Update from Finance and Planning

April--it was a good month!

By Ronald Kelly

April is often a month that lifts our spirits. Spring is under way. Showers prepare the fields for planting, and flowers burst forth in color. Sunshine brightens the days as they grow longer (usually helped along by daylight savings time). In addition to the wonders of God’s creation and the joys of nature that springtime brings, this year, the church financial picture got a lift as well.

As we reported in the previous issue of the WN, the church-owned summer camp in Orr, Minnesota, has been sold. During April the sale was completed and the sale proceeds are now in our reserve funds. The sales price of $1.7 million was a true market-value price. As Bernie Schnippert, treasurer, has pointed out, it was arrived at after intensive negotiations with numerous competing potential purchasers. The sales proceeds of $1.7 million, minus the book value of the property, $364,000, gave the church at net gain of $1,336,000.

Regular mail income for April was quite good—just over $1.9 million. That’s almost even with the same month a year ago. Mail income for the year is about $6.4 million. Please see the accompanying chart to get an overview of the monthly and annual financial picture.

As you already know, or if you didn’t you may read in this issue, our sales contract with Legacy Partners to purchase and develop the Pasadena campus has expired and they are not renewing it. At first glance this may seem a bit discouraging. Momentarily it certainly was to all of us. But, as we evaluate our opportunities, we have become more and more optimistic. Preliminary talks with city officials indicate that we can move right along with the development plans.

We will work with city staff and neighborhood groups to put together a project that we hope will successfully meet the desires of all stakeholders—the city, neighbors and members of the Worldwide Church of God. In early May, Pasadena Mayor Bill Bogaard indicated his desire to have project plans ready for review by the City Council in "four to five months." In other words, the approval process has not necessarily been put on a slower track because of Legacy’s departure.

We are also optimistic that a fair price can be obtained from the property sale. The climate for the housing market in Southern California is good right now. Many of the sub-developers that Legacy had been working with have indicated their desire to continue their plans as they work directly with the church, who will, more or less, step into the role of master developer.

Obviously there is always room for concern to take on such a project. But our expert outside consulting and legal firms are convinced this project is "doable" and they are ready and willing to continue their assistance to us.

Naturally, as we proceed with development, certain costs will be attached to the project. But we have more than 100 parcels of land in a 48-acre campus. If additional funds are needed, selected properties can be sold to meet the costs of development and to augment the church’s reserve funds.

Thus, we have no current plan for dramatic reductions to staff and church projects as we proceed through the sale process. My staff and I review our income and expense budgets on a daily basis. We make recommendations to management and the board when we feel changes need to be made. Even though it is only early May as I write this column, we are already forming templates and spreadsheets preparing the 2003 budget. The board has approved the budget for 2002, and although it allows for reserves to be used, the reserve fund will not fall below an approved level.

If city officials approve the development agreement, we can begin to implement our transition to the new financial model that we are explaining to everyone who attends our regional conferences. We are all anxious to put into action a new financial structure that provides for much-desired funds in our local churches.

Let me digress here for just a moment and comment on the success we are experiencing in our six pilot congregations that have implemented the new financial model. Generally pastors are reporting an increase in donations as members take responsibility for and ownership of their local church donations. In fact, two of the congregations report an increase of more than 50 percent during the first quarter. That is exciting and encouraging. I don’t know whether to expect that to be the case in all 450 of our U.S. congregations, but we know that many will have similar experiences.

That being said, we have to plan for the possibility that the development plans will not be approved, or would be further delayed. What would our options then be? Well, we own prime real estate in one of the finest areas of Southern California. And we can sell the property parcel by parcel, though this wouldn’t be our preference. That could take some time, but it certainly can be done.

The point here is that members should not be worried that the church is somehow near financial ruin. We have been operating under tight budget constraints. We have sold the Big Sandy and Orr facilities. We have auctioned most of the surplus equipment and furnishings in Pasadena. We have done these things to maintain our church operations and to keep our reserve funds at an acceptable level while we keep the Pasadena property in the sales process.

We will continue to diligently and responsibly manage the various budget areas of the church. As you see in this issue of the WN, we are proceeding with our first option to continue the current development plan to sell the campus in Pasadena.

Should that not prove feasible, we have the option to solicit new buyers, seek a new developer or to sell individual parcels. None of these options is bad. Some would take more time than others, but one way or another, the campus will be sold, and the Worldwide Church of God will move forward as we put our faith and confidence in the Creator of the universe.

Statement of Income and Expenses for
WCG and PTM combined for 2002

                                                            For the Month         For the Year-to-Date

Income

    Mail Income                                             $ 1,908,000                     $ 6,440,000

    Gain on sale of SEP Orr                              1,336,000                        1,336,000

    Other income                                                 637,000                        1,273,000

        Total income                                           3,881,000                        9,049,000

Expenses                                                         2,503,000                       9,450,000

Net gain (loss) to bank reserves                      $ 1,378,000                    $ (401,000)

Copyright © Worldwide Church of God, 2002