NOTICE TO MEMBERS

In June, TLC’s Board of Directors struck a Bylaw Committee that included Bill Pearce, Lori Roter, Tom Watson, and John Shields. The Committee is distributing its draft revisions for member input. The Board would like your feedback. The revisions will be discussed at the upcoming November 21st AGM, but not voted upon.

A special resolution will be brought to the AGM to provide clarification of proxy voting procedures. At the Extraordinary General Meeting held in June it was discovered that there is a discrepancy in our Bylaws under Part 1. Interpretation. The definition of a special resolution did not specify that a member can vote in person or by proxy. On November 21, 2015, the Board will propose the following special resolution:

That the Bylaws of TLC The Land Conservancy of British Columbia be amended by adding the words “or by proxy at a convened meeting” to 1.01 (i) and removing “at the general meeting of which notice specifying the intention to propose the resolutions as a special resolution has been duly given.” and also removing “a majority of not less than three-quarters (75%)” and inserting “the majority as specified in the Society Act” so that the new wording is:

1.01 (i) “Special Resolution” means a resolution passed by the majority as specified in the Society Act a majority of not less than three-quarters (75%) of the Members entitled to vote and present in person or by proxy at a convened meeting. at the general meeting of which notice specifying the intention to propose the resolutions as a special resolutions has been duly given.”

The entire existing and proposed new Bylaws are available on our website or by calling our office. The major changes being proposed are:

Part 1. Interpretation. Changes to align with the new Society Act, adds definition of Senior staff person and clarifies proxy voting procedures.

Part 2. Membership. Addition of requirement to be a member 45 days before voting rights granted. Adds lifetime member category, and adds provision terminating membership 45 days after notice of dues owing. Also adds a provision to renew membership during registration at a meeting.

Part 3. Directors. Renamed Board Directors for clarity. Substantive changes with the addition of a provision for a 2 or 3 year term to allow continuity on the Board, changes to the nominating committee procedures reducing notice to 60 days and requiring members to nominate 45 days prior to the AGM.

Part 4. Powers of Board Directors. Renamed for clarity as above and adds requirement for committees to be chaired by a Board Director and adds optional representation by staff.

Part 5. Proceedings of Board Directors. Renamed for clarity as above. Increases required meetings from 4 to 6, sets quorum at 4, provides deciding vote to Chair, removes provisions for a resolution in writing, and removes a provision for waiver of notice and a provision for acts of Directors if in defect. Added Society Act provisions for remuneration of Directors, adds in camera provision, changes number of allowable missed meetings to 2 consecutive rather than a majority for removing a Director.

Part 6. Officers. Allows Secretary or Treasurer to delegate duties to staff.

Part 7. General Meetings. The new Society Act requires AGM to be held within 6 months of fiscal year end. Clarifies proxy voting procedures.

Part 8. Register of Members. Replaces Secretary with Senior staff person as responsible for keeping the register of members.

Part 9. Register of Board Directors. Renamed for clarity as above. Replaces Board with Senior staff person as responsible for keeping register of Board Directors.

Part 10. Common Seal. Clarifies use of common seal.

Part 11. Banking and Finances. Major revisions. Previous provision of appointment of a trust company removed, as well as provision for Board Directors to distribute funds at end of each fiscal year. Adds requirement for endowment and trust funds to be held in a separate account. Adds requirement for expenditures to align with approved budget.

Part 12. Auditor. Changed Director to Board Director for clarity.

Part 13. Inspection of Books and Records. Inspection of TLC records altered to comply with BC Freedom of Information and Protection of Privacy Act to ensure membership information is protected.

Part 14. Notice. Slight clarification of wording only.

Part 15. Liability of Members. No changes.

Part 16. Limitation of Liability and Indemnity. Slight wording changes, not substantive changes.

Part 17. Amendments to Bylaws. This section removed. New Part 17 is the old Part 18 Charitable Status, Voluntary Donations and Bequests. Added endowment limitations of Community Foundations like the Victoria Foundation which has a $10,000 contribution minimum.

Part 18. Standards and Practices. (Old Part 19) No substantive changes.

Part 19. Acquisition, Protection and Disposition of Property. Entirely new. Provides the foundation for the new operating principles of TLC in respect to acquisition and protection of special places. See below for an explanation of the proposed changes to Part 19.

Part 20. Protection of Property. Deleted. Part 19 outlines the protection mechanisms TLC will use to provide protection via the placement of covenants. In future, properties will not be declared inalienable; rather the processes outlined in Part 19 will ensure protection in perpetuity.

Explanation of TLC Draft Bylaw Amendments (new Part 19)

The Board held a retreat earlier this year during which we canvased the reasons why TLC got into financial difficulty. We asked ourselves what can we do to prevent a reoccurrence of the events which led us to seek CCAA protection and what should be our model of operation going forward. We came up with a model that will provide better protection of properties than what has existed thus far. It has the added benefit of stretching the value of each dollar that is donated so that more properties get protection with less money.

At the end of this exercise it became apparent that in order to achieve our new vision for TLC the bylaws were in need of amendment.

New Model for Protection of Properties

The nature of the business of TLC will not fundamentally change going forward. We will still be in the business of rescuing special properties whose special values are in danger of being lost permanently without emergency action by TLC. The typical campaign aims to raise the full purchase price within a short time frame. When it becomes apparent the target price will not be reached within the tight time frame mortgage money is sought to make up the difference.

TLC got itself into financial difficulty primarily by using our properties as piggy banks that we could raise mortgage money on to purchase other property. This placed financial obligations upon us which we didn’t have the means to support. Similarly we accepted bequests or donations of heritage properties which were associated with high maintenance and administration costs at a time when we lacked the resources to properly support them.

TLC acquired a huge inventory of properties throughout the Province which our existing bylaws required us to declare them to be inalienable. Our existing bylaws prohibit us from mortgaging, selling or transferring the property to others except in an insolvency situation and in that event we are restricted to transfers (not sell) to a like minded organization all with the view of ensuring protection of the property in perpetuity.

Our present bylaws also require TLC to place a conservation covenant pursuant to s219 of the Land Titles Act on all properties that are declared inalienable. The covenant restricts the use of a property in a manner that preserves the special values associated with a property. The covenant is made in favour of a covenant holder who is obliged to monitor the covenant to ensure the protective obligations are maintained.

The covenant cannot be changed by the owner and even in an insolvency or a CCAA protection proceeding the Court has no jurisdiction to amend the covenant.

What we learned is that the inalienable designation does not give the property full protection unless a s219 covenant is registered on title and that it is the covenant, not the inalienable designation, which provides the protection.

We wish to continue what we excel at and what we are known for and that is protecting property. In the rescue stage it is important to us to retain the power of mortgaging but the proposed change to the bylaws obliges TLC to place the covenant on the property as soon as the mortgage is paid off and the bylaw change will preclude TLC from remortgaging the property.

The other important change is to empower the Board to sell or transfer the acquired property which is now encumbered with a covenant (which ensures its protection), to anyone of its choosing. The need to designate the property as inalienable vanishes once one realizes the covenant will provide the necessary protection. The ability to sell the property allows us to stretch donor dollars by protecting more properties with the proceeds of sale.

One of the problems which led to our difficulties was the huge staff that had to be maintained to administer our empire of protected properties. Under the new model we will be able to continue to function with a much reduced staff which again will permit donated funds to be used to protect properties with very few pennies on the dollar being spent on administrative costs.

When a property is covenanted the extra restrictions on the use of the property will lessen the value of the property so TLC will never recover the full cost of acquisition in the resale. In this new model the donated dollars effectively equate to the depreciation in market value associated with the protective measures that are placed on properties.

Going forward TLC will continue to rescue properties whose special values are in jeopardy and in most cases selling them to appropriate persons whether to similar non profit charities as TLC or other organizations or individuals after we have placed the necessary protective covenant on title.

Other charitable land trusts such as the Nature Conservancy of Canada do not have an inalienable designation process such as ourselves. Protection of private land through covenants is a common practice for charities such as TLC. We hold covenants on 230 properties. The National Trust in Britain for example holds covenants on 37000 hectares of private land.

The new model allows us not only to stretch our conservation dollars by allowing us to purchase lands and sell them with a conservation covenant and use the proceeds to purchase other special places (At Ducks Unlimited they call this ‘Revolving Land’) but provides those lands with more protection than they presently enjoy under the existing bylaws.

Trust Issue

During the CCAA proceeding TLC has experienced considerable difficulty with persons objecting to proposed sales on the basis the properties are “trust” properties to which TLC has no beneficial interest. The arguments raised rested on the argument that donors contributed money for the purchase of property or the pay down of a mortgage on the basis TLC would hold the property in trust for its intended purpose in perpetuity. The most notable property where this issue was raised by the Attorney General was Binning House. The Court ruled that it was a TLC trust property (although later the Court of Appeal set aside the initial transfer to TLC on other grounds).

If the Attorney General is going to persist in viewing most of the properties we attempt to rescue as ‘trust ‘ properties we will not be able to use a mortgage to bridge the short time frame we are typically faced with. It is important therefore to ensure our acquisitions are not considered ‘trust’, otherwise our primary goal of saving properties will be next to impossible and TLC will lose donor support. It is to be noted that TLC has never considered any of its properties to be trust properties other than the few which were donated with a separate endowment fund to support the properties without the need of TLC general revenues.

The bylaw amendments clarify that donations are impressed with a trust to oblige TLC to use the funds for the acquisition of particular properties and to protect them with a covenant and that once those obligations are complied with the trust obligations associated with the donations are at an end. The bylaws ensure that acquired properties are beneficially owned by TLC with the full right to sell or transfer protected properties.

 

A full copy of the text of the existing Bylaws and the proposed new Bylaws can be found on our website at www.conservancy.bc.ca. We encourage your feedback. To make comments, please send them via email to admin@conservancy.bc.ca or call us at 1-877-485-2422 or 250-479-9053.

We look forward to hearing from you.

TLC’s Bylaw Committee