Financial worries raised over prime TLC properties

Three former board members say mortgaging of heritage sites and green spaces could be risky

Financial practices at The Land Conservancy could put at risk dozens of landmark heritage properties and iconic wild spaces throughout the province, three former board members say.

The former members cite the practice of taking out mortgages on existing properties and borrowing from restricted funds to pay operating costs as being problematic for the organization, which has preserved such sites as the Sooke Hills and the Sooke Potholes since it was founded in 1997.

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They also say the organization lacks focus and is stretched too thin, arguing that executive director Bill Turner is trying to do too much too quickly through obtaining new properties by mortgaging existing ones.

Last year, TLC raised $3.1 million in donations. It brought in another $4.5 million from rentals, government grants and membership fees.

However, it has 26 mortgages on 15 properties, including Abkhazi Garden in Victoria and Madrona Farm in Saanich. According to Turner, the mortgages total about $3.5 million, with unsecured loans an additional $1.7 million.

If the organization defaults on the mortgages, those properties could be repossessed, sold and developed.

"Anything that can be mortgaged is being mortgaged," said Elspeth McVeigh, former TLC treasurer, who resigned in February in protest over the organization's financial practices. McVeigh, a Vancouver resident, has a background in business, economics and banking.

Auditors also sounded a warning in the TLC's most recent financial statement.

"Considering the current economic environment and the significant deterioration in cash flows, the ability to meet these obligations and maintain operations is in doubt," says the 2008-09 report by auditor Grant Thornton LLP.

If sufficient additional funding is not obtained, there is doubt about the TLC's ability to continue as a going concern, the report says, but adds "it is management's belief that this vital funding will continue in the future."

The three former TLC board members — McVeigh, Barry Glickman and Carol Pickup — raised their concerns as the organization prepares for its annual meeting on Sept. 25. All three were elected on a pro-Turner board in August 2009 after a nasty dispute split the TLC but have since resigned.

Turner dismisses concerns about the organization's financial stability. Most of the $3.5 million in mortgages are for short terms and are privately held, so they are either paid off, rolled over or replaced when due.

"This is common practice just about anywhere in the world," Turner said.

TLC will not default on payments, he said.

"Only five of TLC's mortgages are held by financial institutions. The other mortgages are held by green lenders — investors who want their money to make a difference in the world and are sympathetic to our work," Turner said.

He said the choice is often between losing a site or taking out a mortgage if fundraising falls short.

The debt is down $1.1 million from the previous year, said deputy executive director Ian Fawcett. "We keep telling people the debts are not our problem," he said.

"Cash flow is the issue. There are regular payments such as rent and salaries and regular operations, but the money doesn't come in regularly."

It is more difficult to solicit donations for operating expenses than for individual projects, Fawcett said.

Barry Glickman, a University of Victoria professor, quit the board in June. His resignation letter expressed concern about the TLC's habit of borrowing from projects to cover its $250,000 to $300,000 monthly operating costs.

Pickup, a former Saanich councillor, resigned in May in the wake of McVeigh's resignation.

"I became more and more concerned about finances as time went on, especially after our treasurer had resigned after trying to look into the finances in depth," she said.

Former board members and staff also say money is not always spent where donors intended.

McVeigh said donors do not realize they must mark their cheques or write a letter to guarantee the donation is used for a specific project.

Beth Cubbage, TLC bookkeeper from 2002 until August 2009, said donations to specific campaigns are allocated to the project within the bookkeeping system, but the cash itself goes into general funds.

If the money is needed to meet payroll or other operating costs it is borrowed from restricted funds, she said. It is not always put back, she said.

Turner said TLC's financial practices are identical to other organizations and, if funds are borrowed to cover operating costs, they are always returned. "All donations are accounted for according to the donor's instructions," he said.

jlavoie@tc.canwest.com

cjwilson@tc.canwest.com

Click here for a map of selected TLC properties

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