Unsecured creditors left with a fraction of what they were owed when The Land Conservancy emerged from creditor protection in 2017 could be in for a small windfall if the City of Victoria goes along with a density-swap deal between Abkhazi Gardens and the developer of a proposed multi-family residential project.
The density transfer would see the existing townhouse density rights of the gardens’ site at 1964 Fairfield Rd. transferred a few hundred metres to the west to 1733-1737 Fairfield Rd., where Aryze Developments is planning a multi-family project.
It would also down-zone Abkhazi — currently zoned for a dozen townhomes — and ensure it holds heritage designation, while Aryze’s property would go through a rezoning process to accommodate a new multi-family project.
Under the agreement, The Land Conservancy would receive about $300,000, which it says it will use to pay the unsecured creditors that were never made whole during the restructuring.
After three years, The Land Conservancy climbed out of creditor protection in 2017.
The Land Conservancy went into protection owing about $7 million. It ended up paying $7.3 million to creditors and $2.4 million to lawyers and the court-appointed monitor. All secured creditors were fully paid.
Supporters provided $1.6 million worth of creditor forgiveness and another $230,370 in donated legal fees, while the non-profit organization sold and transferred some properties.
Cathy Armstrong, executive director of The Land Conservancy, said while the organization is out of creditor protection and debt-free, it felt it had an obligation to those 35 unsecured creditors who got only 22.5 per cent of what they were owed.
“We completed that creditor protection but we did leave a letter of obligation,” she said. That letter said if TLC was ever able to make a density-transfer happen in exchange for a cash infusion — an idea which had been floated as a way to raise money in the midst of the restructuring — then they would pay the unsecured creditors.
Armstrong said the $300,000 would amount to about another nine per cent of what the unsecured creditors were owed.
She said she told the creditors, following the restructuring process, that there was a slim hope they might see more money if TLC could find a developer they were comfortable with and a project that could work.
“And here we are,” she said. “We’ve found a willing partner and we think we have a project that we can all agree is maybe workable.”
Armstrong said they have made clear the agreement is not an endorsement of the proposed development. “We’re here to partner with them. It benefits the garden, but it’s up to the mayor and council and the community to decide if that project is something that benefits the community.”
Discussions with the City of Victoria indicate it would go along with a density transfer if certain conditions are met, including the down-zoning of the gardens, the loss of its density rights, cleaning up its heritage status and council approval of increased-density zoning at the new development site, she said.
Aryze director of development Chris Quigley said it’s a partnership that works for all involved — The Land Conservancy gets cash, the land is protected from development in perpetuity and Aryze’s proposal for the 1700-block of Fairfield Road is made more attractive.
“I believe there’s the benefit new housing can bring by up-zoning the land that we are proposing to develop, and we’re down-zoning the Abkhazi Gardens so that may strengthen community support. …
“This definitely adds a new dimension to what we’re proposing and I think it speaks to a lot of people’s interest,” he said. “We always look for community and public benefit as part of all of our projects. And this just seemed like a natural fit where we could do a project close by to switch that density, or transfer that density off the garden to protect the asset and move it to a more appropriate location.”
Armstrong said the agreement sits well with the Conservancy as it encourages densifying areas that can handle it.
“If we don’t densify our urban already-disrupted landscapes, then that means we’re sprawling out into the wild spaces and that means into the forest, filling in wetlands, disturbing habitat,” she said.
Aryze has proposed using less than a third of the available 35,000 square feet of density available from the Abkhazi Garden site.
The project at 1733 Fairfield Rd. envisions both townhomes and apartments. Aryze expects to make an application to the city in April.
