Letter to the Congregation 2 - regarding ideas for Saulaine discussed in the community
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Dear Fellow St. John’s Congregation Members,
I am writing today to remind you that we have an important meeting and vote arranged for this coming Sunday to determine the future of Saulaine. In recent weeks you have likely seen two ideas related to the future of Saulaine, specifically i). severance and sale of a significant portion of the property to an environmental group, and ii). creation of a partnership with an unspecified entity to manage the property. The purpose of this note is to provide a more detailed analysis of these proposals and explain why both have been rejected by Council.
Council has previously advised you that the Congregation has been suffering major financial losses at both 200 Balmoral and at Saulaine for several years now. Such an ongoing drain on our reserves is not sustainable and threatens our future. Council is recommending we list Saulaine for sale both to reduce our annual operating losses and release congregation funds to create a financial reserve for the future. To do this requires a positive vote of 2/3 of the membership voting at the meeting on Sunday. Your support of the resolution is critical in securing the future of our Congregation and Church.
Severance
One idea being promoted is to sever the property and sell the portion zoned for conservation (roughly half of the total property on the floodplain of the Nottawasaga River) to the Escarpment Biosphere Conservancy (EBC). Two Council directors (Edgars Legzdiņš and Jānis Tikiņš) recently met with the CEO and staff of the Conservancy to discuss their potential interest in acquiring this land. EBC conveyed that discussions with several other Church members had been very preliminary and had not focused on valuation. EBC indicated that they would generally pay $4,000-$7,000 per acre for non-developable land which, in Saulaine’s case, would translate to a gross price of $80,000-$140,000 for the roughly 20 acres of the conservation-zoned land. After severance and legal expenses, the Church could expect to net $40,000-$100,000. EBC expected that the severance approval process, even if successful, would take approximately 18 months. They agreed that there is no guarantee that the severance application would be successful. Even if it could be successfully implemented, this idea would result in proceeds covering less than one year of Saulaine’s annual operating losses. It would provide no funds with which to alleviate our financial crisis. The idea makes no financial sense.
Partnerships
A second suggestion being promoted is that the Church enter into a vendor-take-back mortgage arrangement with a group of Latvian purchasers. Such an arrangement would have to be on market terms to protect the Church’s charitable status and would, necessarily, be subject to legal review. To be on market terms, the purchasers would have to provide collateral (generally marketable securities with a market value of 200% of the mortgage) that the Church would hold and revalue regularly. The Church does not have the capability to assess the creditworthiness of borrowers and to regularly revalue collateral. That is the purview of banks and other financial institutions. In any event, a financial arrangement of this kind would not release cash to alleviate the current financial crisis and should not be pursued.
Conclusion
Council recognizes that many members have rich and fond memories of their times at Saulaine. However, the harsh reality is that Saulaine has not played a significant role in most of our Congregation’s lives in many years. We have actively sought alternatives to selling Saulaine for two years now, but no viable alternative has emerged.
Saulaine generates losses of approximately $100,000 per year, yet, it holds a market value that could be unlocked to benefit the Congregation and the Church and protect our future.
Proponents of continued engagement with Saulaine are welcome and encouraged to bid on the property when it is listed for sale, including partnering with organizations and groups that share their objectives and values.
Council sees no other way forward and urges you to vote for the resolution to list Saulaine for sale this Sunday. Please participate in making this important decision on the future and survival of our Congregation and Church.
St. John’s Ev. Lutheran Latvian Council
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