Pass the Plate?

Here are my thoughts and those of Ben Richards (Share Financial-Dallas, TX).

Passing the plate is not the most effective way to collect tithes and offerings, even though most churches still deploy this long standing collection tradition. Today, more and more churches are not passing the plate, instead are opting to have a dedicated place in the church building where congregants can place their money. This has been called the agape or love box.

But the most effective way and perhaps the most important strategy in this digital age, is the option for congregants to donate on-line. One line giving can also automatically draw each month thus eliminating the discretionary decision that congregants may make.

Besides the actual collection of money, the most important aspect of giving starts with the heart—the heart of the congregants and the heart of the pastor. It is a church’s lead pastor who must regularly teach his congregants of the blessings that come from tithing. This teaching can be supplemented and enhanced by personal testimonies from congregants (perhaps every quarter) on how their life has been blessed because of and since they started tithing.

When Should A Church Expand?

This question is frequently contemplated by church leaders across the country. The logical answer is… a church should relocate when it has outgrown its current facility. This means that the church can no longer grow in its current space. Maybe your church needs more seats or maybe you need more children’s space. The bottom line, though, is that a church must be conducting as many weekly services as reasonably possible and continuing to add new attendees (or at least, remaining the same).

The key word here is grow. A church that is seeing consistent growth should plan for a future relocation. We believe that a church that is not adding new attendees is not growing and is not ready to seek its own permanent facility. But ultimately, it’s up to God to implant the vision and the timing into His leaders for a different facility. God implants the vision and the timing into His leaders to take action.

Many churches believe that in order to grow their congregation, they need to have a permanent (perhaps “owned”) facility. Remember the movie Field of Dreams—build it and they will come. Sometimes this is true. This was certainly true for Mission Hills Church. They didn’t have sufficient parking to expand where they were at University & Orchard. Since opening their new facility in SouthPark, in 2009, they have seen incredible new growth.

While every facility situation is different and it’s tough to generalize, we have long observed some consistent trends. But first let me state that, we keep a database of 2,000 churches along the Front Range (from Colorado Springs to Ft. Collins) and we interact with church leaders at least 10 hours every week. What we hear and what we observe is that usually a church must be conducting at least 2-3 Sunday morning services before it is ready to expand. Just like businesses in office buildings that I have relocated (over the past 20+ years); a church’s current facility has to be “packed-out” before it makes sense to seek a larger space.

Finally, we observe churches meeting in substandard facilities that are growing and regularly adding new people. Why? They have the buzz—people are talking about the church. People are attracted to good preaching and to excellent worship, but people are most attracted to being a part of something that their friends or friends of friends are talking about. Churches expand by word-of-mouth.

Another Successful Bond Underwriting

Advisors is proud to report that our client, Crossroads Community Church, has successfully raised 100% of its new facility debt resources through a bond underwriting conducted by Share Financial. This allows Crossroads to acquire the 45,000 square foot, former Burt Chrysler, Jeep automobile dealership located at 9900 Twenty Mile Road in Parker, Colorado.

Like most bond issues, CCC’s bond underwriting campaign was conducted in two phases—a national effort and a local placement—over a 5 month period. The national effort resulted in bonds being snapped up in just a few hours by a national audience of investors. With similar results, the local congregation requested 40% more bonds than were offered (available), with the average amount requested nearly doubled the national requested amount of $12,000-14,000 (per family).

These results are remarkable but not surprising. Bonds today offer an investor a secure investment return ranging from 4% to 8% which is substantially better than most CD and Treasury holdings. I personally own church bonds and see them as an increasing component of my own investment portfolio. Not only is it a great investment, but it allows a church congregant/member to own a piece of their church’s facility.

For an expanding church or non-profit organization, bonds are an excellent financing alternative to conventional financing. While up-front costs are considerably more, bonds offer a 25-year fixed interest rate which can be prudent in a turbulent credit environment. Oftentimes bonds are the only alternative an organization may have to procure debt financing. While we try to direct our clients towards less costly financing, more and more we observe that bonds offer the right solution.

Church Facility Work Brings Happiness

Today, at the church that I attend, Pastor Jim Dixon spoke about how happiness and joy come from responding to God’s calling. God calls us to confess that Jesus is Lord (as Peter did in Matthew 16:16) and to focus our lives in service to Him. If we do this, then we will begin to experience happiness and joy.

Development Advisors Church Facilities group (comprising Mr. Scott McLean and Mr. Tim Dreessen) believes that we have each been “called” to serve churches desiring to expand and/or relocate. We believe that God has called us to this service. While we have performed this specific work to churches for only 6 years, it has taken our entire careers to mature. Our lifelong careers in commercial real estate brokerage and development and our regular attendance as congregants at local area churches, have uniquely prepared us for such a time as this and for this church facility calling. We have a passion to serve Christ by leading churches (its' staffs and congregant leaders) that seek to expand and/or relocate their church facility. By doing so, we convert church leader’s visions into reality and participate in expanding God’s kingdom. Both the journey and the result, for us and for our clients, produces great joy and happiness. PTL.

New Facility - How Much Debt Is Prudent

In addition to cash and fund raising efforts, nearly every church facility relocation project today requires a certain amount of debt in order to be accomplished. Most lenders will tell you that a church’s total facility expenses should not exceed 35% of its annual budget. In fact, in a bond underwriting, this is a statutory limit. Even at 35%, this is a tremendous burden on a church. So how much is prudent?

Frequently, Development Advisors is asked about the amount of debt that a church should take on. Here are some ideas worth considering:

a. In general, we believe it’s only prudent to take on as much debt as can be comfortably managed during stormy seasons.
b. Borrow only as much as you can pay back. Church properties typically sell in the after-market for considerably lower than their replacement costs. A church should not borrow more than the future value of the property. The reason that church properties sell so inexpensively is that they simply have very little demand (so few possible buyers). Little demand means a lower selling price.
c. Discern what is really needed as opposed to what is desired. Borrow money for real needs necessary to evangelize, worship, teach, disciple and to help others recover.
d. Borrow only as much as the church can allocate from a modified budget for future additional debt service and operating expenses.
e. Finally, the leaders of the church have a responsibility to discern God’s leading in prayer.

Churches End Up Paying Property Taxes

We just learned that churches, who desire to lease instead of own their facilities, will likely end up paying real property taxes to the owner of real property who is obligated to pay these taxes to the State of Colorado regardless of the occupant of the building.

We think this is just plain wrong.

In our opinion, the intent of the state real property tax exemption doesn’t regard ownership but only use. The State of Colorado Property Tax Exemption Statute states that in “the general assembly hereby finds, declares, and determines that the uses of property which are set forth in this part 1 as uses for charitable purposes benefit the people of Colorado and lessen the burdens of government by performing services which government would otherwise be required to perform. Clearly there is no mention of property ownership. We believe that the owner of real property, who leases to a qualifying tax exempt entity, should have their real property taxes abated for the portion of the space occupied by the qualifying entity.

Currently, in order to qualify for real property tax exemption, a church must both own the property and also use the property for qualifying charitable purposes.

Colorado Revised Statute 39-3-106 (1) states that: Property, real and personal, which is owned and used solely and exclusively for religious purposes and not for private gain or corporate profit shall be exempt from the levy and collection of property tax.

It is our hope and perhaps a future goal to find a way to revise this to match the original intent of the statute.

VACANT Retail Boxes Offer Church Facility Choices

With the continuing malaise plaguing the economy and consumer spending at its lowest level in a decade, unprofitable retailer operations are being shuttered leaving vacant spaces in retail shopping centers across American. According to Mary Beth Jenkins with the Laramie Company, who recently reported at the Rocky Mountain Real Estate Expo, there are 54 retail boxes currently unoccupied in the greater Denver area. This does not include the many additional automotive facilities that too lie fallow.

Development Advisors, LLC (“Advisors”) believes that many of these empty retail buildings would be desirable as a new church facilities. Retail boxes offer many of the attributes that churches are seeking today—visibility, access, parking, and services like restaurants to frequent before and after Sunday services.

Not long ago, the mere presence of a church in a retail center suggested that the shopping center had lost favor with retailers who abandoned the center for greener pastures elsewhere. But today, the reputation of a shopping center with a church has changed. These days, weekend and evening traffic from a church can transform a slowing retail center.

There are many examples of churches that occupy retail space in the greater Denver area including:
▪ Calvary Chapel South Denver: 9052 West Ken Caryl Avenue; Littleton, CO 80128.
▪ Orchard Christian Center purchased the former Beau Monde shopping center at the NWC of I-25 & Orchard Road in Greenwood Village, CO.
▪ Foothills Community Church 8270 W 80th Ave; Arvada, CO 80005.
▪ Flatirons Community Church 400 W South Boulder Road; Lafayette, CO 80026-8856.
▪ South Fellowship 6560 S Broadway; Littleton, CO 80121.
▪ Colorado Christian Fellowship 10630 E. Iliff Avenue; Aurora, CO 80014.