5 Consequences of Too Much Building – Part 1

In the past few weeks, I have been exposed to a couple of interactions that have really impacted me. The first was two days of workshops that I was asked to lead for the Center for Congregations in Indiana. Many of these churches are dealing with aging buildings and a declining attendance/membership. The second was a Podcast by Dr. Thom Rainer (What to Do When You Build too Big). Both of these shone a light on many issues churches are facing when they find themselves in a situation with more building than they need.

This issue is generally caused by a couple of factors:

1. The church has declined in attendance and facility use, and as such, the previous facilities are too large for the remaining membership and programming.

2. The church is built too big to start with, mainly because of:

  • Miscalculation of projected growth
  • Improper planning
  • A “build it and they will come” mindset

Regardless of the “cause”, the “effect” is serious business. In light of that, I want to address the 5 consequences for “too much building” and provide some possible considerations:

#1: – The Money Pit

1. Higher Utility Costs – An often over looked consequence of too much building is the cost of utilities to heat, cool and light a facility that is larger than needed. Many churches just keep paying the bills…because…well…”we have always done it that way”. But it does not have to be that way. If you do not need all of the space, then shut some of it down and stop paying for unneeded utilities. Other options may include:

  • Selling the facility and obtaining a “right sized” facility
  • Leasing, renting or sharing a portion of the facility, even it only covers the cost of utilities, maintenance and repairs
  • Merging your congregation with another. This trend has saved many congregations and provided facilities for others that may have only been renting (for more information read “Better Together: Making Church Mergers Work” by Jim Tomberlin and Warren Bird).

2. Deferred Maintenance – This is very sad to me, but due to poor planning for the inevitable costs of natural physical deterioration (1-4% annually of the current replacement value), many congregations with aging facilities (over 25 years old) find themselves in a precarious situation. Many, if not most of the churches we serve that are 25 years or older have millions and millions of dollars of deferred maintenance with no capital reserve fund or a plan as to how it can/must be addressed. In many instances this causes a catch 22…you have deferred maintenance…but the congregation is shrinking…so the income is depleted…now what? Steps that are needed here include:

  • Understanding the situation – meaning you need a Facility Assessment to understand your deferred maintenance and capital reserve needs
  • Implement a proactive plan to address the above

3. Deferred Maintenance SQUARED The above issue of deferred maintenance is compounded when adequate attention is not given, thus more than doubling the impact of the natural rate of physical deterioration. This situation will force many, if not most, churches to face other considerations such as whether to close the doors altogether or just continue to let the congregation (and the deteriorating facility) die a slow death. I have worked with one church recently that was spending 70% of their operating budget to pay for the operations, maintenance and repairs of their 80+ year old building. In my opinion, they are no longer a ministry/church but rather a group of people donating to a property management organization. Sad!

There are four more, and we will hit them next time. In the meantime, make sure to get your free copy of the eBook on Capital Reserve Planning.

2 comments on “5 Consequences of Too Much Building – Part 1

  1. We built our building about 12 years ago. I started in my job about 5 years ago and one of my first concerns was recapitalization. We had done almost no savings for recap, and most were of the mindset that the building was still “new” so there was no need for concern. I paid to have a recapitalization assessment done and the results were not pretty. Although the facility and its systems were in good shape, in the foreseeable future (5-10 years) we could expect to seem significant predicted expenditures for system recapitalization. The problem is always the same. The amount one needs to save according to either of the calculation methodologies is so significant annually as to be virtually unobtainable. For us it was something on the order of $350K per year for the next 25 years. Interest in doing this drops off right about then and people revert to God will provide and we’ll just ask the congregation for a special offering. My finance administrator and I have managed to begin putting away at least some money from every budget in a recap designated fund. I have also been educating our Church Council on the situation and seem to have finally got their attention. Even so, there just isn’t enough room in the budget for this kind of saving. And we use our building hard. It is almost fully occupied at least half of every day but maybe Saturday. We try to keep pretty tight control on our utility usage for spaces that aren’t occupied ( we upgrades our BAS two years ago to facilitate this), but our cooling/heating system air handlers cover extensive areas so it is pretty much impossible to shut off much on an average day. That’s a design/build issue we aren’t able to fix in the foreseeable future. Pretty hard to move from facility maintenance to facility management under these circumstances, but we’re trying.

    So I get the problem, as you describe it here in your article. What’s the solution? There’s only so much money in the budget. We don’t want to be a property management company, so only so much can go to operations and facilities. Our facility is actually too small to accommodate us, so down/right-sizing isn’t an option. ANy suggestions. Have your Facility Stewardship book, which has been helpful, but this nut is a pretty hard one to crack.

    1. Bob: You are clearly in a tough place. These kinds of changes have to start at the cultural level of the church ad its leadership. First step is evaluating your current operation costs to make sure you are not spending more on items like utilities.

      Then setting up the projected reserves requirements…and start saving. I know that is easier for me to say that to put into practice…that is where the cultural change comes in. Even if you can only start small, start setting aside dedicated monies for reserves and try to increase it every year. Also make the leadership know what will be needed each year for the next X number of years and get them to help you “find” the money from other places….this is painful, but so is having your worship center HVAC go down in August with no funds to replace it.

      Feel free to reach out any time.

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