Proposed Partnership with TSF

Who is The Solomon Foundation (TSF)?
The Solomon Foundation is a not-for-profit church extension fund. They provide investment opportunities for individuals and mortgage financing for Christian Churches and Churches of Christ. Their CEO, Doug Crozier, has decades of experience in real estate banking and church funding. You can find out more information about their organization by visiting their website.

What is the proposed plan?
TSF pays off the mortgage that Citizen’s Bank holds on our facility. With congregational approval, we gift our property and facility to TSF. With the equity our gift provides, TSF will be able to loan money to churches that are building new facilities or refinancing existing buildings. We will then lease this facility at a cost of $7000 a month.

What changes?
With this proposed plan nothing changes and yet everything changes. The following chart will help:

NOW	WITH TSF PARTNERSHIP
Ministry – Worship gatherings, ministry activities, weddings, funerals, parties, etc. take place in our facility under our direction and at our discretion.	Ministry– Worship gatherings, ministry activities, weddings, funerals, parties, etc. take place in our facility under our direction and at our discretion.
Ownership – Citizen’s Bank owns $2.3 million of our facility via the mortgage. We have approximately $1 million in equity.	Ownership – TSF owns 100% of the property and facilities at 6300 Aurelius Rd.
Facility cost – We pay Citizens Bank $15,500 in a monthly mortgage payment.	Facility cost – We pay TSF $7000 a month in rent. (A more detailed explanation of the lease is below.)
Refinancing – Given that interest rates are at historic lows and due to the fact that commercial loans must be refinanced every 3 to 5 years, we expect our mortgage payment to increase when we refinance next July and every 3 to 5 years until the mortgage is paid off. (Assuming we can refinance.)	Lease option – Our lease with TSF will be a 10-year lease, with options to renew after each 10-year period for a total of up to 50 years.
Budget impact – We struggle to make budget (even with cuts) and we carry a building debt of $2.3 million.	Budget impact – We have no debt and our monthly facility costs decrease by $8500 per month ($102,000 per year).

What are the benefits?
This is a good deal for three reasons. First, it is a financial win-win. We honor our commitment to the bank by paying off our loan. We are able to bless TSF with the gift of our property and facility, which enables them to finance the expansion of other Christian churches that are doing Kingdom work. It gets us out from under the current debt of our facility and puts us in a better financial position to do ministry.

Second, the proposed plan has a spiritual impact. Rather than us paying the shareholders of Citizen’s bank thousands of dollars in interest every month, we pay an extremely fair price to lease our facility while partnering with the ministry of TSF and the ministries of the churches they are helping to expand. The gift of our equity will enable ten churches to build or refinance. As such, South Lansing Christian Church will have a role in providing ministry centers where thousands will come to know Christ.

Third, not owning “our” building makes a subtle yet profound theological statement. As we exist to SEEK God, STUDY His Word, and SERVE the world, not owning a building helps us to understand that we are the church, not the building. It reminds us that the church is the body, not a location; a people, not an address. How we live as Christ-followers defines who we are, not a facility.

What are the lease details?
This is a “Triple Net Lease.” A triple net lease means we are responsible for all taxes, insurance and all maintenance. Since we do not pay property taxes, that means we are responsible for all insurance and all maintenance (just as we are currently). We have full run of the property and facility (just as we do now). We are allowed to make any modifications/changes (paint colors, moving walls, etc.) that we want. We pay all the maintenance and utilities; we cover all minor and major repairs.

We can continue to collect rent for anyone that uses the facility as well as for the farmhouse. That rent is not passed along to TSF but remains in our general fund (or wherever the Finance Team should designate it).

The lease will be a ten-year lease with four additional ten-year options. Once the initial ten-years has passed, we will have the option to renew it for another ten years. The monthly lease payment in year one will be $7000. Our lease payment will be tied to the Consumer Price Index (i.e. inflation). Each year the lease payment will be adjusted upward between 0% and 2.5% per year, depending on the current CPI. For example, in the worst case (a CPI of greater than 2.5%), the lease payment would go from $7000 a month to $7175 a month for the second year of the lease.

The lease details are still being negotiated. We are hoping, through this negotiation, to obtain an overall cap to the lease payment—a dollar figure that the lease payment will never exceed. We will communicate the result of those conversations when we have a specific figure to share.

What protection do we have?
First and foremost, the leadership has been praying about this opportunity since the initial conversation with TSF three months ago. A few weeks ago we asked you to begin praying. We ask that you continue to pray. We believe that God has opened doors for this to happen – that He is doing “immeasurably more than all we can ask or imagine.” Because He has opened doors and not shut them, we believe that His divine protection is the best protection. Please continue to pray that His will is clear and that we can discern it.

Second, our Management Team has been doing background checks on TSF. We have talked with other churches that have partnered with TSF. We have used our network of relationships within the Christian Churches and Churches of Christ to ask about the integrity of TSF, Doug Crozier, and their Board of Directors. We are satisfied with what we have learned thus far.

Third, we have retained one of Michigan’s top real estate attorneys (recommended by Julia Dale) to give us counsel as we negotiate the language of the lease. He will assist us through the writing/negotiating process.

What are the risks?
We are taking every step we can to mitigate any financial or missional risk to our church. (See “What protection do we have?)

But there is a spiritual risk. We know what it is like to be a church without money for ministry. These lean times have contributed to the stress that we have endured at SLCC. But what will it be like to actually have some money? We can easily forget that having money can sometimes be as stressful as not having any. We must be careful that we do not allow ourselves to fight over where money is allocated.

In addition, we must not allow ourselves to think that the solution to all our problems is in alleviating the financial stress we have had, nor can we allow ourselves to think that The Solomon Foundation is the solution to any problems we have. The Solomon Foundation is merely a tool that God is using. He is the solution to every need we have.

What is the timeline?
Let’s start with where we have been and move on to where we will go:

July 17 – Mike Blakely announces that, if offerings do not improve, we will be forced to take extreme measures including, possibly, leaving the building.

August 28 – Frank has conversation with Russell Johnson, Vice President of TSF. Russell expresses an interest in TSF helping SLCC.

September 3 – Frank has conversation with Dave Dummit, Lead Pastor at 2|42 Community Church in Brighton. TSF is financing their new building and Dave offers to connect Frank with Doug Crozier, CEO of TSF.

September 13 – Frank meets with Dave Dummit and Bob Smith from 2|42 and Doug Crozier. Doug proposes the Gift-Lease Partnership.

October 13 – Doug Crozier and Russell Johnson fly to Lansing, meet with Frank and Wally, Citizen’s Bank, and that evening with the SLCC elders and Julia Dale, acting as our legal counsel. Doug introduces The Solomon Foundation to our elders and provides preliminary details of the Gift-Lease Partnership.

October 17 – SLCC elders move to approve the Gift-Lease Partnership, subject to congregational approval.

October 23 – Frank advises congregation that we are “in conversation” with a potential partner ministry, and asks the church to pray.

October 27 – TSF Board of Directors approves Gift-Lease Partnership provided sufficient equity ($1 million or more) results from the difference between the appraisal and our mortgage pay-off.

October 30 – Frank tells the congregation that The Solomon Foundation is the potential partner ministry and announces that a major announcement affecting SLCC’s future will take place on Sunday, November 6.

November 2 – Elders and Staff meet with Deacons and Finance Team to share the details of the proposed partnership.

November 6 – Frank will announce the proposed partnership with TSF to the congregation and give a broad explanation of the Gift-Lease concept. The congregation will have the opportunity to submit any questions they have via chair-cards.

November 13 – The congregation will have the opportunity to meet Doug Crozier, the CEO of TSF. He will join Frank on the stage during our worship gathering for a town hall style conversation. They will attempt to answer as many of the questions from the previous week as time allows. Any additional questions can be submitted directly to one of the staff or elders, or emailed to questions@seekstudyserve.org.

November 20 – Our elders and staff will continue to answer questions and have discussion about the proposal during and after the Thanksgiving meal following our worship gathering.

November 27 – Russell Johnson will be here to preach during worship. In addition to working with TSF, Russell works with the National Missionary Convention. Though his time with us will be focused on the National Missionary Convention, the elders, staff, and Russell will still be available to further discuss the proposed partnership.

December 4 – We will have a Special Congregational Meeting following worship on this day to vote on the proposal. Per Article Eight, Section B of our Constitution, a two-thirds majority vote of the members present is required for approval.

Why such an accelerated timeline?
Two reasons. First, the sooner we get out from under our mortgage, the sooner we begin saving $8500 per month.

Second, though our mortgage, which comes due next June, has a pre-payment penalty clause, we are in a position to avoid paying that penalty. Banks have year-end issues. They would rather show cash on their books than our loan when the auditors and their shareholders look at their year-end statistics. This puts The Solomon Foundation in a good negotiating position to, not only help us avoid the pre-payment penalty, but also to pursue a possible discount on the loan. This can only happen, though, if we are able to close the deal by December 31, 2011.

We are committed . . .
. . . to answering every question anyone has with as much detail as we are able to provide. If we don’t know the answer, we will find the answer. No question is too insignificant. Each person’s thoughts and opinions are valued. We will do everything within our power to ensure that every SLCC stakeholder is listened to and his or her thoughts and opinions are carefully considered.