Legion Branch No. 264 on Calgary’s Kensington Road is the latest branch of Canada’s largest veteran support service to secure its long-term future by monetizing valuable land assets, thanks to a unique partnership with Truman Homes.

As the branch prepares to open the doors of its new facility to members, the project team involved says partnerships between asset rich non-profits and developers looking to densify inner-city neighbourhoods are viable and valuable to both parties.

What’s more, Oliver Trutina, vice-president of Truman Development Corp., is “throwing down the gauntlet” to developers in Toronto and Vancouver to “step up and start conversations with other Legion branches and social organizations whose futures depend upon innovative new revenue streams.”

“We’ve looked at other sites and have also been approached by other Legions and non-profits in similar situations across Canada. Right now, I can’t divulge more than that,” he says. “We’re working to make this project a huge success so that others can see what’s possible. We want it to be a beacon.”

The project is a $16-million mixed-use facility, which will be wholly-owned by the Legion, followed by a $100-million plus mixed-use condo development which will be wholly-owned by Truman.

“It’s essentially a land swap,” says Mark Barham, chair of business operation trustees for the Legion, summing up the partnership. “We get a third for revenue and a home and Truman gets two-thirds for condos.”

The land he’s referring to is a 0.89-hectare parcel on Kensington Road and 18th St. NW which has been owned by The Legion for more than sixty years.

The Legion’s new facility will increase their space from 15,000 square feet to 37,000 square feet, including two long-term revenue generators: a restaurant, plus 20,000 square feet of office space.

While other Legion branches in British Columbia and Ontario have undergone redevelopment to include condos and assisted-living suites, the project team for the Kensington Road branch had a different vision.

“We knew we wanted the steady income of leased office space right from the beginning,” Mr. Barham says. “We also wanted a building that would be a connection point for the Legion and the general public so a restaurant was the natural choice. If we had condos, we’d end up right back where we were, relying on our member fees to make the organization viable. We knew we had to remove the onus of cash flow from our members.”

In addition to increasing the branch’s space to 37,000 square feet, the facility will also include two long-term revenue generators: a restaurant and 20,000 square feet of leasable office space. (Truman Development Corp.)

According to Mr. Barham, the math makes sense.

“The office space should be worth $30 per square foot, which means $600,000 a year from leasing that. We’ve just hired a Red Seal chef with quite a following for the restaurant and we anticipate it will do well. We expect to have a surplus of $1-million per year. On an ongoing basis, that’s significant.

“That money will go towards our veterans, cadet cores, remembrance and the community,” he continues. “We want to be in a position to cut a cheque for a community organization that needs a new roof for example.”

Next door, Truman’s mixed-use development should break ground mid-2017 and will feature an eight-storey, 218-unit condo plus commercial space at grade and underground parking.

It’s an unorthodox arrangement which is new to both the partners and the nearby community associations of West Hillhurst and Hillhurst-Sunnyside, both of which opposed the redevelopment.

According to David White, Principal at Civic Works, the project’s planning and design consultants, initial community reception was “mixed” but, with the future of the Legion branch at the core of the proposal, he maintains that public engagement was an “overwhelmingly positive experience.”

“It’s always a challenge for more established communities to accept change, but securing the future of this branch was high on a lot of people’s priorities. There was compromise on all sides and ultimately, we reached a conclusion which has allowed us to make this happen.”

The unusual nature of the project also made finding a partner to bring it to fruition challenging. Truman is the third developer to take on the contract since the Legion began its search for a developer in 2012. The deal with Truman was struck early in 2015.

“I actually read about the deal falling through with the second developer in January,” Mr. Trutina says. “It was a Sunday. We called them on the Monday, met on the Tuesday and shook on a deal soon after that. Other developer couldn’t make the numbers work; we took a different approach.”

But he insists the project isn’t just about dollars and cents.

“My father, George [the patriarchal owner of Truman], is now an honorary patron at the branch. He’s in there all the time, they ring a bell for him and he has to buy everyone a round of drinks,” he says. “When the development is completed, home buyers will be gifted Legion membership. This is a legacy project; something we want our name associated with, something which honours our veterans.”

Mr. Barham agrees that “with this partnership, everybody wins.”

“There are 141 Legion branches in Alberta and 1,600 in Canada. Many are located on extremely valuable land,” he says. “They’re watching what we’re doing and they’re going to follow suit because it makes financial sense.”

“Developers want to participate; it just has to be viable for them,” he continues. “Social organizations which are asset rich and cash poor don’t have to redevelop themselves as long as they have the leadership in place to take those conversations forward.”

Mr. White says that, from a planning perspective, it does make sense. “A lot of other social organizations, like community associations for example, have powerful and relevant missions but are housed in buildings which just aren’t sustainable,” he says “When you bake that mission into a mixed use building, it starts to work on a number of levels and it can be a great thing.”


Original Article from the Globe and Mail:    www.theglobeandmail.com/real-estate/