Denver Church Real Estate

Another Successful Bond Underwriting

2012-01-30T11:14:00.000-08:00

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

2012-01-22T16:16:00.000-08:00

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

2010-03-19T15:39:00.000-07:00

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

2009-12-09T11:31:00.000-08:00

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

2009-12-08T19:12:00.000-08:00

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.

Refinance Debt in 2010

2009-12-01T08:51:00.000-08:00

At the Rocky Mountain Real Estate Expo, we heard that interest rates are projected to increase in 2011 primarily as a result of competition from the US Government. Apparently a $6 Trillion pool of available debt capital will be reduced to only $3 Trillion because of this new competition. This new demand will put pressure on this supply thus causing the cost of this debt resource to increase.

As a result, we suggest that our church clients make plans during 2010 to refinance any debt expiring in 2011 or 2012 before this possible rate spike.

Denver Softens Land Use Regulations for Churches

2009-11-19T15:41:00.000-08:00

We are pleased to report that, after talking with Denver Planning, city staff met and discussed the current Denver Zoning Code’s treatment of church and similar public assembly uses, and revisited how or whether the New Code should change that treatment. Denver Planning has agreed to remove the assembly area size restriction (see our previous update entitled Denver Proposing Strict Land Use Regulations for Churches) and to permit churches in all zone categories. Instead, planning will use the existing administrative review process. This will apply to a church moving into a residential or mixed-use zone district to occupy an existing building for the first time (different use prior to), to expand an existing building, or to develop a new building ground-up. This is customary in our experience and likely typical for other municipal jurisdictions along the Front Range. Further, we understand that in commercial zone districts, in which residential is not present, there would be no administrative review process even though it would still be necessary to apply for a change of use from zoning (if not previously used by a church)

The only restriction (limitation on use) remaining would be the 11 pm end-time for regular hours of operation in a residential zone district.

If you have questions or need any help, please feel free to contact us.

Denver Proposing Strict Land Use Regulations for Churches

2009-11-11T08:44:00.000-08:00

Churches need to become familiar with the sweeping changes proposed to Denver’s land use regulations—Denver’s New Zoning Code. These changes will certainly impact churches currently located or desiring to be in the City and County of Denver. We recommend that as a property owner, you go view the new zoning map to learn about the proposed new zone district for your church property.

Further, after a quick review of Draft #3 of Denver’s proposed new zoning code, it states in section 11.3.2.5 entitled “Public or Religious Assembly” that Special Exception review is being proposed for >300 seats in Residential Zone Districts and >600 seats in all other zone districts. This could be a big problem for a church owner that needs to sell its property and also for a church seeking to purchase and renovate an existing building, if your church does not comply with the seating regulations.

It’s possible that any renovation work that would require a building permit could trigger a Special Exception which is akin to a complete rezoning of the property. This could invite neighbors to object and the size of the assembly area (worship or sanctuary space) to be modified and therefore rendering the property less valuable for future church use.

If you have questions or need any help, please feel free to contact us.

Church to sell prominent Cherry Hills Village church property

2009-10-28T15:45:00.000-07:00

Rarely does such a high-quality property, in a proven Denver-area location, become available to purchase, but the Colorado Community Church property at 3651 South Colorado Boulevard can now be purchased for a fraction of the cost to construct new. This is a terrific opportunity for a church user or a Christian investor.

This well-known church property is a proven location (Cherry Hills Village, Colorado) for successful church operations and growth. The property was home to Cherry Hills Community Church for 10 years beginning in 1985 prior to being purchased by Colorado Community Church in 1995 to accommodate their surging growth under Dr. Mark Brewer. Colorado Community Church desires to downsize and relocate this campus to a smaller facility.

Nearly $6 million has been spent renovating the building (completed in 2006) including adding a new fellowship hall, chapel, café, children’s classrooms, and completely replacing the parking lots. This luxury 75,000 SF church facility is arguably worth nearly $19 million but now can be acquired and occupied immediately for only $9.9 million.

On a typical Sunday, several thousand adults and children can be served in this “like-new” luxury church property which has a sanctuary for 1,200, a fellowship hall for 600 and children/youth areas to accommodate 400.

This church is ready for immediate occupancy. Whoever ends up purchasing this great church property, is almost certain to see their church community prosper. You may click here to download a brochure.

If you would like more information, please contact Scott McLean at Development Advisors, LLC at 303-534-3344 x103.

Video Church Gaining Momentum

2009-07-01T07:34:00.000-07:00

On a recent trip to northern Colorado, I met with several pastors of large and leading churches including Paul Trimble with Crossroads Church in Loveland. Paul talked about the growing phenomenon of churches accomplishing new expansions by obtaining smaller new sites all simulcast from a “headquarters” facility. There are a few churches along the Front Range that are doing this today including Rocky Mountain Christian Church in Niwot and Frederick.

Paul shared with me a DVD of a leadership podcast that Andy Stanley of Northpoint Community Church (Alpharetta, GA) conducted in his Leadership Podcast dated 5-1-2009 says that the “old paradigm” of the senior pastor having to be both a gifted, dynamic and attention-retaining speaker AND the operating leader of the church is has gone away because of the video church phenomenon. This is a very good thing since a gifted speaker/lecturer/motivator/speaker is rarely a qualified administrator. In fact, you don’t want your gifted communicator anywhere near administration. Andy says that there is a movement afoot to do video churches all across America by “partnering” with churches that own “under-utilized” real estate. This is an opportunity for the kingdom to come together like never before. Many people will object to this change. But this could be incredibly beneficial to the declining trend of Christian worship in America. A bazillion dollars has been spent on real estate, much of which remains underutilized by many churches with shrinking congregations.

I also met with Pastor Clay Peck, lead pastor at Grace Place church based in Berthoud, Colorado who told me about Mark Driscoll with Mars Hill Church in Seattle who operates seven popular church venues in one of America’s most un-churched cities. Further Mars Hill just opened a new venue in Albuquerque, NM—just 1,500 miles from Seattle! Mark discusses how to preach in a multi-site format at his blog. Mark has boldly stated that Mars Hill plans to expand to 100 churches in the next 10 years. Wow.

We all need to be thinking about expanding our reach. What is your plan to expand?

Facility Goal or Dream On

2009-06-10T18:38:00.000-07:00

What do you dream about? Are you pursuing your dreams? Do you have goals that will direct you to realize your dreams for your future, or are you leaving it all up to chance?

Over the past several months, the staff of Development Advisors have talked with literally hundreds of churches here in Colorado to learn more about their growth and therefore their need to expand their facilities. Advisors specializes in working with churches that need to expand. Nearly 10% of these churches suggest that they have growing congregations (PTL) and that they have the desire to expand their church facilities in the future.

Many of these church leaders have a vision for their future, but many of these churches have not stated their desires, their dreams, in writing. What these churches need are goals and specifically a facility goal.

Just like that vacation you have been planning, its critically important that you have a road map showing how you get to each one of your destinations and then get home!

At Development Advisors, we lead our church clients through the process of establishing goals for their facility expansion in the first of four phases. In Phase 1, we help churches clearly define their vision, know their membership, plan financially, plan the right size staff and manage their critically-needed volunteers. Such goals must specifically articulated in writing and matched with a church’s future facility desires. We lead our clients through this Phase 1 process in order to create the church’s Facility Goal.

Financing Successfully Arranged

2009-04-20T18:03:00.000-07:00

Development Advisors just completed a unique “syndicated” arrangement to finance a new 100,000 SF church facility in south metro Denver for our client Mission Hills Church. What an incredible challenge! But we praise God for his leading and for his provision.

As it turned out, we could not have picked a more difficult time to procure debt financing. It’s still very soon after the credit collapse of 2008. There is no question that the “collapse” continues well into this new year (2009). We solicited no fewer than 12 lenders seeking debt financing for the $29 million MHC project. In collaboration with Keith Carson at Mission Hills Church, at least 8 complete packages of historic and credit information were provided to lender candidates. Together, we solicited conventional lenders, non-conventional lenders and private lenders (such as foundations). I am pleased to announce that Mission Hills Church was successful in obtaining up to 62% of its total project costs ($29 million) in the form of a syndicated commitment from both FirstBank and from Share Financial. Share is a church bond underwriting company based in Dallas, Texas. Share has done many bond underwritings all across the US over the past 30 years including First Aurora AOG (Aurora, CO) and Rocky Mountain Christian Church's (Niwot, CO) new Frederick plant.

Not only are church bonds a good solution for church expansion projects, but they make excellent investments for church members who essentially invest in their own church. Personally, I intend on purchasing some of these highly secure and above-market yield financial instruments. Church bonds historically have a lower default average than municipal bonds and Share has not had a single default in its’ 30 year history.

You may wish to learn more about the MHC new building project entitled "Called to Something Big".

Audio Visual Lighting Costs

2009-03-02T19:14:00.000-08:00

Its amazing how much a church needs to spend these days for a state-of-the art AVL system. As Mission Hills Church ("MHC") got started looking at the costs to outfit its 117,000 SF new church facility, both my partner Tim Dreessen and I were shocked.

After much research and discussion, it was decided that MHC would hire Clair Brothers out of Manheim, Pennsylvania, to complete the design for a new AVL systems for the main santuary, the chapel, the youth area (of course), the children's area (including the Early Learning Center) and the lobby (to name a few key areas).

The initial estimates were well north of $3 million, nearly $25/SF. This would equate to almost 20% of the proposed hard costs for the project. Outrageous!

But just today, I heard that another southeast Denver metro area church (not Cherry Hills) spent $3.2 million for all of its AVL installations and spent an eye-popping $23/SF including about $2M in its worship center which seats almost 2,000 persons.

Over the course of vetting and value engineering, MHC was able to get the proposed costs down to around $2.2 million ($18.80/SF). Now that the reality of the woeful financing markets have taken a hold and we have revised downward the budget for every system/item in the reduced new proposed building (100,000 SF), the overall budget is still $1.4 million ($14/SF).

While I don't profess to being more than a music loving baby booming classic rock listener, I bet that what MHC gets for $1.4 million will be hands down compared to what they have now and certainly better than most churches of its size. Further, the design we will install will be scalable meaning, that when giving picks up sometime after the grand opening, MHC can add this gizmo and and that gadget to achieve the type of facility that will be few and far between in the greater Denver area.

Judge rules church wronged by Boulder County

2008-11-23T20:34:00.000-08:00

On November 19, 2008, jurors decided Wednesday that Boulder County Commissioners violated federal law when in 2004 they refused to allow a Rocky Mountain Christian Church ("RMCC") a request to expand on its property at 95th Street & Niwot Road in Boulder County, Colorado.

Jurors decided that the Commissioners violated the Religious Land Use and Institutionalized Persons Act (“RLUIPA”) because they:
1. did not treat the church equally to a non-religious institution;
2. placed a substantial burden on the church’s practice of religion;and
3. put an unreasonable limitation on that practice.

US Judge Robert Blackburn still needs to decide if RMCC can expand on its property. Back in 2004, RMCC requested approval to double its facility size by building an education building, a chapel, a gymnasium, and a gallery. This expansion was proposed to add 132,000 square feet to the church’s existing 106,000-square-foot campus.

From Alan Ahlgrim, Lead Pastor at RMCC “… we won 100% of what we were most concerned about and in addition we anticipate we will recover every dime of the litigation costs the church has incurred.”

“We won the central issue that brought us to the court house. This has been a long and complex case and we respect the verdict of the jury and we are very grateful that they concluded that the county actions were not fair. We are very, very happy with the decision since it vindicated the church...”

The Becket Fund for Religious Liberty, a Washington-based law firm dedicated to the free expression of religion, supported Rocky Mountain Christian Church in its lawsuit. After the verdict was announced, the Becket Fund issued a press release calling the decision “a major victory” for the church. “This is a win not just for Rocky Mountain Christian Church, but for every house of worship across the country. What this decision says, loud and clear, is that religious institutions need to be treated the same as non-religious institutions — no better but also no worse,” Eric Rassbach, national litigation director of the Becket Fund, said in the news release.

Construction Costs DECREASE

2008-11-23T19:49:00.000-08:00

The Associated Builders and Contractors just reported significant decrease in construction prices.

“Construction input prices fell 2.8 percent in October – the largest one-month decrease since July 1986 – according to the November 18th producer price index (PPI) report by the U.S. Labor Department. Despite the dramatic decline, construction input prices remain 10 percent higher than October of last year (see graph below).

Prices for fabricated structural metal products dropped by 0.6 percent in October, but are still 15.1 percent higher than one year ago. Plumbing fixtures and fittings prices dropped slightly in October by 0.1 percent, however they are up a relatively modest 4.1 percent from October 2007. Nonferrous wire and cable prices dropped 7.7 percent – the largest monthly decline since 1949. The decrease brings the year-over-year change down 5.4 percent from October 2007. Prices for fabricated ferrous wire products increased 2 percent in October following a slight decrease in price the month prior. Still, prices are up an astonishing 30.55 percent from a year ago. Softwood lumber prices decreased 7.4 percent from September, the largest monthly decrease since November 2004, and are now down 8.8 percent from last October. In contrast, asphalt felts and coatings prices continue to increase, rising 5.7 percent from last month and up 60.2 percent from a year ago. Crude energy prices dropped significantly, down 24.9 percent in October, with crude petroleum down 26 percent and natural gas down 29.1 percent. Gasoline prices dropped 24.9 percent on a monthly basis. Finished energy good prices fell 12.8 percent from the previous month. Overall, prices for finished goods decreased 2.8 percent, making it the third consecutive monthly decrease. “

© 2008 Associated Builders and Contractors

Blog Purpose

2008-11-01T19:10:00.000-07:00

My hope for this blog is to offer a forum to discuss issues, offer ideas, present solutions, air concerns, and report on the real estate and construction activities of churches in the greater Denver area (Pueblo to Ft. Collins).