Will we sell property or seek a ground lease?
Instead of selling property, we are seeking a long-term ground lease arrangement. A ground lease developer/their funding consortium will pay FUMCSD for the use of our land:
- Terms can be from 55-99 years
- Lessee is responsible for all aspects of the building, including development, operating expenses, on-site services, and property maintenance
- A lease allows FUMCSD to maintain ownership of our land in perpetuity
- Allows FUMCSD to ensure long-term affordability for the term of the lease
- Allows FUMCSD to attract a more competitive pool of developer proposals while ensuring financial feasibility of the project
Which sections of property are included?
Our team is looking at the entire parcel east of the access road and sanctuary, which includes P8, P9, The United Methodist Center/Cove, P10, P11, the building currently occupied by Here Comes the Bride, and P12. P1 is also up for consideration. The project could include portions of one or both of the sections outlined in the below image.
Is our site zoned for housing?
Residential housing is allowable on our property.
Who will the housing be for?
When working with a developer, we can request that our project focus on a particular group and income level. For example: Extremely Low-Income Families, with income at 30% of Average Median Income, might look like an annual income of $50,000 for a family of four.
Defining our vision of our “ideal” neighbor is one of the items that is currently in progress. To do so, we’re asking:
- How do we do use our church resources for highest and best use?
- What is our Christ-centered vision for building housing for a specific population (such as large families with children, or seniors 55+, etc.) at a targeted income level (30%-80% of Area Median Income (AMI) or a mix of market rate and affordable housing)?
How many housing units would be offered?
We conducted a financial feasibility study with LeSar Development Consultants to determine if an affordable housing project would make sense. They used a hypothetical large family project of 140 units when conducting their analysis. However, the total number of units will be dependent upon our final vision for desired neighbors and which portions of property we decide to set aside for the ground lease.
Will the units be for sale or for rent?
The housing units would be for rent and that process would be managed by a property manager, completely independent of the church.
Who will manage and maintain the housing property?
Using a ground lease, the developer is responsible for setting up ongoing management and maintenance of the property, including providing supportive services to residents.
As a congregation and the owner of the property, we will have recourse if the developer/property manager violates the ground lease agreement.
Will this draw resources and focus away from our church programming?
There may be some initial investment of church funds, mostly in legal work to get a ground-lease agreement into place. But the main responsibility to find funding for the project falls on the developer. This often requires time to conduct due diligence and put together the stack of funding from private, government, and philanthropic sources before work begins (can be up to several years).
When it comes to staff time and human resources, there will be times when staff and volunteers are heavily involved, such as negotiating a ground agreement, or coordinating construction. There will also be times when we are waiting for approvals or developer research, etc.
Once the project is built, how we interact with and build community with our neighbors is up to the congregation to determine.
How will this impact church parking?
Part of the proposed land for development currently serves as parking lots. However, as our church grows, we will continually reassess parking capacity and options for repurposing unused space.
Projects with over 20% affordable housing or in a Transit Priority Area (we fall into both criteria), have no minimum parking requirement. However, we can request in our RFP that developers submitting proposals include a plan for parking, which could include shared parking with the church.
How will this impact revenue from our UMC tenants?
If we invest the revenues from a one-time, capitalized ground lease payment in a similar way that we steward Foundation funds, a conservative 5% draw on those funds for operating expenses would more than compensate for the loss of current tenant revenue.
What are the next steps?
The Property Transition Team (PTT) has been charged by the Church Council to explore affordable housing options and create a proposal to be approved, denied, or amended by the Church Council. Here is a brief overview of the steps involved:
- Input from congregants will be given to the PTT for use in their discernment and deliberations as they create this proposal.
- Congregational input will not necessarily dictate the decisions, but all of it will be considered.
- If Church Council approves the PTT’s proposal, it will be put out for bids by developers.
- If the bidding process is successful and a developer is selected, a Charge Conference will then be held to approve or deny a final contract.
