopment of 958 Broadview, the Estonian (Toronto) Credit Union Ltd. (ETCU) took a pragmatic step to look for provisional housing. To manage risk and provide “continuity of service” at a location familiar to Toronto-Estonians the ETCU purchased 11 Madison for $2.3 million in February of 2014. The residential home, built about the same year as Chester Public School, is part of a designated heritage district. (See http://www.theara.org/news/357... ) For 8 years #11 Madison was a Buddhist Centre and before that served as an office for The Canadian Council of Churches from 1969 to 1996.
In their press release the ETCU said:
“The purchase will have no impact on day-to-day operations in the near term. In other words, ECU will continue to operate out of one branch at the Estonian House and will use the property to generate rental income in the interim.” (See https://www.estoniancu.com/pre... )
Since 11 Madison was intended to be an interim home for ETCU, it didn’t seem out of the ordinary to repurpose a former residential property into an office. Law practices, doctors, dentists, and other professional services have operated from former private homes for decades. Understandably features like public accessibility, enhanced security and a safe would have to be attended to before an ETCU branch could open.
For the remainder of 2014, 11 Madison remained empty while ETCU worked on ideas “to generate rental income.” In the spring of 2015, a Phase 1 Environmental Site Assessment (ESA) was performed on the site. ESA’s are commonly used by purchasers, vendors, financiers, real estate agents and lawyers involved in real estate to determine or evaluate the financial liabilities of potential or actual contamination on properties. For a Phase 1, a qualified person reviews historical records, performs a site inspection, interviews are conducted with property owners or managers and an analysis is done to determine potential contamination on or near the site. ESA’s are standard practice when commercial or community property ownership is transferred or land-use zoning is changed.
From about 1890 through to 1969 #11 Madison was registered as a private residence that went through a number of ownership changes. In 1969 The Council of Canadian Churches renovated the property into an administrative office under “commercial” usage. After that 1969-1996 period, the property was classified under “community” usage as a place of worship. The history of the building and other comments from the most recent ESA for 11 Madison is available for review. (See attached “11 Madison RSC 218090”). From an environmental perspective, the site came back clear of any contamination issues or hazards.
With a clear ESA, it might have seemed a natural progression to request changing the building’s usage from community to commercial, but as noted in a letter dated June 2016, ETCU opted for an interesting rental option. Kongats Architects were hired to manage the conversion of 11 Madison to a student residence with “10 dwelling rooms.” (See 1401a -11 Madison Ave Past Use of Building, letter June 2, 2016 attached).
In December 2013, just before purchasing 11 Madison, ETCU headed a group of credit unions to lend $10 million to a student residence less than 100 metres away. The choice to convert 11 Madison months later into a 10 unit student residence was an intriguing choice to say the least. In the end, the anticipated short-term conversion of the property into a student residence may have been deemed too costly since the City of Toronto advised ETCU that a parks levy of $85,000.00 would be assessed on the property. (See 22 - Letter re Park Levy Payment attached). Keep in mind that the Park Levy may still be a budgetary consideration under the current due diligence assessment.
But the underlying usage concept that Kongats was asked to work on still begs the question: If a sizeable loan was provided to a neighbouring student residence just a couple months before, why renovate 11 Madison to host 10 additional student dorm rooms? Some might think that this new 10 room residence could divert income from the borrower on the corner. Perhaps. But others may have concluded that 10 rooms could benefit this well-established residence while they were in the midst of refurbishing their property. What if the borrower was going to be short 10-12 rooms of capacity each semester because of renovations? It’s possible the borrower could “operate” 10 rooms in a neighbouring building to help generate additional income toward their loan payments. In this case, the borrower ends up paying a lease to one of its lenders to “operate” the 11 Madison residence while, at the same time, they’re able to put a little more revenue towards their debt service. Seems like a win-win.
To date, the student residence hasn’t come to fruition. But why wasn’t the house configured into an administrative office which could more easily be converted into a bank branch. With so much construction downtown certainly a good realtor could find a commercial tenant in need of office space for 2 or 3 years. Unfortunately for ETCU’s bottom-line, the property has remained vacant for 3 years.
Questioning why a 10 room student residence was considered may be a moot point anyway. The circumstances behind the changing usage model for 11 Madison might best be learned from the “4 Orgs” recent statement:
“In 2014, 9 Madison Ave. was listed for sale by Build Toronto, the corporation tasked with selling City property—creating a very real opportunity for the Estonian community. Some community organizations began to discuss a possible purchase of the parking lot at 9 Madison Ave. Then 11 Madison Ave.—just north of 9 Madison Ave.—also became available for sale. Again, following discussions among various organizations, the Estonian Credit Union stepped forward and purchased 11 Madison Ave. in 2014 as a strategic investment to provide its members—and the Estonian community—with potential space for future use.Is it fair to conclude that #11 was purchased solely to dissuade others from buying #9? Surely, many Estonian House Limited shareholders are questioning why these particular circumstances weren’t raised in 2014 at any EM2 meetings. At the time, the EM2 committee discounted the downtown possibility and actively asked shareholders to support redeveloping 958 Broadview with Tribute. But those involved in the Madison discussions in 2014 must have known sizeable investments were needed for redevelopment of 9 and 11. Physics, math or strategic planning, is this where 9 + 11 began to equal EM2 or is the equation 958 minus 9 minus 11 equals zero chance for Broadview?
With Estonian community organizations owning property on either side of 9 Madison Ave., we had a stronger position with which to begin negotiations with Build Toronto.” (Excerpt from https://www.estoniancentre.ca/... )
The diverse directions and usage models over the last 3 to 4 years are like looking for George Reeves in the clouds, remember…it’s a bird, it’s a plane…no, it’s Superman. Strip out of the phone booth and look at 11 Madison: it’s a house, it’s a religious centre, it’s a bank branch… no, it’s a student residence. After the due diligence period and getting beyond a heritage designation, it might be a cultural centre.
Even Clark Kent might have trouble checking the box that best applies to the preferred use of the property.
(The next articles in the series will look at the health of 958 Broadview which will be followed by a look at the issue of property ownership.)
Related: Toronto Eesti Maja tulevik
Madison Project “Due Diligence” Part 1
Madison Project “Due Diligence” Part 2
Madison Project “Due Diligence” Part 3 – School Season Neighbours
Déjà vu all over again - Part 4
Part 5 – "Cash out, but will it cash in?”