For municipal governments, the wave of church closings is good news and bad news: good in hot real-estate markets where billions of dollars’ worth of now-tax-exempt property may be redeveloped and returned to the tax rolls; bad in cold real-estate markets, where thousands of closed churches will remain unused or underused and human services operations may lose their longtime homes. Either way, it will fall to cities and counties to lead and guide the process of finding new and better uses for buildings that have long anchored communities and neighborhoods.
Why are so many of America’s houses of worship being abandoned? To begin with, as a March Gallup poll documented, for the first time ever, less than half of all Americans consider themselves to be church members, down from more than 70 percent in 2000. Contributions have dwindled accordingly.
Second, with the popularization of the automobile in the 20th century and the Internet in the 21st, the need for every town, village and urban neighborhood to have its own house of worship of each faith and denomination has faded.
Third, even with the property tax exemption that houses of worship enjoy, real estate has become more expensive to maintain, with hikes in the costs of utilities, insurance and capital repairs.
And now, the COVID-19 pandemic has made it questionable whether worshipers will return to houses of worship they have been visiting online, if at all.
Costs and Opportunities
A denomination in one state owns an estimated $1.4 billion in real estate to serve 50,000 weekly worshipers — a hefty $28,000 in property per attendee. Many churches have found themselves spending half or more of their operating budgets on real estate and owning assets that are 80 or 90 percent composed of illiquid real estate. Many congregations report being “one new roof away from closing.”Savvy houses of worship will look to stay alive and maybe even thrive by converting properties to mixed use. The real-estate community embraced mixed use a long time ago, but the faith community often has looked at it as a headache — sharing our buildings and grounds with those people who use our property for their purposes. But mixed use can not only bring congregations much-needed revenue, it also can broaden appeal to millennials and Generation Z, who may care more about a faith community’s active missions and partnerships than their family’s history of baptisms, weddings and funerals.
There are other opportunities to be found. The prime downtown locations that many struggling houses of worship occupy could make them attractive prospects for conversion to housing, for example. Orange, N.J., a city of 30,000 residents, has 16 churches (in various states of repair) in its small downtown, all of them located just blocks away from a New Jersey Transit station just a few stops away from Midtown Manhattan.
To be sure, houses of worship can be difficult for municipalities to deal with. Change can be difficult as worshipers — increasingly senior citizens — are emotionally tied to remembrances of what has occurred in a beloved building. Debate among a congregation often revolves around issues perceived to be moral — the sacredness of a property, the worthiness of a buyer or user, the feelings of a longtime congregant — rather than on the pragmatics of the deal. Negotiations also require understanding how some religions and denominations are top-down in their decision-making; others are bottom-up; and many impose elaborate processes that involve some of each.
The Roles Governments Can Play
To navigate these challenges, municipal governments and their redevelopment agencies should consider which among five roles — or which combination of the five — they need to play in church closings and redevelopment:• Data cruncher: Municipalities can gather data on the houses of worship in their community — not only size, value and condition, but also information on the health and well-being of the house of worship’s congregants, their desires, and the proclivities of their religions and denominations.
• Mediator: Municipalities can put themselves in a position to be a matchmaker and mediator between and among the house of worship, real-estate brokers, consultants, and both for-profit and not-for-profit developers. The faith community and the development community speak different languages, but city administrators can be effective translators.
• Policymaker and implementer: Converting a house of worship to a new use or mixed use often can challenge outdated zoning regulations, test historic designations and stir up neighborhood opposition. Municipalities can act toward successfully resolving these and other difficult matters — or to inflame them.
• Grant- or loan-maker: Many houses of worship have little cash on hand but up to millions of dollars tied up in property. If a municipality or its development agency can forward a relatively small amount of pre-development money to hire real-estate expertise, that action can pay off dividends down the road in getting a house of worship to head in the right direction. Later in the process, a municipality or its development agency can be one of several funders to make the project work.
• Purchaser and project manager: Sometimes, the only way to get a particularly key project done will be if the municipality or its development agency commit the ultimate intervention, purchasing the property and acting as project manager. If a city or county is in the market for a community center, an arts center, a library or a human-services hub, it should consider a church as a potential site.
While many municipalities have participated in church redevelopment, only a small number have tackled the issue head-on. Most notable is the San Antonio, Texas, Neighborhood and Housing Services Department’s Mission Oriented Development initiative. And the Montgomery County, Md., government’s Faith Community Advisory Council has convened a Religious Land Use Working Group that has focused its efforts on assisting the county’s many immigrant houses of worship.
A number of not-for-profit development corporations also focus on redevelopment of houses of worship, including, nationally, the Local Initiatives Support Corporation and Enterprise Community Partners’ Faith-Based Development Initiative. Locally, and within denominations, many different kinds of not-for-profits are active in these kinds of redevelopments. Not surprisingly, much of the focus of these organizations is on developing low-income, affordable and workforce housing, though not every house of worship is suited for such uses.
Ultimately, however, coordinating efforts like those will fall primarily to local governments. With the coming wave of closings and the potential for mixed-use projects, more municipalities should begin developing initiatives whose sole focus is on the care and feeding of the real estate of houses of worship.
