Multiplication Center

Creative Ways to Finance a Church Facility

November 11, 2014

by Warren Bird

Visioneering - 01) Aerial Day

 

Mosaic acquired its latest property (which once housed a Kmart) from a local businessman, Mike Montgomery, who 11 years earlier was homeless and sleeping near Mosaic’s current location. After turning his life over to Jesus, Mike, who had watched Mosaic minister to the community, assured Mark DeYmaz that one day “Mosaic would be permanently located on the property.”

Lead Pastor Mark DeYmaz is exploring new ways to fund a church building for Mosaic Church of Central Arkansas (www.mosaicchurch.net), while at the same time bringing spiritual, social and financial development to an underserved community. Along the way, he and Mosaic are winning the heart of the city.

“As an urban church we don’t have traditional funding sources, so we have to be creative,” says Mark of the multiethnic, economically diverse church he founded in 2001. “We are physically demonstrating the power of redemption through the reclamation of dark or underutilized property.”

Here’s how it’s working for the central Arkansas congregation of some 600 and its community: for the second time in Mosaic’s 13-year-old history, the church has taken over a large abandoned retail building. Its current effort has been to acquire a 100,000-square-foot former Kmart store on 10 acres on one of Arkansas’ busiest intersections.

The building, which had fallen into disrepair over the past decade, cost Mosaic $2 million. The building’s owner gifted $300,000 at the time of closing. The church put down $600,000 in cash from its building fund and it borrowed $1.1 million from the bank. Then, one year later, Mosaic rented 50,000 square feet of the space to an Arkansas based fitness company for $1.15 million over 10 years. It’s now looking to rent an additional 2,500 square feet to a local restaurant or coffee shop.

“Basically we have the mortgage paid through rental income,” says Mark of the church that has been featured over the years in USA Today, New York Times, Washington Post, and most recently, the Wall Street Journal. “In the process, we’re able to encourage affordable health maintenance, small business, job creation, generate tax revenue, and help reduce crime in our community. In return, we generate some measure of income to help fund our mission.“

“This deal is really a win-win-win for community revitalization efforts, the church and God’s kingdom.”

Read more here about the deal on the University of Arkansas-Little Rock website.

Financing Options Are Expanding

church localityThe rules for church buildings and how to fund them have changed in recent years, according to consultant Jim Tomberlin, who recently released the co-authored book Church Locality, with chapter titles such as “What’s the Future of the Church Building?” and “The Advantages and Disadvantages of Non-Traditional Space.” Jim’s focus is multisite congregations and church plants, but the implications are the same for all churches trying to address the changing landscape—and funding issues—of church meeting space.

“The church building was once seen as a key asset in the community,” says Jim Tomberlin in Church Locality. “Today these same buildings can be viewed as a liability. In the eyes of people who do not value church attendance, church buildings reduce potential tax revenue, cause traffic headaches, and create a noise problem.” Today’s new rule is that churches must build community-centric facilities like what Mosaic has done, according to Jim. As a result, many churches are experimenting with variations of an approach that buys or leases, but then subleases to help fund their costs, and all in a way that the community welcomes the church’s development efforts.

Older Churches Also Mixing It Up

New and growing churches aren’t the only ones cornering the market on innovative approaches to financing.

More than 50 church leaders based primarily in downtown Brooklyn, NY, attended a recent conference on “faith-based property development” to learn how to partner with private developers to build out their parking lots, extra buildings, vacant lots and air rights.

Conference organizers offered Harlem’s Bethel Gospel Assembly as a successful example.

Bethel Gospel developed the unused courtyard of the former Junior High School 120, which has been the location of the 97-year-old church since 1982, into a $130 million project that includes 162 condos which sold for between $1 million and $3 million, and from which Bethel owns one single condo unit purchased at the closing for the price of one dollar. Specific to the church, this structure also includes 47 units of rental housing that are directly owned by the church, along with an 1,800-seat partially completed church sanctuary on the ground floor that is set to open in the summer of 2015. This new sanctuary is also physically connected to the former school – which will continue to serve as Bethel’s ministry complex.

The 28-story building, which has a modern glass and brick façade, is called Fifth on the Park and is the tallest in Harlem, complete with a full-length lap pool, landscaped garden, outdoor deck, fitness center and theater-quality media room, according to its website. The Bethel Gospel Assembly portion of the building includes 7 stories of rental units called, Pavilion Off the Park, and the Destiny Worship Pavilion which occupies the 4 stories located at the base of this mammoth facility. The expectation is that the funding stream provided by this venture will not only assist the church in sustaining its local social endeavors which include its counseling, feeding and clothing programs, but will also assist Bethel in its many global outreaches such as its ministry complex in the Northwest province of South Africa, and its outreaches in the Transkei.

The 5th on the Park condominiums are located in a very desirable location in Harlem near Mount Morris Park.

5th on the park

Organizers see key benefits in this type of strategy for land-rich but cash-strapped churches. Efforts such as these create new affordable housing units, dovetailing with the churches’ mission of social justice. The market-rate housing can help fund social-service programs. And any new ground-floor space can be used as sanctuaries and community centers for the congregation.

“I can see us developing affordable housing on a (church parking) lot,” one deacon in attendance at the conference was quoted as saying. “And any profit made from the deal will go toward expanding our soup kitchen and food pantry and might allow us to add after-school programs for youth.”

Mosaic Blessing Its Community

DeYmaz and Mosaic know very well the benefits of a similar strategy.

The church had moved into its current location—Little Rock’s first Walmart store—in 2003, two years after it was founded. Mosaic rented the 80,000 facility for just $0.10 a square foot, some $666/month. Within five years and due to Mosaic’s efforts, small businesses again were attracted to the site. Within seven years, then, Mosaic was operating in 35,000 square feet and sharing the 80,000 square feet with three small business creating much need economic uplift in the community.

With 30% of its 72204 zip code living at or below the poverty line, Mosaic has helped bring the struggling community back to life. In fact, changes to real estate space in Mosaic’s University District in the last 10 years show that the church’s holistic approach to community engagement—addressing spiritual, social, and financial needs—has had a measurable impact.

A mosaic of volunteers from a work day at Mosaic Church’s new location, a former Kmart in Little Rock’s University District.

masks1According to the 2012 Economic Impact of Arkansas Volunteers report, Mosaic and its community-based nonprofit, Vine and Village, provided a combined total of nearly 10,500 hours of volunteer service to residents in the area. Those hours translate to almost $352,000 in services provided. Last year, Mosaic’s food distribution alone served more than 18,000 individuals from almost 2,900 households, according to an article published on the University of Little-Rock website.

“We think it is more important to bring life back to the community and to demonstrate redemption in tangible ways,” Mark says. “The community—from the neighborhood associations, to small business, to the University of Arkansas at Little Rock—considers Mosaic its own.”

“By first becoming a church that reflects the wonderfully rich diversity of our community, we have been better able to help inspire real community transformation and get beyond rhetoric to results for the glory of God. In a church like ours mission isn’t a program, it’s who we are.”

 

 

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