As the Roman Catholic Church continues to contract across America, it is leaving behind growing numbers of vacant religious properties that pose unique challenges for commercial real estate redevelopment. Most real estate is zoned residential, office, retail or industrial. However, churches fall into the "other" category.
Many old churches are located in residential neighborhoods that are not conducive to the introduction of a commercial use.
Parishes that need to sell their properties often struggle to overcome such obstacles.
"It is a hard job," said Dan Truog, a commercial executive for Coldwell Banker Real Estate Corp. in West Bend. "I don’t specialize in selling churches. When entering a listing on a Web site, some allow you to fill in a field with ‘religious facility,’ but what do you label it as?"
Shrinking church membership, declining numbers of priests and the growing legal costs of sexual abuse scandals involving priests are creating additional strains on the Catholic Archdiocese of Milwaukee to close and consolidate parishes, adding to the roster of vacant church properties (see accompanying chart).
Organizations that could use a church property as it is are typically nonprofit agencies that cannot afford to pay the asking price for the property.
Private developers often have concerns with the costs and processes involved in redeveloping a church property, including rezoning the site and paying to demolish the structure. Marketing the property also proves difficult, real estate experts say.
Some church properties that have parking lots or several acres of land are being sought by developers, primarily for new residential construction, said Barry Willbanks, a former pastor who is now a commercial real estate broker and a national religious property sales specialist for Coldwell Banker in Menlo Park, Calif.
"Land is difficult to find, and churches do not always have the money to compete with developers," Willbanks said. "I recently sold (a church property) with an acre and a half that had six offers from a private school, two or three developers and one or two churches. Luckily, the church won out, but it had to raise its offer by $400,000 to come out equal with developers. The property sold for $3 million."
Truog is currently working with Sacred Heart, an organization of three parishes in Juneau and Horicon that merged into one newly built church in Horicon. Many different kinds of potential buyers have looked at the old church properties for different reasons, Truog said.
"A developer is looking at the Sacred Heart in Horicon because it overlooks the Rock River and may be looking into condos," Truog said. "One plus to church properties is that churches don’t pay taxes, and municipalities always look at what else can go in (the church property for sale). So they are usually willing to work with a buyer to change its use."
The buyer of the Sacred Heart location in Juneau was an individual who plans to convert the church into a single-family home and a school for dog groomers, Truog said. The rectory will serve as a dormitory, and the church structure will serve as the buyer’s home and as space for the school, Truog said.
Willbanks and Truog say they do not take every religious property listing that comes their way, because the properties can be difficult to sell. Some organizations may have plans to move and have put the property up for sale, awaiting construction or the purchase of a new property. Others may have excessive asking prices, they said.
One Milwaukee-area business owner, who asked not to be identified for this report, has been buying local church properties, sectioning the land off for resale and donating the church structures to nonprofit organizations. He has completed four donations in six years.
The business owner has experience in real estate and quickly realized that the Internal Revenue Service offers an adequate tax break for the donation of a church building.
However, many vacant church properties simply have too many obstacles for redevelopment, and he declines such deals, he said.
"It is quite involved, and I don’t think many people would be interested in the mechanics of it," he said. "With the land division and legal and zoning issues, the deals are kind of fragile. There are a lot of things that can go wrong, and you have to walk away from it."
Many Milwaukee-area churches are struggling to survive financially, he said.
"There are two problems," he said. "The church population is shrinking. There are very few congregations that have more members today than they did 10 years ago."
As the congregations shrink, the financial burden on the remaining members is increasing, he said. When a church needs money for a new roof or to pay for utilities, a maintenance person or to compensate clergymen or the equivalent, it becomes harder for the church to viably own the building, he said.
Some church members may protest the closing of their churches, which adds another headache while trying to rezone the property and close on the purchase, he said.
"There sometimes can be emotional issues with former members of the congregation," he said. "Frequently when buying a church, you have to get approval from the local parish board, and there can be significant emotional issues with the people who are giving up their church."
Another national church property expert, Earle Shroyer, a commercial real estate broker for Realty Executives International in Glendale, Ariz., is seeing his business grow because of the limited available expertise in religious property redevelopment.
Shroyer, who represents 270 churches and averages one church sale per month, is the son of a pastor.
He says the degree of difficulty for selling a religious property often reflects the health of the local real estate market overall. Phoenix and Southern California are seller’s markets, and church properties often are quickly sold in such markets, Shroyer said.
Milwaukee is not, Truog said.
Shroyer conducts most of his marketing through his Web site, www.churchesforsale.com. Willbanks has found success on the Internet as well and markets his properties at www.churches4sale.com.
Both Willbanks and Shroyer said marketing efforts, such as direct mail and keeping a database of churches, can help prevent a property from becoming stagnant on the market.
Truog has listed properties on a national listing site specifically for churches at www.praisebuildings.com and through his network with Coldwell Banker.
However, the Milwaukee market is lacking both congregations looking for churches and an awareness of new uses for church properties, he said.
No church properties are currently listed on the MLS for commercial properties in the Milwaukee area, according to John Periard, executive director of the Commercial Association of Realtors Wisconsin (CARW).
The Catholic Archdiocese of Milwaukee does not keep a collaborative list with church properties for sale, said Wayne Schneider, chief financial officer and treasurer of the Archdiocese.
"In general, in my experience, churches prefer to sell to other churches, because there is an emotional attachment to use (the property) as a religious organization," Willbanks said. "But money talks, as well. And if you have a developer saying (he or she) will pay $3 million and the church can only offer $2.6 (million), the organization is probably going to sell to a developer."
Perishing parishes
Since 1998, the Catholic Archdiocese of Milwaukee has closed one parish, created two others and merged 84 parishes into 31 parishes. The merged parishes are:
Beaver Dam: St. Katharine Drexel Parish, merging of St. Michael, St. Patrick and St. Peter Parishes, Beaver Dam.
Campbellsport (Armstrong): Good Shepherd Parish, merging of former Our Lady of Angels Parish, Armstrong; St. Michael Parish, Dotyville; and St. Mary, Eden.
Cedarburg: St. Francis Borgia Parish, merging of Divine Word, Cedarburg; and St. Francis Borgia, Cedarburg.
Cudahy: Nativity of the Lord Parish, merging of the former St. Frederick, St. Joseph and Holy Family parishes, Cudahy.
Eldorado: Our Risen Savior Parish, merging of the former St. John Parish, Woodhull; and St. Mary Parish, Eldorado.
Elkhart Lake: St. Thomas Aquinas Parish, merging of the former St. George Parish, Elkhart Lake; and the St. Fridolin Parish, Glenbeulah.
Fond du Lac: Holy Family Parish, merging of the former Sacred Heart, St. Joseph, St. Louis, St. Mary, St. Patrick parishes, Fond du Lac; and St. Peter Parish, St. Peter.
Sons of Zebedee: Saints James and John Parish, merging of the former St. John Parish, Byron; and St. James Parish, Oakfield.
Fox Lake: Annunciation Parish, merging of former St. Mary Parish, Fox Lake; St. Mary Parish, Lost Lake; and St. Gabriel Parish, Randolph.
Franklin: St. Martin of Tours Parish, merging of former Sacred Hearts of Jesus and Mary Parish, Franklin; and Holy Assumption Parish, St. Martin.
Fredonia: Holy Rosary Parish, merging of the former St. Rose of Lima Parish, Fredonia; Mother of Sorrows Parish, Little Kohler; and Holy Cross Parish, Holy Cross.
Hartford: St. Kilian Parish, merging of the former St. Kilian Parish, Hartford; and St. Patrick Parish, Thompson (Erin).
St. Lawrence Parish, merging of former St. Matthias Parish, Nabob; and St. Lawrence Parish, St. Lawrence.
Horicon: Sacred Heart Parish, merging of the former St. Malachy Parish, Horicon; and Immaculate Conception Parish, Juneau.
Hubertus: St. Gabriel Parish, merging of the former St. Columbia Parish, Lake Five; St. Hubert Parish, Hubertus; and St. Mary Parish, Richfield.
Kenosha: St. Elizabeth Parish, merging of former St. Casimir and St. George parishes, Kenosha.
St. Mary Parish, merging of the former St. Thomas Aquinas and St. Mary parishes, Kenosha.
Kewaskum: Holy Trinity Parish, merging of the former Holy Trinity Parish, Kewaskum; St. Bridget Parish, Wayne; and St. Matthias Parish, Auburn.
St. Michael Parish, merging of former St. Michael Parish and the St. Michael and St. John of God Parish, Farmington.
Lyons: St. Joseph Parish, merging of former St. Joseph Parish, Lyons; and St. Kilian Parish, Lyons.
Milwaukee: Mary Queen of Martyrs Parish, merging of the former Mother of Perpetual Help and St. Stephen Martyr parishes, Milwaukee.
St. Maximilian Kolbe Parish, newly formed.
Our Lady of Divine Providence Parish, merging of St. Casimir and St. Mary Czestochowa parishes, Milwaukee.
Our Lady of Guadalupe Parish,
merging of the former Holy Trinity-Our Lady of Guadalupe and St. Wenceslaus parishes, Milwaukee.
Prince of Peace Parish/Principe De Paz, merging of former St. Matthew and St. Lawrence parishes, Milwaukee.
St. Rafael the Archangel Parish, merging of the former St. Barbara and Holy Spirit parishes, Milwaukee.
St. Vincent Pallotti Parish, merging of the former St. Anthony of Padua and Holy Cross parishes, Milwaukee.
Three Holy Women Parish, merging of the former Holy Rosary, St. Hedwig and St. Rita parishes, Milwaukee.
Pleasant Prairie: St. Anne Parish,
newly created.
Racine: St. Richard Parish, merging of the former St. Casimir, Holy Name, St. Rose, St. Stanislaus and Holy Trinity parishes, Racine.
Random Lake: Our Lady of the Lakes Parish, merging of the former St. Mary Parish, Random Lake; St. Nicholas Parish, Dacada; St. Patrick Parish, Adell; and St. Mary Parish, Cascade.
Sheboygan Falls: Blessed Trinity Parish, merging of the former St. Mary Parish, Sheboygan Falls; and the St. Rose, Lima and St. George parishes, St. George.
South Milwaukee: Divine Mercy Church, merging of the St. Adlabert, St. John, St. Mary and St. Sylvester parishes, South Milwaukee.
West Allis: St. Joseph Parish,
closed June 1999.
Source: Catholic Archdiocese of Milwaukee
CHURCH for sale
But who wants to buy an old church near the airport?
St. Stephen Catholic Church, located at 5880 S. Howell Ave. in Milwaukee, purchased 15 acres of land in Oak Creek in 2002 with plans to build a new church.
The new $8 million structure would be four times the size of the current church to accommodate St. Stephen’s growing number of parishioners. However, construction of the new church is dependent on the sale of the current property.
Selling the old church has been a challenge. Churches are unique properties and at times are difficult to sell.
The St. Stephen move has been eight years in the making, said the Rev. Richard Liska, pastor of the church.
Although the would-be new church continues to develop through design, and the neighborhood around the site at 10301 S. 13th St. in Oak Creek continues to grow, construction is on hold until the church can sell its current property on South Howell Avenue.
The current church sits on 14.25 acres of land that backs up to General Mitchell International Airport. St. Stephen has placed a $4 million asking price on the property, which may be making it a more difficult sell.
"It is challenging because of the asking price," Liska said. "A number of churches of other denominations looked at (the property), some people looked that wanted to start up schools (but could not afford to purchase the land)."
St. Stephen isn’t budging on that $4 million price tag, because it will need those funds to finance construction of the new church, Liska said.
Several individuals, companies, organizations and developers have expressed interest in the site since it entered the market a year ago, but none have offered to meet the asking price, he said.
According to St. Stephen’s recorded history, the church has been for sale many other times since it was built in 1844. The structure was renovated in 1927 after a fire in 1926. The church tried to sell its land back to Milwaukee County in the 1960s, but the sale did not go through.
Commercial real estate brokers, including James T. Barry III, president of Milwaukee-based Colliers Barry and Sam Dickman Jr., vice president of Milwaukee-based Dickman Co., Inc., have both looked at the site.
The Dickman Co. sees St. Stephen as an attractive property for several different potential uses. The hesitation goes back to the asking price, Dickman said.
"Industrial land (in that area) by the acre is $65,000," Dickman said. "I think it is a wonderful site, and at this point, people would be interested if it was priced correctly."
General Mitchell Airport has considered buying the church property to use it as a cushion for continuous airport development, airport director Barry Bateman said.
"The airport is an interested buyer, and we have told (St. Stephen officials) that, but they are looking for a higher compensation than we are willing to pay," Bateman said.
Aside from the price, the key issue for other parties that may be interested in the property is that it adjoins the airport, Bateman said. A business located on the land would have to be one that is not concerned about noise or would have to build a sound-insulated building, he said.
During worship services, parishioners at St. Stephen can hear airplanes taking off nearby and, because the church does not have air conditioning, they can smell exhaust from the aircraft when the windows are open in the summer, Liska said.
In January, Milwaukee Archbishop Timothy M. Dolan celebrated St. Stephen’s first Mass of the year. During the service, Dolan was startled and ducked for cover when he heard the sound of a plane roaring overhead after it took off from the airport, Liska said.
"What was that?" Dolan asked, according to Liska. The congregation, used to hearing the loud planes during worship services, laughed in amusement at Dolan’s surprised reaction, Liska said.
The close proximity to the planes is precisely the reason the airport is coveting the St. Stephen property.
"The reason we were interested in (the property) is because it is contiguous to the airport, and we need land for various and sundry airport support functions," Bateman said. "It is a rare commodity to have (at least) 13 acres. We certainly let them know we were interested, and they have not responded."
An interested developer is currently looking for partners to join a venture to buy and develop the property, but Liska said he is not sure if the plan will become reality.
Liska said he believes that if the church continues to find difficulty in selling the property, it may not be its time to move.
However, St. Stephen is literally busting at the seams, Liska said. As other parishes have been merged (see accompanying chart), St. Stephen has 900 worshiping families that travel from Milwaukee, South Milwaukee, Oak Creek, Cudahy, St. Francis and Franklin to a church that can only seat 237 people.
Initial plans for the new St. Stephen structure to be built in Oak Creek were created by Groth Design Group in Cedarburg. The needs of the new church, including handicap accessibility, a seating capacity that can be expanded to accommodate further growth and a structure that complements the historical pieces St. Stephen plans to bring to the location, necessitated some of the design features planned for the structure, Liska said
"We did not want the design of the new church to be completely dictated by the past," Liska said. "The actual sanctuary space is like St. Peter’s in Rome, without the long nave. It is a cruciform with the altar in the middle as the focus point. (There will be a) dome of light above the altar and a colonnade with circular form."
The design of the new church is as far as St. Stephen and Groth Design can take the project at this point, Liska said.
The $8 million new church will seat 500 to 600 people initially, with room to expand to a seating capacity of 1,000, Liska said.
However, the next phase cannot begin until St. Stephen is ready to break ground with construction, which won’t happen until the current Milwaukee site is sold.
"The sooner the better," Liska said. "We were hoping to begin in spring, and at this point we have not been able to sell."
Archdiocese CEO
Dolan works to restore faith in Catholic Church
The Roman Catholic Church has faced several challenging issues in recent years, most notably, lawsuits against priests and bishops who have sexually abused minors or covered up abuse by other clergy. In addition, church attendance has declined, and the number of priests has plummeted, causing the church to close more than 20 percent of its parishes. Such challenges greeted Archbishop Timothy M. Dolan when he came to the Catholic Archdiocese of Milwaukee in 2002. Many of the problems facing the Catholic Church are similar to the challenges faced by businesses today, including human resources, revenue, public relations and facilities management issues. Dolan recently discussed those challenges with Small Business Times reporter Elizabeth Geldermann. The following are excerpts from that interview.
SBT: Let’s start with the general state of the Archdiocese of Milwaukee. Would you say that there are more churches that have outgrown their church structures or more congregations that are merging due to a decreased number of parishioners?
Dolan: "I’d say a little bit of both. We have to be realistic. The essence here is demographics. In expanding areas, like in parts of the suburbs and what are now called the exurbs, the farmer and rural areas that are now becoming kind of extensions of the suburbs, the church is mushrooming. There, we can’t build churches fast enough, and we are building huge churches in these expanding areas.
"However, in the older, more established neighborhoods, whether that be city neighborhoods (like) Bay View, (or communities like) South Milwaukee, St. Francis or West Allis – those we are realistic about the demographics. The populations have shifted. Young families have moved out, we have an aging population (in those communities). We still want to be attentive and sensitive to them, but sometimes we have to be shrewd and prudent and make sure that we do some mergers and consolidations so that those people in the shrinking areas can still be adequately served. We can kind of prudently use our resources of personnel and other gifts to make sure that the populations of the expanding areas are being served."
SBT: Are the consolidations and mergers due to a priest shortage or mainly because the Archdiocese is trying to make a smaller parish merge with another parish in the underserved areas?
Dolan: "I would think a little of both. There is no denying the fact. We do have a shrinkage of available priests. However, even if we had an abundance of priests, which is sure something I would like to have, we probably still would be involved in some careful stewardship of resources and probably still have to be realistic to say, ‘You know the old days in this area, we used to have six parishes and each parish had two priests. Now the population has shrunk, so we don’t need that number of parishes or that number of priests anymore.’
"In one way, it is sort of realistic demographics, but on the other hand, there is no denying that because the supply of priests is not as ample as it used to be. We have to be pretty prudent and sound in the way we utilize the personnel."
SBT: How do you think the Archdiocese will be affected by new Pope Benedict XVI? Can the Pope’s beliefs and actions have a reflection on Milwaukee area congregations?
Dolan: "I sure hope so. The whole purpose of the Pope is the earthly head of the Catholic Church. Of course, Jesus is the head of the Church, but the Pope is the earthly head of the church and is the earthly sign of unity. His spirit, his teaching has a tremendous effect on Catholics throughout the world. It is sort of a sacred trickle-down theory. We saw that with Pope John Paul II. His 26-1/2 years had a tremendous impact on the Catholic Church. I would welcome that and anticipate that and expect that, that the new Pope Benedict XVI would have a very positive affect on Catholic life in southeastern Wisconsin.
"That having been said, the church is probably the greatest grassroots organization around. There is a beautiful Catholic principal that is called subsidiarity, which means what can be done closer to the people should be. So the real life of the church is in parishes, and I would like to think in the diocese. We are proud of the fact that we are united under the earthly father and we look to him for unity and faith and morals, but we also have to be attentive to the local life of the church."
SBT: How significant was the financial impact, or will the impact be, from the lawsuits against the sexual behavior of priests on the Archdiocese?
Dolan: "There is no denying that that has had an impact on us. The good news is that statistics are showing that Catholic people are remarkably resilient and that they are still generous to the church, in spite of our deep disappointment in the actions of a tiny minority of priests and the way bishops mishandled it. Their faith is not in priests or in competent bishops. Their faith is in Jesus and his church. They are remarkably resilient when it comes to that.
"That having been said, we also have to be upfront that the legal costs, the outreach that we have done to victims of sexual abuse, the very constructive and effective mediation process that we have gone through in bringing emotional, spiritual, pastoral and monetary outreach to victims. That is cost. That has cost us money. Now I have to be a sound steward, and I cannot touch money that people have given for the charitable and educational efforts of the church. I can’t touch that to pay these other expenses. But it does have an impact. There is no doubt about it. I have to get that money elsewhere, and that’s money that probably would have been spent for other things were not for this. So there is no use denying the fact that it has had a negative influence on the financial picture of the church."
SBT: Do you think that it will continue to be a financial burden, or are you optimistic the situation will improve?
Dolan: "I would like to think that we have a lot behind us, but no. I think there will continue to be, we are in the enterprise of trying to restore trust. We are in the enterprise of continual outreach to people who have been terribly and tragically hurt by this. And there are still some legal questions that need to be solved that still might have an impact on the Archdiocese. All you can do is wait and cooperate and consult and pray and be open to what happens."
SBT: You are trying to pass a policy for unannounced searches of a priest’s home when he is suspected to have been involved in inappropriate behavior. Is this an effort toward restoring trust?
Dolan: "That’s related, you bet it is. Because every diocese, which of course is the local unit of church government, every diocese is trying to establish a charitable, prudent effective way to have guidelines and monitoring for the priests who have been removed due to a substantiated allegation of sexual abuse of a minor. We have to do that. And we want to. So we are trying our best. We have been doing it. What we tried to do is put that in writing, and of course, I made a terrible mistake in kind of not taking a further step in the rigorous consultation of priests, and I have got to do that if that policy is going to be credible and effective. So even though, for sure we are backing up on this policy, we are not backing away from the idea. We just want to arrive at it at a much more consecutive way."
SBT: Are there other issues from a financial or operational standpoint that the Archdiocese is facing today?
Dolan: "What we are hearing our people saying is that they really want us to be transparent and open. And thank God the Archdiocese of Milwaukee has that reputation. We have an excellent finance counsel that is mandated by church law and made up of about 10 very respected business leaders, men and women, in the community. And so we run our budget by them. We run our audit by them. We have to be open.
"We have something called the Archdiocesan Resource and Development Council, the ARDC, which is chaired by Don Layden Jr. (senior vice president of Metavante Corp.) and again a group of real savvy people who advise us on development issues, on financial issues, on marketing issues and how to get the message and mission of the church across in a more timely way. So, thank God we have a tradition of real openness, consultation and dialogue, because that’s what the people are asking for.
"We are also doing a good study of our diocesan properties. Do we need all of them? Would the people be better served if we moved elsewhere? You know, we have the Cousins Center down in St. Francis, and so we have a group of very effective people led by Les Blum (senior vice president and general manager of Opus North Corp.). He and five other people, out of the goodness of their hearts, they are all committed Catholics, said they would be happy to take a good look at our properties and see if they are being utilized in the most effective way.
"And we just did a major study on our seminary, which does cost a bundle, but it is worth it. It is producing the priests, deacons and lay leaders. But we have some ideas on how to make that more fiscally solvent.
"And finally, our finance council said we should take as much of the annual report (as possible) under a microscope and make sure that it is as revealing and as precise as it could be. So, we have got our auditors working hard. Each year, we publish the complete financial report of the Archdiocese, the audit, because people have the right to know. They told us they want to know. So the finance council said, ‘Let’s wait a while and let’s un-bundle this a little more and make sure this is as precise and as accurate as it could be. Not that they weren’t in the past, but they just felt that there were some things that we needed to be more precise on. God willing, within the next month or so, we will be able to publish an even more revealing and transparent financial report for the people. So those are some things that we are doing."
May 13, 2005, Small Business Times, Milwaukee, WI
