Should Throop Purchase the Greene & Greene Property ?
			By David S. Lawyer, July 4, 1998

It is proposed to offer $790,000 to purchase the property just north
of Throop Church.  I think that purchasing this is very risky and
likely to eventually destroy the church.  I think it likely that the
resulting financial problems will, sometime within the next 10 or 15
years, cause the church to solve these problems by dissolving, merging
with Neighborhood Church, or moving to a smaller building.

I find it quite ironic that a Church which a few years ago was
seriously considering dissolving or selling the Church and buying a
smaller church, now is considering expanding our "campus".  If we
could obtain the property to the N. at a much lower price, it might be
worth considering.

It is claimed that the rental of the property will pay for the
mortgage.  If this were so, and if it were very likely that the same
rental income would continue in the future, then we should definitely
buy it.  But this is not the case.

First, let's look at what we are buying.  The main house occupies
almost (about 100 sq. ft. less) the same area of land as our Church
School (Henry House): 1840 sq. ft. excluding exterior stairwells and
hallways (breezeways).  Both are 2 stories but the Greene & Greene has
both an attic and basement.  Since the Greene & Greene has interior
stairways and hallways, less of its interior area is available for
office space.  Thus the two buildings are of approximately the same
usable floor area and they are just a "stones throw" away from each
other.

What do we rent Henry House for per square foot per month?  The Funeral 
Society pays about $0.75.  Montessori is expected to pay $1.37.  In the 
coming year the Korean Baptist Church is expected to pay $1.03 but the
use of our main building is also included so they actually will pay
much less.  Thus we rent for about $1 per sq. ft.  However this
includes walls and the downstairs  restrooms so if the above figures
were to be just for the interior floor space (excluding restrooms) it
would be somewhat higher, perhaps $1.10 per sq. ft.

For the Greene & Greene it was stated that the rents will be about
$4 per sq. ft.  These are extremely high rents and are a few times
greater than what we get.  To get such rents one needs to maintain the
property in excellent shape and, should a vacancy occur, be able to
locate the rare tenant willing to pay such high rents.  I doubt that
we can do this for long.  Furthermore, one must consider the
likelihood of a future recession (or worse) where rental vacancies are
widespread.  The upstairs of Henry House went unrented for about a
couple of years just a few years ago.

Exactly what will happen is unknown.  If it costs us a few thousand
dollars more a year than was estimated to maintain the property, or if
a short vacancy occurs so that we loose a months rent from a tenant,
then it would not be much of a problem to make up the deficit out of
our budget.  But if there are a few vacancies for a long period or we
are forced to significantly reduce rents to get tenants, then we could
have a deficit of say $50,000 a year (or worse).  What would we do?
We could try to run the church without a minister, or even mortgage
the main building, or use up the endowment fund and loose the income
that it generates.

We have a history of mismanaging property.  For many months we did not
even list the vacant 2nd floor of Henry House for rent.  The cleaning
costs for the main church building are about 4 times higher than that
estimated for the Greene & Greene and although our area is much
larger, the office rooms in the Greene & Greene are much more
difficult to clean than the open spaces in the church such as Throop
Hall.  I think there is a good chance that we may let the building
deteriorate (some window sills there are in the first stages of decay)
to the point where it becomes difficult (or impossible) to rent at the
luxury prices now being charged.

Another factor that may affect us is that during the financial crises
that are likely to occur, the board will spend a lot of time on this
and neglect other church problems and programs.  This could contribute
to the decline of the church without us even being aware of the cause.

Regarding parking, the property has 16 parking spaces, one of which is
jam parking (the back car must be moved before the car in front can
get out).  I understand that we now may park free on Sundays in the
parking area to the north of the Greene & Greene.  At one time we had
permission to use the spacious lot across the street.  It would be
nice to get more parking but with a 300 seat sanctuary, we need about
200 spaces if we want to provide for 100% capacity.  Thus purchasing
the Greene & Greene by no stretch of the imagination solves the
parking problem.

There is also the possibility that we might get lucky, that we will
greatly improve our management, and that there will be no more
recessions for at least a decade or so.  Then one day 25 years from now
we would own a nice piece of property which could be used for future
expansion.  Is this likely?  I wish it were, but realistically it's not
very likely.

Thus I think that purchasing the Greene & Greene property is a high
risk not worth taking.  If it succeeds we will be only somewhat better
off but if it fails the church may not be here at all.