God-Mart

This will be this first in a series of notes on this topic.
A new trend among growing churches is the purchase of retail space that can be converted to ministry space. As a church, we recently purchesed a shopping center. It was and continutes to be a significant challenge.
Several articles have appeared int he media lately on this topic. There are churches that have purchased depressed shopping areas and used then as business incubators for impacting the community. Kirby John Caldwell's church has been the nost notable of these. On the other end of the spectrum are churches that buy prime retail space to have a presence in high traffic areas that can give them signinficant visibility. Between these two areas is where most of the activity has taken place.
As big box stores like Walmart, Kmart and others close older store fronts, the opportunity is there for a church to get the space. These sites can be especially appealing to growing churches that are ready to relocate and have a history of innovation. The big boxes can be pricey, and present many unanticipated challenges.
Purchasing:
Typically, when retail space is purchased, it is on the value of the land, builings, and lease potential. Most church boards don't really know how to account for the issue of leases. As we buy homes, we think about the land and the building. This is where one of the first challenges emerges. You need to have someone on board that can cut through the additional information and help make the right decision for your church.
We were in the position of making a purchase at a time when the shopping center was considered a distressed property. The lease value was minimal, but had to be considered. Since that time (2 years) our property has become prime real estate and risen significantly in value. Timing was vital in our process.
Most churches do not purchase these properties with the idea of using all of the space. Big box sites usually have smaller tenants in place, and the specifics of those leases can be a significant issue. The idea of additional lease income to help offset the new financial burden can be very tempting, but many issues arise. As a landlord, will you manage the property or hore it out. You will have responsibility to maintain the common areas (parking lots, light, sidewalk, grass, etc.) and you will need to budget for that. Your liability will greatly increase, as will your insurance needs.
Typically, churches do not pay property taxes. This ceases to be the case when you purchase retail property. You will pay property taxes on any area that is not used specifically for ministry. (Don't be fooled into the idea that the Dollar Store can be considered ministry).
You must file the appropiate forms to get the ministry area separated from the retail area. It can be a long process, during which time you may have to pay the property taxes that are due. You will also be taking a sales tax producing space off of the market. Depending on your community situation this can bring great opposition to your plans. When the zoning issues are taken up, be ready for people to speak out against your plan. Know the actual amount of the taxes that have been generated over the past three years and be ready to show how the church will be able to offer service to the community that will offset that financial loss.
More to come...