UUCS Congregational Meeting December 5, /25/20141

UUCS Congregational Meeting December 5, 2010 The Background 8/25/20142

UUCS Congregational Meeting December 5, 2010 Background Around 2000, this congregation made the decision to build a new sanctuary. Architects designed our beautiful sanctuary and estimated the building costs at approximately $800,000. A fund raising, capital campaign was started and approximately $400,000 was raised over a four to five year period. 8/25/20143

UUCS Congregational Meeting December 5, 2010 Background In addition, the church borrowed $100,000 from a local bank. Plus the church borrowed $300,000 from two church members. 8/25/20144

UUCS Congregational Meeting December 5, 2010 Background In 2008, you may recall that the church begin a capital campaign called “Burn the Mortgage” to retire the local bank mortgage. The campaign was successful and the remaining balance of the $100,000 bank mortgage (approximately $46,000 at that time) was paid in full. 8/25/20145

UUCS Congregational Meeting December 5, 2010 Background To kick off that “Burn the Mortgage” campaign, the church sponsored “cottage meetings” at various homes of members. In those meetings, when reviewing the financial situation of the church, many were surprised to learn that, even after we paid the local bank, there was still another $300,000 of mortgages to go. 8/25/20146

UUCS Congregational Meeting December 5, 2010 The Remaining Mortgages 8/25/20147

UUCS Congregational Meeting December 5, 2010 The Remaining Mortgages The $300,000 in mortgages actually consist of three mortgages to two individuals: –A $50,000 note –A $100,000 note –And a $150,000 note Each mortgage is at 5% interest, 15 years in length. 8/25/20148

UUCS Congregational Meeting December 5, 2010 The Remaining Mortgages The debt service amount (that is, the amount of money needed to pay the principle and interest annually as required in the mortgages and notes) is approximately $30,500. Payments of principle and interest were scheduled to start February, 2006 and end in /25/20149

UUCS Congregational Meeting December 5, 2010 The Remaining Mortgages Since that scheduled time, some interest and some principle has been paid. But bottom line, the church has not met the terms of the mortgages and notes and is in “Payment Default” There simply was not enough money from pledges, contributions, fund raising, etc., net of expenses, to meet the debt servicing obligations. 8/25/201410

UUCS Congregational Meeting December 5, 2010 The Remaining Mortgages The mortgage holders have given verbal forbearance to the church during the last four years of the payment defaults. Projected forward to January 31, 2011, the balances owed on these three mortgages is: – $50,193 on the original $50,000 note –$101,143 on the original $100,000 note –$169,182 on the original $150,000 note –$320,518 Total $300,000 8/25/201411

UUCS Congregational Meeting December 5, 2010 The Plan Forward 8/25/201412

UUCS Congregational Meeting December 5, 2010 The Plan Forward Working closely with the two mortgage holders, the Board has put together a plan that we believe accomplishes several objectives: –Gets the church out of payment default and waives past covenant violations. –Reduces annual debt servicing to a manageable level within our budget –Protects our cherished programs like RE, Music and others from possible future budget cuts –Pays our debts! 8/25/201413

UUCS Congregational Meeting December 5, 2010 The Plan Forward While this may sound like a magic pill, it requires a long term commitment and hard work by the membership to accomplish the annual debt servicing of this new debt structure. 8/25/201414

UUCS Congregational Meeting December 5, 2010 The Plan Forward Many of you are aware that one of our long time members recently passed and left the church approximately $64,000. The first step of the plan is to take $50,193 of this money and pay off the first “original $50,000” note as of January 31, Next, take the “original $100,000” note and divide into two notes of $50,572 each. 8/25/201415

UUCS Congregational Meeting December 5, 2010 The Plan Forward Take the third “original $150,000” note and divide into three notes of $56,394 each. Now we have five notes. Each note will have an interest rate of 3%, down from the original 5%. Each of the five notes will be “interest only” for the life of the note with a balloon payment of the principle amount at the end of the life of the note. 8/25/201416

UUCS Congregational Meeting December 5, 2010 The Plan Forward Each note will have (among many clauses) a “no penalty for early payment” clause. The maturities and length of each note will be as follows: –No. 1 for $50,572 – June 30, 2016 –No. 2 for $50,572 – June 30, 2021 –No. 3 for $56,394 – June 30, 2026 –No. 4 for $56,394 – June 30, 2031 –No. 5 for $56,394 – June 30, /25/201417

UUCS Congregational Meeting December 5, 2010 The Plan Forward Note that there is five years between each note’s maturity date. The idea is that the church takes a three year “financial rest period”, then a two year “capital campaign period” to raise the money to make the balloon payment for the particular note that is maturing. Then the cycle repeats until all five notes are retired. 8/25/201418

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UUCS Congregational Meeting December 5, 2010 The Plan Forward Annual Interest payments while all five notes are “live” are approximately $8,000 and decrease by approximately $1,500 each five year cycle as each balloon payment is made. 8/25/201422

UUCS Congregational Meeting December 5, 2010 The Plan Forward As noted before, there is a “no penalty for early payment” clause. If the church wants to be more aggressive with its payoff schedule, there will be nothing in the agreements that will prohibit that. There is nothing in the agreements that requires the church to raise the money via capital campaigns. The church may have another windfall. The church may possibly be able to borrow the money from a bank sometime in the future to pay off the mortgages. 8/25/201423

UUCS Congregational Meeting December 5, 2010 The Plan Forward The agreements do not dictate how the church raises the money to make the interest payments and the balloon payments. The agreement only requires that the payments be made no later than the dates on the schedule agreed to!!! 8/25/201424

UUCS Congregational Meeting December 5, 2010 The Plan Forward The two mortgage holders have graciously agreed to the terms outlined in this presentation. Indeed, the holders have encouraged the Board to take a LESS aggressive payment schedule to give the church the best opportunity to meet its obligations. Finally, we have identified an attorney who will do the paper work on all this for free. 8/25/201425

UUCS Congregational Meeting December 5, 2010 The Plan Forward What we seek from you today is your input and thoughts on The Plan Forward. We plan another Congregational Meeting in early January to review again The Plan Forward that will address your concerns and incorporate good ideas. 8/25/201426

UUCS Congregational Meeting December 5, 2010 The Plan Forward Questions? 8/25/201427