Our Blog

Purchasing an Existing Facility

September 20, 2007

In the past, as churches grew and the needs for facilities changed, the usual solution was to buy a piece of vacant land and build a new church. Today the process of securing land, processing permits, mitigating impacts, and constructing facilities is more complicated than it once was. Many churches are finding that their best option is to purchase an existing facility. An existing facility will normally require a number of compromises from the ideal, but the savings in time, energy, finances, and disruption of ministries will often make the existing facility a good choice. There can be pitfalls, however, in purchasing existing facilities. There are some good rules to follow in the purchase of an existing building:

  • Make sure that you have engaged an experienced church broker. If your real estate broker has not handled church properties before, he or she may well miss identifying some of the key issues required for a successful “house of worship” purchase.
  • Communicate early and effectively with your lender, since a seller may not be willing to wait six months for you to find an acceptable loan.
  • Make sure that there are clear understandings with your municipal authorities regarding your use of the facilities and any plans you have for modification. In many cases churches have found that while the current facilities have been “grandfathered” for church use, any modification will trigger a complete review and attendant fees from the city.
  • If the facility is old, engage a qualified engineer to evaluate the condition of the building. He will be able to tell you if there are serious and expensive problems present in the structure.

Often the purchase of an existing church or other public assembly capable building is a cost sensitive option for housing a growing ministry. With proper due diligence and good representation, purchasing an existing property may be a good choice for your congregation.



Selecting a Lender

August 23, 2007

Many non profit groups are at a loss when it comes to selecting a lender. They often go to financial institutions that they may have some relationship with and present incomplete and often misleading information. When the financial institution shows a lack of interest or an out right denial of a loan, the church is discouraged and may start a dialogue with a number of “loan brokers” who indicate that they are able to find the required funds. Many churches have spent large amounts of money on “commitment fees” and other charges without ever being offered a valid loan (one with reasonable costs and rates).

It is better to look for a lender who understands church dynamics and who is committed to providing funds for churches. There are many fine denominational lending programs, there are several committed church lenders (such as Foundation Capital Resources, which Clifford Roberts Group works with), and there are consultants that can assist the church in creating a proper presentation of lender required information. A church should always have a full understanding of the lender, the broker (if one is involved), and the long term implications of the type of loan they are receiving. A standard issue commercial loan may not be appropriate for many churches.

Look for performance. Talk to other churches that have used the lenders and consultants that you are considering. Make sure that they have proven capability in dealing with the needs of the church, both now and in the future. Churches are flexible institutions that move through many transitions while providing ministry to their communities. Be sure that your long term financial relationships understand that need for flexibility.



What about our “conditional use permit”?

July 30, 2007

Often when we are dealing with churches that are contemplating the purchase of a building, we find that they and their advisors have not calculated the costs and time required to secure a conditional use permit (CUP). Nearly every municipality and county requires a use permit prior to the use of a facility for religious assembly purposes. It is important that a full understanding of this process is acquired before any offers to purchase are made.

Each locality has their own process for approving CUP’s. Some are relatively simple, with very direct questions that can be handled by a designated member of the church leadership. In other areas, fairly sophisticated exhibits may be required. Sometimes the fact that the property currently houses an approved “house of worship” does not assure that future remodeling or expansion will be allowed without a complete application that meets current standards. Land use regulation is becoming a far more crucial element of church strategic planning than it has been in the past. Learning what is going to be required in terms of time and funds to acquire a CUP is an essential first step in considering a new church property.



Does our church need a strategic plan?

July 6, 2007

Every organization that hopes to thrive and grow needs a strategic plan. The purpose of this plan is to reconcile goals with processes. It is much easier to define goals, whether long or short term, than it is to create an executable plan to reach them. Goals are often ill defined points at which we plan to some day arrive. Plans are detailed maps that indicate how we will move from our current status to the goals that we have articulated.

Often churches are excellent at defining mission and goals, but not as capable at laying out a clearly marked path toward those goals. Strategic planning allows the church to review all of the resources and potential capabilities that it possesses. It creates a step by step directive that allows for proper and timely utilization of these assets, defines bench marks that will indicate progress, and may offer alternative scenarios for accomplishing the espoused goals. A good strategic plan is comprehensive in its review of available resources. It is also comprehensive in review of available options to channel those resources toward defined goals.

Strategic plans are needed when the community served changes, when facility growth or transition is contemplated, or when the vision of leadership regarding the mission of the church may be modified. Clear vision, accurate inventory of resources, and detailed planning are the keys to successful growth, transition, and enhanced ministry.



What is an “asset analysis”?

June 26, 2007

For a church, an asset analysis is a comprehensive review of the facilities, land, equipment, and furnishings owned by the church. It is done to determine if current properties are serving the mission of the church or whether maintenance, modification, new facilities, or extensive remodeling may be required to more effectively house the ministries of the church. Many churches fail to review their facilities even as the needs of their congregation may be changing. Are Christian Education facilities appropriate for the current demographic of the church? Has the area surrounding the location mandated a new outreach to the community? Do facilities need to be modified to meet new purposes?

Sometimes, the congregation has relocated to other areas of the city and new facilities that are more convenient may be considered. One of the facts of church life is that a church is continually evolving based upon leadership, community demographics, mission and priorities. The programs of the church transition, but often there is no comprehensive review regarding how the physical facilities can support those transitions. It is important that outside, objective input can be a part of reviewing how facilities can be made more responsive to congregational needs. Without spending the time and energy required to undertake a complete asset analysis, churches often move forward with ill advised projects that do not meet the continuing needs, mission, and priorities of the church.

Check back for more helpful information!