Foreclosure crisis hitting some metro churches

Sheila M. Poole and Craig Schneider 

The Atlanta Journal-Constitution

It seems that even houses of worship aren’t immune from foreclosure.

The wave that swept through metro Atlanta’s residential market, forcing thousands from their homes, has also swamped dozens of area churches.

More than 90 metro Atlanta churches were posted for prospective foreclosure from 2006 to 2010, according to a review by the Kennesaw-based real estate research firm Equity Depot for The Atlanta Journal-Constitution. At the end of the day, roughly 50 of those churches were actually lost through foreclosure proceedings.

Of 113 churches currently listed for sale in metro Atlanta, at least 33 are foreclosures or churches in serious financial trouble, estimated Rick Arzet, an associate broker with Prudential Georgia Realty, who specializes in churches. Although that’s just a small fraction of the churches that dot the Atlanta landscape, the situation is the worst he’s seen in 40 years.

“Churches are the tail on the dog,” Arzet said . “The people in churches are the same people who are your neighbors,” he said -- the same people who are losing jobs and cutting back on spending and that includes donations to the collection plate.

Poor judgment and even ambition sometimes play a role, as well.

“This is one case where there are a lot of similarities between the secular world and the religious world," said Chris Macke, a senior real estate strategist for CoStar Group, a Washington, D.C.-based real estate services firm that monitors the phenomenon.

In some cases, pastors built larger churches at the peak of the economic cycle thinking that good times would continue indefinitely, he said. When they didn’t, or when projected population growth didn’t materialize, many churches were left with large loans and dwindling revenue.

Small churches, many of them with predominantly African-American congregations, dominate the foreclosure lists. But medium-sized congregations and even one megachurch with debts of more than $18 million show up, too.

An excess of optimism spelled trouble for Bible Baptist Church in Newnan, which was forced to leave a 51-acre campus that included a Christian school and three swimming pools. The church, which was growing rapidly, took on $3.8 million in debt in 2006 to improve its sewer system, parking, playground and gym.

When the economy tanked, many church members lost their jobs and offerings started going down, said Pastor Doug Anderson, who has led the church for 21 years. Church membership dwindled from 400 to about 100. The church now holds services in a shopping center.

“We certainly made mistakes,” Anderson said. “We just got too much debt … We probably tried to do too much too fast.”

Most of the services it supplied to the community have stopped. There is still a Christian school, but no athletics and no summer camp. There are no buses to go into the poor areas and pick up kids.

That's typical: When a church is forced to retrench, its outreach to the surrounding community often suffers. No longer can community members turn to the church for food, clothing, counseling and other support.

"You're not just losing property," said the Rev. Michael Wright, of Concerned Black Clergy of Metropolitan Atlanta, who said his office has fielded calls from about 45 churches in financial straits. "Back in the day, a lot of communities were built around the church. We're losing an information center, a community center and a centerpiece of the community."

Some groups are working to address the problem. At noon  Thursday, agroup of Atlanta pastors and representatives from local financial institutions are scheduled to meet at Grace Community Christian Church in Kennesaw to examine ways to handle church foreclosures.

For more than a decade, the Rainbow PUSH Coalition has helped pastors around the nation navigate the financial side of church. To weather the financial storms, said Axel Adams of Rainbow PUSH, churches are cutting back on expenses, combining services and reducing staff. He called the situation in Georgia “fairly bad.”

“I think a lot of churches were really not prepared. We have pastors who read the Bible and interpret Scripture, but a lot were really not paying attention to what was going on economically,” he said.

Some lenders are willing to work with churches, others are not, Adams said. “Some lenders will go beyond the call to ensure that churches stay in business,” he said. “They see the importance of these institutions being in the community.”

Church in the Now, a Conyers  megachurch led by James Swilley, watched its congregation explode in the late 1990s.

“I was under the impression it was time to take it to the next level,” Swilley said. “I hate to say we overbuilt, but we did.”

In 2003, he got a loan for about $18 million from Evangelical Christian Credit Union. But the church has been losing members, and money, since. Some of the problem was the recession, but Swilley said some members disagreed with  his “very liberal” view of theology. Membership also took a dip after Swilley announced last October that he is gay.

Membership is down to 1,000 now. The 9 a.m. service Sunday, which draws about 100 people, meets in the lobby of the church, not in the 2,500-seat hall.

“It looks like in a few months, we might not be able to stay here,” Swilley said.

Just as it is for a family, foreclosure is traumatic for a congregation.

Last April, the Rev. Don Brealond was stunned when he arrived at his  Word of Life Church International in Bartow County to find the locks changed and his belongings outside.

"It was really difficult emotionally," said Brealond. "Everything just fell apart."

The foreclosure ended several years of growth for his church, which had met in a local hotel, a shopping center and an office building before borrowing $600,000 to buy an existing church building.

Brealond said he was advised to borrow from a local  private lender for a few months at a higher interest rate, then refinance with a bank. But the bank loan never materialized and soon, the church was falling behind in its payments.

"I got some bad advice," he said. "And I didn't have enough experience to know I was getting bad advice. ... How many pastors do you know who can pay the bills, run the business of the church and get out there and preach and teach and be available to the people?"

For a while he shared the building with another church, then he tried to rent it out for special events. The church now exists on paper only, he said.

Severe financial problems can set church members against one another.

Many members of Flat Rock Community Church near Lithonia say the church should never have taken the loan of $900,000 to build a new 300-seat sanctuary in 2005.  But others point out that three major subdivisions were planned for the neighborhood, and the church wanted to grow along with it.

When the Great Recession hit and those subdivisions weren't built, the congregation divided over how to stay afloat. Some favored a merger with another church, others wanted to simply hand the deed back to the bank.

“It divided the church real bad,” said William Waits, 72, of Decatur, a longtime member.

A pastor was replaced. The chairman of the board of trustees resigned. The church staved off foreclosure late last year by declaring a bankruptcy, but recent court documents indicate that the bankruptcy has been dismissed.

“It has become a mess,” said Jamie Jenkins, an official with the North Georgia Conference of United Methodist Churches. “It’s an unfortunate mess. Nobody wins.”