Churches End Up Paying Property Taxes

We just learned that churches, who desire to lease instead of own their facilities, will likely end up paying real property taxes to the owner of real property who is obligated to pay these taxes to the State of Colorado regardless of the occupant of the building.

We think this is just plain wrong.

In our opinion, the intent of the state real property tax exemption doesn’t regard ownership but only use. The State of Colorado Property Tax Exemption Statute states that in “the general assembly hereby finds, declares, and determines that the uses of property which are set forth in this part 1 as uses for charitable purposes benefit the people of Colorado and lessen the burdens of government by performing services which government would otherwise be required to perform. Clearly there is no mention of property ownership. We believe that the owner of real property, who leases to a qualifying tax exempt entity, should have their real property taxes abated for the portion of the space occupied by the qualifying entity.

Currently, in order to qualify for real property tax exemption, a church must both own the property and also use the property for qualifying charitable purposes.

Colorado Revised Statute 39-3-106 (1) states that: Property, real and personal, which is owned and used solely and exclusively for religious purposes and not for private gain or corporate profit shall be exempt from the levy and collection of property tax.

It is our hope and perhaps a future goal to find a way to revise this to match the original intent of the statute.

VACANT Retail Boxes Offer Church Facility Choices

With the continuing malaise plaguing the economy and consumer spending at its lowest level in a decade, unprofitable retailer operations are being shuttered leaving vacant spaces in retail shopping centers across American. According to Mary Beth Jenkins with the Laramie Company, who recently reported at the Rocky Mountain Real Estate Expo, there are 54 retail boxes currently unoccupied in the greater Denver area. This does not include the many additional automotive facilities that too lie fallow.

Development Advisors, LLC (“Advisors”) believes that many of these empty retail buildings would be desirable as a new church facilities. Retail boxes offer many of the attributes that churches are seeking today—visibility, access, parking, and services like restaurants to frequent before and after Sunday services.

Not long ago, the mere presence of a church in a retail center suggested that the shopping center had lost favor with retailers who abandoned the center for greener pastures elsewhere. But today, the reputation of a shopping center with a church has changed. These days, weekend and evening traffic from a church can transform a slowing retail center.

There are many examples of churches that occupy retail space in the greater Denver area including:
▪ Calvary Chapel South Denver: 9052 West Ken Caryl Avenue; Littleton, CO 80128.
▪ Orchard Christian Center purchased the former Beau Monde shopping center at the NWC of I-25 & Orchard Road in Greenwood Village, CO.
▪ Foothills Community Church 8270 W 80th Ave; Arvada, CO 80005.
▪ Flatirons Community Church 400 W South Boulder Road; Lafayette, CO 80026-8856.
▪ South Fellowship 6560 S Broadway; Littleton, CO 80121.
▪ Colorado Christian Fellowship 10630 E. Iliff Avenue; Aurora, CO 80014.

Refinance Debt in 2010

At the Rocky Mountain Real Estate Expo, we heard that interest rates are projected to increase in 2011 primarily as a result of competition from the US Government. Apparently a $6 Trillion pool of available debt capital will be reduced to only $3 Trillion because of this new competition. This new demand will put pressure on this supply thus causing the cost of this debt resource to increase.

As a result, we suggest that our church clients make plans during 2010 to refinance any debt expiring in 2011 or 2012 before this possible rate spike.