St. Chad’s Building Committee 3

Meeting # 27

04/20/2008

Revised

 

Attendees:  Paul Apodaca, Larry Babineaux, Susan Carson, Bob Gough, Merri Jean Jones, Bo Keith, Debra Kincaid, Jan Kingsbury, Eileen Simpson, Richard Simpson, and Father Brian Winter

 

Members Absent: Rich Lehoucq

 

Handouts provided prior to meeting: 

Agenda,

Cash Flow Spreadsheets

 

Handouts provided at meeting: 

Financial Report as of April 14, 2008,

Phase 3 and 4 Cost Estimates,

Indicative BC3 Program Finances,

Net Cumulative Operating Budget Surplus Graphs

First page of the Contract for Campaign Consultation Service dated April 18, 2008

Letter from Betty J. Sargent

 

1.   Bob Gough opened the meeting.  Susan Carson led the prayer.

 

2.   Bob Gough explained the meeting agenda is different from previous meetings in order to address financial strategy, the most urgent issue facing the BC3 for this meeting.  Less urgent items could be deferred to next meeting if time did not permit them to be addressed today.  Bo Keith asked to add an administrative item under Other New Business.  Richard Simpson moved the revised agenda be accepted.  The motion was seconded by Eileen Simpson and passed unanimously.

 

3.   Larry Babineaux moved the April 6 meeting minutes be approved.  Richard Simpson seconded the motion.  The motion passed.  Susan Carson requested the word “state” be corrected to “stated” in the second paragraph on page 3 of the April 10 meeting minutes.  Richard Simpson moved the corrected minutes be approved.  Bo Keith seconded the motion, which was passed.

 

4.   Paul Apodaca presented the financial report.  The Building Fund balance is $86,785.52.  Pledge payments are twenty-four thousand dollars ahead of the expected pledge receipts, in part due to early payments.  The pledged total to date is $492,481.46.  Eighty-five pledging units have pledged amounts to the Building Fund.  It was noted that the Building Fund, as with all funds in the Operating General Fund, earn interest.  Interest is not calculated for each specific fund. 

 

5.   Bob Gough presented drafts of the Phase 3 and Phase 4 Cost Estimates, and asked if we had achieved consensus on the phasing plan.  Phase 3 consists of all new construction: sanctuary, choir, chapel, vestibule, offices, choir room, conference room, sacristy, and tower.  Phase 3 also includes site work, west parking spaces, sidewalks and curbing, lighting, and utilities.  Of all phase 3 components, the sanctuary is considered the most important.  It has been determined by the committee that to partition off the surrounding space from the sanctuary would result in severe penalty costs.  Phase 4 consists of the classroom extension, remodel of the current sanctuary into a fellowship hall, remodel of existing restrooms, replacing the existing HVAC system, additional parking, concrete work for curb and sidewalks, patio spaces, portal, landscaping, and playground areas.  It was noted that the water and sewer could be deferred, as proposed by Bill Fanning.  However, since our septic system is located in a construction area and the water requirements probably could not be handled by the current system, it would probably not be realistic to defer the water and sewer hookups.

 

The costs displayed in the center columns of the handout were taken from Bill
Fanning’s information.  The rightmost columns contain Bob Gough’s adjustments, which reflect a more spartan approach with the degree of interior finish scaled back.  To achieve this adjustment, Bob reduced the square foot costs from $175/sq. ft. to $160/sq. ft. and from $155/sq. ft. to $140/ sq. ft.  Coincidently, these numbers were the same assumptions made by Susan Carson during a separate consideration.  The purpose of working on these figures is to arrive at a budget figure that can be presented to the architect firm.

 

There are two items that need clarification from Bill Fanning.  1) How many parking spaces will the west parking area contain?  2)  What is covered under the two separate fees listed for water and sewer expansion ($28K and $35K)?

 

Susan Carson moved the target (working) budget figure for Phase 3 be set at $2,225,000, utilizing a 10% reduction in square foot costs from the architect’s estimate for finish work.  The motion was seconded by Larry Babineaux and, following discussion, was passed.  The group discussed if the project costs had been reduced sufficiently to satisfy input from some parishioners during the Parish Meetings.  It was generally agreed that all areas of the project are open to change, and if the parish cannot meet the requirements set for Phase 3, the BC3 would proceed step by step to meet the challenge.  It is important to present to the Vestry and the congregation a detailed explanation for why we have set up Phase 3 and 4 and a funding breakdown.  The option of building office space and the additional classrooms, but not a sanctuary does not address crowding during worship or fellowship, or allow for future growth.  Adding a third service is successful only if that service arises from a need within the congregation, such as a group wanting a different and specific style of worship.  A study has not been conducted to determine what effects a third service has on additional clergy, music, and education personnel requirements.  It was noted that the demand for a new sanctuary came from the ministries prioritization, where worship is seen as the number one priority for our community.

 

6.   It was proposed that our next steps are to go to the Vestry and ask for approval for the phasing and close-the-gap capital campaign, after which BC3 would reengage Fanning Bard Tatum.  The Vestry has requested more detailed funding information.  It was felt that we should present all goals so the committee can proceed without encountering stumbling issues at a later time.

 

Bob Gough presented the Indicative BC3 Program Finances handout, which compared where the money will come from to building costs.  Bob expressed the opinion that pledged funds plus borrowing is reachable; that the Phase 3 target of $2.25 million is reachable.  It was commented that the amount of debt service gave heartburn.  Bob presented graphs showing the net cumulative operating budget surplus.  Debra Kincaid stated that after talking with several banks this past week, an interest rate of 6.25% is optimistic, and cautioned against leaning on this number.  A loan’s interest rate may be fixed for a five to seven year period, but not indefinitely.  The group focused on the graphs showing 6.5% interest rates.  A positive cash flow occurred on the graph indicating $500K in bonds.  It was suggested that we need a feasibility study for bonds.  Debra further added that banks allow borrowing for the purpose of covering borrowing.  This is termed “a line of credit”.  A line of credit of $50K could be obtained for the period where a negative cash flow is projected, between 2011 and 2015.  The Episcopal Church Foundation has commented that it is a common practice to hold a ministry enhancement fund raiser to reduce a mortgage, usually about five years after the building project is completed.  Bob stated a 10% growth projection was incorporated into the cash flow spreadsheets.  No one knows what the actual growth will be, but the goal is to use a number that is realistic, and perhaps tilt to the conservative side.  Debra noted that banks will be cautious in making loans to churches, using loan to value.  Loans to established churches are more favorable than a new start-up church.  Banks will consider 20 year loans, but not 25 year loans to start.  St. Chad’s has experienced current growth across the board in all age ranges.  Various studies have shown that when there is little room for seating and parking, the growth rate drops.  Bob reported that this information was confirmed by Glenn Holliman of the ECF.  Susan Carson reminded the group of her study of  past years operating fund pledge amounts, which had grown considerably higher than 10% for a majority of the years within the study.  Bob pointed out that the main picture does not vary much when the percentages are varied.  Some level of risk cannot be avoided.

 

There was discussion on the amount of money that might be raised during a second pledge drive.  A need is the feasibility of the number of parishioners interested in participating and the range of funds they would consider.  It was stated that the biggest issue is the assumption of obtaining $250K in the second pledge drive, not the amount of bonds to be collected.  An idea was raised having the Foundation consider a loan of $50,000 to St. Chad’s during the year(s) of negative cash flow.  It was suggested the addition of an associate clergy could be deferred; however, since the BC3 cannot affect this kind of change, we should therefore not strap the operating budget in any way.  It was suggested that a close-the-gap pledge drive would be more effective if the financial objectives are openly presented to the parishioners.  Glenn Holliman had predicted that, based on our size, our congregation should have raised $660 – 800K during a capital campaign.

 

It was suggested that the BC3 provide the Vestry the following:

·         Spreadsheets showing $0 in bonds, $250K in bonds, and $500K in bonds, using 6.5% loan interest

·         The approach BC3 believes should be taken

v      Plan a second campaign with a $250,000 target

v      Debt service is affordable with options for dealing with it

v      Financial package

·         Justification for all assumptions

v      Working target of overall project budget

v      Cost estimate

·         A cover letter summarizing the spreadsheet findings, cost estimates, and financial summary

·         Note: If $250,000 is reached in the second campaign, the project goes forward.  If not, BC3 will need to reevaluate everything.

Debra Kincaid moved the BC3 adopt for a working target to be presented to the Vestry and possibly the congregation, the overall project budget using 6.5% interest projections, the cost estimates, with a one page cover summarization.  Jan Kingsbury seconded the motion, which passed unanimously.

 

Larry Babineaux expressed appreciation for a job well done on the spreadsheets.

 

Bob Gough requested Jan Kingsbury and her sub-committee work on the Close the Gap Campaign ideas and present to the BC3.

 

7.   Bob Gough indicated he had spoken with Terri Mathes of the Episcopal Church Foundation regarding additional assistance from her.  She sent a revised contract with proposed services.  Bob handed out copies of the first page of the contract.  Terri recommended she review the operating and building fund pledge information in order to assess the potential for a second stage campaign.  Terri would train twenty leaders to make calls to the remainder of the congregation, either in individual or in small group settings.  Terri had commented that without face to face contact, any language used in our brochures would not matter.  The emphasis would be on a paradigm shift on how we talk about money.  The EFC tends to focus on a general model with 70 – 90% of the congregation in favor of building.   Either Bob or Father Brian would contact Terri.  There is some belief that the ECF brings value added.  It was noted we have access to two individuals in our congregation with professional fund raising expertise: Jan Hosea and Celeste Walther.  The ECF contract asks for $1,500 per day plus travel/hotel/meal expenses.

 

It was suggested that the core group to be trained is the BC3 and Vestry.  The ECF could be engaged to have their professionals train, organize, and prepare a whole package to be presented to the congregation.  Having professionals out in front may be misconstrued as bringing in the hired guns to accomplish the task.  ECF could help St. Chad’s make the transition from pastoral to program church.  It would be an investment for St. Chad’s, that also has implications for the annual Stewardship campaign.  It was suggested that having the ECF look at the pledge information provided a sanity check for the BC3.

 

8.   Jan Kingsbury passed around a sign-up sheet for taking flower orders on April 27 and May 4 after each service.  Jan Kingsbury will have examples to show during the pre-sales.  Eileen Simpson has been assigned the task of advertising the flower sales on the Bulletin Board.  Several people, including non-BC3 members, will put the flower orders together.

 

9.   Jan Kingsbury stated that 86 thank you letters, with returned pledge cards, had been mailed to the pledging units.

 

10.  Bob Gough stated that Action Items 23-4, 24-1, 25-1, and 26-1 are considered to be closed.  In reference to Action Item 19-3, Bo Keith indicated that shirt sale information was ready to be placed onto the web site.  Rich Lehoucq had reported to Bob that the golf tournament might be held in mid to late September.  Sandia would charge $75 for 18 holes with use of a cart.  Rich is looking at some way to involve non-players in the fund-raising event.

 

11.   Bo Keith presented examples of file names using the yymmdd format for ease of sorting by date. 

 

12.  The next BC3 meeting is scheduled for Sunday, May 4 at 11:15. 

 

New Action Items

27-1.  Jan Kingsbury – Begin plans for a second stage pledge campaign with sub-committee.

 

Respectfully submitted,

Eileen Simpson

4/21/2008