Business Side of Management of Church-Owned Property
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1 Business Side of Management of Church-Owned Property Tom Kennedy Director of Real Estate Management and Development Archdiocese of Chicago Archbishop Quigley Center Chicago, Illinois Photo: Jaeger, Nickola & Associates, Ltd.
2 Course Description This course will discuss the buying and selling of property; property donations; leasing, including property characteristics, limitation of tenants, lease due diligence, term sheets, leased premises (utilities, other pass-throughs, property insurance and tenant insurance), important lease provisions (covenants regarding tenant s use and tenant / landlord obligations for condition of premises), subletting (assignment) and lease renewals; real estate taxes; and patrimony / stained glass
3 Conference for Catholic Facility Management ( CCFM) is a Registered Provider with The American Institute of Architects Continuing Education Systems (AIA/CES). Credit(s) earned on completion of this program will be reported to AIA/CES for AIA members. Certificates of Completion for both AIA members and non-aia members are available upon request. This program is registered with AIA/CES for continuing professional education. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construction or any method or manner of handling, using, distributing, or dealing in any material or product. Questions related to specific materials, methods, and services will be addressed at the conclusion of this presentation.
4 Copyright Materials This presentation is protected by US and International Copyright laws. Reproduction, distribution, display and use of the presentation without written permission of the speaker is prohibited. Archdiocese of Chicago; Conference for Catholic Facility Management ( CCFM ) 2012
5 Learning Objectives Modifying traditional real estate practices to support the Church mission Challenges facing a not-for-profit entity in purchasing and selling real estate including acquisition via donation Special lease considerations for Church property including finding appropriate tenants, property management, parish/tenant shared space issues, and dispute resolution Real estate challenges in administering closed properties (taxes, maintenance, utilities, patrimony, etc.)
6 Modifying Traditional Real Estate Practices to Support the Church Mission Real Estate Department s role Support the parish/agency Support the Church Mission
7 Modifying Traditional Real Estate Practices to Support the Church Mission Decision-maker at parish Pastor Parish Finance Council Bishop Vicariate Administrative Consultant
8 Modifying Traditional Real Estate Practices to Support the Church Mission Managing real estate Not-for-profit considerations Real estate taxes Type of property Buildings, green space, parking lots, fields Leases vs. licenses Rental income Insurance (self-insured)
9 Modifying Traditional Real Estate Practices to Support the Church Mission Other considerations Building age and condition Parish short-term needs Parish long-term needs Zoning
10 Challenges Facing a NFP in Purchasing and Selling Real Estate Including Acquisition Via Donation Purchase and sales procedure Authorizations Form
11 Challenges Facing a NFP in Purchasing and Selling Real Estate Including Acquisition Via Donation Forms Property Purchase/Sale Execution Form Required signatures
12 Challenges Facing a NFP in Purchasing and Selling Real Estate Including Acquisition Via Donation Purchases in excess of $750,000 Approval by The Archbishop s College of Consultors Purchases in excess of $7.5M Approval by The Holy See
13 Challenges Facing a NFP in Purchasing and Selling Real Estate Including Acquisition Via Donation Donations Real Estate Department due diligence Property title Potential liens against the property Real estate taxes Environmental issues Appraisal or survey, if necessary
14 Challenges Facing a NFP in Purchasing and Selling Real Estate Including Acquisition Via Donation Parish responsibilities Intended use of property Cost Maintenance Utilities Real estate taxes
15 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Identifying parish property for lease Type of property Condition of property (repairs needed) Available for lease list Parish use
16 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Tenants Not-for-profit 501(c)(3) Charitable use Tenant application and credit check Use compatible with Church Mission
17 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Forms: Tenant Application
18 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Lease Term Sheets Non-binding letter of intent Prepared by the Real Estate Department after consultation with the pastor or business manager of parish on the following terms: Leased premises Landlord s reserved spaces/uses/times Tenant use Rent Security deposit Tenant insurance Capital improvements Tenant work Landlord work Parking rights Pass-thru expenses
19 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Important lease provisions Use Rent Utilities Use covenants Tenant obligations Parish obligations Insurance Defaults and remedies
20 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Guidelines for shared use Code of communication Maintenance checklist Schedule of use Regular parish/tenant meetings
21 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Lease administration questions Are parishes invoicing tenants on a monthly basis? Do the invoices include all the pass-through expenses referenced in the contract? Are parishes entering into verbal agreements or written side agreements outside of the signed contract? Are parishes having regular meetings (at least once a month) with tenants? Are tenants using the leased premises for the permitted use stated in the contract? Is the parish aware of any unpermitted uses or users in the leased premises? Are tenants respectful of Landlord s reserved times under the contract?
22 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Are tenants using more than the parking spaces granted to them under the contract? Are parishes setting aside a portion of the collected rent to a reserve for future work that needs to be done at the leased premises? Are parishes regularly walking-through the leased premises to ensure proper maintenance and repair and compliance with code? Are tenants using more or less than the leased premises described in the contract? Are tenants making alterations, additions, or other improvements without the prior written consent of the parish? Are parishes keeping track of annual increases in the rent and billing accordingly?
23 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Lease renewals Parish satisfaction Process Form Facility inspection
24 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Forms: Lease/License Renewal Questionnaire
25 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Parish special events (short-term lease) Dept. of Insurance and Risk Online form ( departments/financial_services/documents/special %20Events%20Facility%20Useage.pdf) Insurance requirements
26 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Forms Request for Certificate of Insurance Acord 25 form CBC as additional insured Parish and leased premises
27 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Forms Landlord/Tenant Incident Report Form Completed by parish
28 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Forms Notice to Tenant Completed by parish, mailed to tenant Necessary as basis for legal action
29 Special Lease Considerations for Church Property Including Finding Appropriate Tenants, Property Management, Parish/Tenant Shared Space Issues, and Dispute Resolution Forms Sample Invoice Completed by parish, mailed to tenant
30 Real Estate Challenges in Administering Closed Properties (Taxes, Maintenance, Utilities, Patrimony, etc.) Taxes Eligibility for tax exemption Assessment appeals
31 Real Estate Challenges in Administering Closed Properties (Taxes, Maintenance, Utilities, Patrimony, etc.) Maintenance Responsible party Leased Vacant/For sale Cost/budget
32 Real Estate Challenges in Administering Closed Properties (Taxes, Maintenance, Utilities, Patrimony, etc.) Utilities Responsible party Leased Vacant/For sale
33 Real Estate Challenges in Administering Closed Properties (Taxes, Maintenance, Utilities, Patrimony, etc.) Patrimony Warehouse Distribution
34 Questions? This concludes The American Institute of Architects Continuing Education Systems Course Conference for Catholic Facility Management ( CCFM ) Archdiocese of Chicago Tom Kennedy Director, Real Estate Management and Development tkennedy@archchicago.org
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