On the afternoon of Monday, January 22, a group of students, staff, and faculty gathered with three representatives from Quest’s Board of Governors to discuss the Board’s recent announcement to develop the University’s lands. The meeting was announced in an email sent to students on January 15th, roughly one week prior.
The biggest news in the email was Quest’s decision to form a partnership with Board member Michael Hutchinson and his enterprises. The meeting was held to provide context to the decision and, according to the email, to “address any concerns that may arise from Mr. Hutchison’s simultaneous membership on Quest’s Board of Governors.”
Three Board representatives—Chancellor Peter Webster, Chief Dale Harry, and Quest President George Iwama—were present to answer questions. Notably, Hutchinson was not present at the meeting, as he is currently in Japan.
Iwama opened with a brief explanation of Quest’s announcement. Quest’s not-for-profit status means the university cannot develop lands on its own, he said. As a result, the university must enter into a trust, or general partnership, which will “collectively develop” the university’s land.
This is similar, Iwama added, to the deal Quest struck with Hutchinson for the development of the Ossa and Red Tusk residences. In that agreement, Quest has a 25-year lease on the buildings before owning them outright.
When several students raised concerns about Quest’s agency in the deal, Iwama stressed the particularities of the “general partnership” they plan to enter with Hutchinson. This agreement, he explained, gives Quest equal bargaining power to the other entities within the trust. (In a “limited partnership”, the entities involved do not necessarily share decision-making power equally.)
Chief Dale Harry explained that the partnership was one of only two choices currently available to the university to achieve financial stability. “From DQAB, we had the question: what are our options? Sell the land, or partner?” He added that, in light of Quest’s history of land sales, selling further land was not on the table. “If you sell the land, it’s gone forever. But if you partner, you can build a future, and you can utilize the land.”
Quest alumnus Jesse Horn asked why the university had not first attempted to offer the development opportunity to the public, as is common practice. Iwama answered, “we all agree the most open and straightforward way would be to have had a request for proposals and have people bid in.” However, he added, Quest’s current financial situation has “limited our freedom to take some of those obvious paths.”
“We don’t have a deal that’s better,” Iwama said, “and we’ve been nurturing this one.”
Quest’s decision to monetize its lands is motivated by two upcoming deadlines—the first being fulfilment of the DQAB’s three major recommendations for the school, which is due on March 31st of this year. One of the recommendations states that Quest must take steps to monetize its lands for the sake of financial stability.
Iwama stated that Quest is close to achieving all three of these recommendations on schedule.
The second, more urgent deadline is a $20-million payment of Quest’s first loan, which is due in November 2019.
According to Iwama, the loan is owned by an organization directed by Blake Bromley, one of the three founding members of the Sea to Sky Foundation. Bromley is also a current director of the Almoner Foundation, which owns the North and South residences.
The reason Quest has this loan, Iwama explained, is that Quest has not had tier-one bank accreditation, which makes it difficult for the university to secure a low-interest, long-term loan—the sort commonly held by universities like UBC.
“Banks and donors who have been reluctant to lend or otherwise support Quest have reacted well to the prospect of this partnership,” wrote the Board in their January 15 email. “Within a few years, we expect that major banks and donors will be more likely to grant Quest much-needed financial support.”
The board members at the meeting were more specific. Iwama said that the partnership with Hutchinson in combination with the university’s 2017 subdivision proposal would create the possibility for the school to secure a new, less expensive loan to pay off the old one.
Before doing this, Iwama said, the school had to subdivide the land in order to attract banks—this was the reason for the subdivision proposal the school filed last year. “One reason banks keep their distance [from loaning money to Quest directly] is they don’t want to close down a university,” Iwama said. A lending bank, however, might find it more palatable to risk foreclosing on a smaller parcel.
According to Board members, Quest is still unable to take on the loan directly because of its non-profit status. However, the relationship formed with Hutchinson via the trust will allow the two entities to collectively apply for a loan from a bank. Iwama suggested that Hutchinson will provide the trust with financial support in this endeavour.
“Michael Hutchinson is putting at stake a lot of his assets in order to channel commercial funds from a bank into this venture,” he said.
Iwama was optimistic about the possibility that the partnership might mitigate, or erase, Quest’s debt concerns. However, he cautioned, the development proposal “does not make things just go away; it just puts things in a more workable situation for the future.”
The Board did not offer solutions in response to multiple student questions about Hutchinson’s conflicts of interest in continuing to serve on the Board, except to say that he and David Fujimagari, a Board member who also works for Hutchinson, leave the room during discussions about development. Each member present emphasized that they find Hutchinson trustworthy. Some added that, based on his work with the Board during the difficult summer months, they believed he had the best interests of the University in mind.
However, Chancellor Webster, the newest member of the Board, acknowledged that he shared students’ concerns when he first joined. “In an ideal situation,” he said, “it shouldn’t have happened.”
The Board members said that they were open to further discussion of the issues raised at the meeting, including holding a public meeting with Hutchinson in the future.