Churches Are Building Housing Developments ‘in God’s Back Yard’

July 13, 2020


The Arlington Presbyterian Church in Virginia was dealing with declining Sunday attendance, and fewer donations, before deciding to turn to an affordable housing developer for help. In 2016, with membership down to about 60 from a height of 1,000 in the 1950s, the church sold its century-old sanctuary to the nonprofit Arlington Partnership for Affordable Housing (APAH). The developer razed the church and built a seven-story, 173-unit affordable complex in its place, allowing the congregation to escape increasing costs while fulfilling an obligation to care for the poor. Today, the church leases space on the ground floor of the building to serve its congregants.

“We had an alignment of mission,” Nina Janopaul, the CEO of APAH, said of the $71 million project that opened in November. “Their mantra was, the church is the people and the mission, not the building.”

Americans were already going to church less and less before the coronavirus shut down large social gatherings. After physical church attendance fell to zero for months during lockdown, the financial troubles caused by waning religiosity were thrown into sharp relief. But the situation, seemingly grim, has been cast as an opportunity by affordable-housing advocates and religious leaders working to combat homelessness. Religious institutions own thousands of acres of land in the U.S., and amid falling membership and participation, calls to convert surplus faith property and places of worship themselves into housing have gained traction.

“Land that belongs to faith communities is supposed to be for the services of the vulnerable,” said Monica Ball, who helps lead the Yes in God’s Back Yard (YIGBY) movement in San Diego. “If [the coronavirus] leaves us with more open space to build more desperately needed housing, amen.”

The de-churching trend that forced Arlington Presbyterian to sell its sanctuary has been weighing on churches across the country. About a third of U.S. congregations surveyed between 2018 and 2019 reported having no savings, according to Mark Chaves, a professor at Duke Divinity School who leads the National Congregations Study. Church donations plunged as Americans locked down and religious services went virtual. The president of Barna Group, an evangelical research firm, told the Economist in May that as many as one in five churches in the U.S. could close over the next 18 months.

Churches became more comfortable taking on debt in the 1990s, and by 2006, church borrowing had reached $28 billion nationwide, a practice that led to a marked increase in church foreclosures after the financial collapse of 2008. In 2012, about 26% of American churches, synagogues, mosques and other places of worship had mortgage or other debt, according to the National Congregations Study published in 2015. The median balance on that debt was $170,000, and a majority of congregations had less than $100,000 in annual income.

A spike in church closings would add more property to what is seen by many as a glut. Before the coronavirus, more than 550,000 people in America were homeless. The pandemic’s economic devastation coupled with waning protections for vulnerable renters means that number could rise.

Property owned by religious institutions usually isn’t taxed, meaning those parcels tend to be revenue drainers for cities in addition to being underused sites for housing. In California, a state with one of the country’s largest homeless populations, about 38,800 acres of land are owned by religious institutions and have development potential, according to a study published in May by University of California, Berkeley’s Terner Center for Housing Innovation. Building affordable housing on some of that land could go far in addressing the state’s housing shortage; religious institutions own more than 9,000 acres of land in San Diego and Los Angeles counties alone, according to the Berkeley study.

Proposed legislation passed by the state Senate in late June would make it easier to do so. The proposal would allow developers of low-income housing in California to circumvent some land-use rules when starting projects at sites owned by faith organizations. A plan to redevelop church property as affordable housing in San Diego last year got bogged down in local ordinances that required the church to have a certain number of parking spaces based on square inches of pew space -- the apartments would have eliminated too many parking spaces. This bill would remove those roadblocks by granting faith sites seeking to build 100% affordable housing special designations that allow projects to skip parts of the rezoning process for multifamily housing. A significant share of faith-owned property in California is zoned exclusively for single-family use, according to the Berkeley study.

If the bill passes the full legislature, it could clear the way for projects in California similar to Denver’s St. Francis Apartments development, a 50-unit affordable complex that opened in 2018 after St. John’s Cathedral leased an underused parking lot it owned to a nonprofit developer. The building houses formerly homeless people in Denver’s Capitol Hill neighborhood, meeting the religious mission of the congregation that it neighbors while satisfying affordable-housing advocates who see big surface parking lots as barriers to overcoming homelessness. “The housing crisis is obvious to everyone,” Richard Lawson, the dean of St. John’s Cathedral, said in 2018. “And I think it's incumbent upon all of us ... to look [at] how to use all of our resources on behalf of those who are not benefiting from this economy.”

In addition to zoning issues, churches can face other obstacles when trying to build housing on land they own. Affordable development funded through the Low Income Housing Tax Credit (LIHTC) program, a major source of financing for subsidized housing, tends to be for medium- to large-scale developments. That’s too big for some faith institutions, according to the Berkeley study. Affordable projects that use the LIHTC are typically 50 units or more because of the need to make low rents financially feasible for developers, said Emily Cadik, executive director of the Affordable Housing Tax Credit Coalition. Developers of affordable housing have had to find ways to fit more housing on single parcels as land costs have increased; larger buildings allow them to account for those costs.

One goal of groups like YIGBY is to help churches navigate those financial complexities. Ball said her group wants to mostly avoid using the LIHTCs on the way to building 3,000 units by 2025. YIGBY instead seeks to “establish a different species of affordable housing and construction finance to expedite and economize production of high quality, eco-friendly basic housing as infrastructure for vulnerable populations,” Ball said in an email. The group plans to use low-interest loans through Self-Help Federal Credit Union and donations from philanthropists.

The organization’s first religious partner signed on in late June. The Bethel A.M.E. church in San Diego, the city’s oldest African American church, will convert property it owns into 16 one-bedroom apartments for homeless seniors and veterans using funding from philanthropists and the credit union. Bethel AME’s pastor called the project a fulfillment of the church’s intrinsic mission.

In New York, Local Initiatives Support Corp. (LISC) partnered with the city in 2016 to help five churches convert their land into affordable housing. When LISC first held workshops to gauge interest, 300 people representing their faith organizations showed up, and the group ultimately received 19 applications. LISC helped the five churches it selected with design, financing and legal matters while pairing them with affordable developers. The effort compensated for religious organizations’ lack of real-estate expertise.

And then there are the realities of the market. Facing the challenges of affordable development, some cash-strapped churches simply wish to take the most lucrative offer, which usually comes from developers interested in a return on their investment rather than the social impact of their project. Many churches sit on attractive real estate in urban areas that are gentrifying and where supply is low. Brooklyn, for example, is home to more than 80 Catholic parishes; if a dozen of them were forced to close, would Catholic leaders abandon affordability in their housing missions, as they did in 2011 when a 142-year-old Brooklyn church sold to a developer who turned it into 40 luxury apartments? In Manhattan, some three dozen religious institutions were razed or redeveloped between 2013 and 2018, many of which became luxury buildings, according to the New York Times.

Tricia Bruce, a sociologist of religion who has studied what happens to churches after they close, said decisions about religious property tend to be ad hoc.

“They lack the resources needed to leverage outcomes that are aligned with the mission because they’re working at the whim of these larger markets and capitalist pressures,” Bruce said.

The legislative efforts in California and programs like LISC’s are meant to provide an alternative to the market for churches. But Bruce said on the whole, churches lack the “sort of formal document that stipulates what to do and what not to do” that would help them better use excess or vacant property, particularly when a pandemic accelerates closings.

The legislation in California is a start, but if the pandemic does lead already struggling faith institutions to close, advocates fear the absence of plans for shuttered worship properties could waste big opportunities.

The fate of the North Highland Presbyterian Church in Denver could offer a clue. The church was at the end of its savings before the coronavirus hit. Donations from the congregation’s 27 members made up a meager sum; about half the church’s revenue came from people who rented or leased space in the chapel — for quinceaneras, yoga classes, acting workshops and other events. When the pandemic forced the church to shut its doors in March, that income dried up, and on April 30, North Highland closed for good.

Ashley Taylor, the church’s former pastor, has turned to Zoom to keep up with her congregants. She doesn’t know what will become of the church building — it is owned by the Presbytery of Denver — but she was getting monthly calls from developers years before the pandemic.

“It’s out of my hands,” she said.


Source: Churches Are Building Housing Developments ‘in God’s Back Yard’ - Bloomberg CityLab