Building acquisition

BUILDING ACQUISITION, MAJOR RENOVATIONS AND LOAN POLICY
(revised Jun 2018)

British Union Conference Policy
Section 2 – General Denominational Guidelines
(original doc. here)

The acquisition and major renovations of property are among the larger of financial decisions made by local congregations, Conference/Mission and Union Executive Committees. Each committee has a specific role. The purpose of this policy is to define the objectives and boundaries of each. The committee with whom beneficial ownership resides (usually the Conference/Mission) has the greatest duty of care. Prior to an offer being made, respective officers will have had a valuation survey by a qualified surveyor of the property to support their bid. Such documentation will be presented to respective committees prior to an offer / works being supported.

The Seventh-day Adventist Association (SDAA) is the titular owner of all properties within the British Union Conference except for the Republic of Ireland where the Seventh-day Adventist Church in Ireland (SDACI) is the titular owner. Any contract relating to major building works or purchases will be with the relevant titular owner, who will take instruction from the beneficial owner executive committee.

Need Assessment
The purchasing body shall assess the need of a new property with regard to the growth and capacity of the church represented. Such churches will demonstrate harmony, growth and a preparedness to maximise the use of the building in services including but beyond regular worship services. The return on capital employed is to be viewed with reference to the total spiritual and charitable use of the properties.

Prioritisation of Need
Where several churches are simultaneously attempting to acquire buildings, priority will be given to those churches with a strong track record of stewardship with regard to their building fund.

Proximal Position of the Church
Church buildings lie at the heart of church communities. Every effort shall be made to purchase buildings or land central to the witness of constituent members. Where a church group decides to purchase property in the vicinity of another church group, consultation between church groups and the Conference/Mission shall be made prior to an offer to purchase.

Church, office and institutional buildings represent the whole of the Seventh-day Adventist Church; as such they should be positioned and maintained so as to represent our key values and must be deemed to be a suitable building for the purpose for which they are being purchased.

Availability of the Church to the Public
Congregations should have strategic plans to make their church building available for community use, in accordance with the values and ethos of the Seventh-day Adventist church, while at the same time having due regard to the church’s own nurture and evangelistic programmes.

Maintenance & Condition of the Building
A building survey prior to a tender being made shall assess the total cost of purchase, maintenance and repairs, such that the building can be used for its intended purpose.

Covenants, Insurability and Restrictions
Care and consideration shall be given to identify such covenants, insurance risks and restrictions that would contribute additional operating costs during the life time usage of the property. The following are some examples of such matters:

Restrictive covenants from previous owners
Listed building status
Tree preservation orders
Stained glass windows

These shall be disclosed to the authorising committees, together with a strategic plan for dealing with them.

Affordability
All buildings purchased shall represent good value for money with reference to prices in the region of purchase. Purchase at premium prices in competitive markets should be resisted.

Financial plans will be assessed with regard to the ability of a church to provide resources not just for the purchase but its ability to sustain the operation of a comprehensive ongoing church programme. In making this assessment, regard will be given to giving patterns over the last three years in terms of tithe, non-tithe and Gift Aid returns.

The financial plan will disclose all resources of the church: reserves dedicated to the purchase of buildings, the current annual budget and a feasible operating budget contingent on purchase.

Regard will be given to anticipated cost of borrowing over the life of any loans taken with a commercial view to the volatility of interest rates.

Pledges from members are regarded as an indication of both willingness and capacity to fund. They are understood to have no legal basis and are thus to be discounted in terms of materiality when included in to financial plans.

External funding from either the Conference/Mission/beneficial owner or public authorities should be assessed and approved by appropriate committees prior to Contracts being signed by the Seventh-day Adventist Association Ltd.

Limits on Borrowing
Reference shall be made to TED Policy S15. This requires that TED executive committee approval be obtained prior to the beginning of construction where:

(i)  Total project borrowing exceeds 15 times the Local Wage Factor (LWF = BUC Annual Basic Salary Factor), or
(ii)  The total completed project cost is 30 times LWF.

BUC approval shall be required when any of the following criteria are encountered:

(i) Borrowing on a project is greater than 25% of the total projected budget.
(ii)  The total loan profile of the Conference/Mission exceeds 20% of the Conference/Mission’s unallocated funds.
(iii)  The working capital of the Conference/Mission is less than 100%.
(iv)  The Conference/Mission total loan liability exceeds twice the non-tithe annual income.

Ownership and Title
All properties are registered in the name of the SDAA (for UK properties) and SDACI (for properties in the Republic of Ireland), the titular owner, that holds all properties in trust for the beneficial owner, usually the Conference/Mission in whose territory the local church, office, institution building resides. Congregations, Conferences & Missions and the Institutions have the responsibility of maintaining buildings in their use and insuring them with the support of the beneficial owner.

Communication
In order to avoid confusion and to expedite matters during the sale or purchase process the secretary of the SDAA or SDACI should be the person giving instruction to solicitors handling the conveyance. For major building works the secretary of the SDAA or SDACI should be person signing contracts with Contractors. In the absence of the secretary the BUC Treasurer will give instruction or sign contracts on behalf of SDAA or SDACI. Solicitors may seek information direct from other involved parties but will not accept instruction from them.

Written by
Christian Salcianu
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Written by Christian Salcianu

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