As I promised, this Weekly Word will provide a summary of our financing plans for the building project, should we vote to move ahead. At the Q&A session on Sunday, our church accountant, Bryan Hanson, offered these thoughts on financing:
- Our Called to Welcome capital campaign was very successful. Our capital campaign consultants provided us with software which projects our monthly income from the campaign from now until the campaign is complete in 2021. If construction begins in November of 2018, we know that we will not make any draws against a construction loan until late spring 2019. During the construction phase, we pay only interest on the construction loan.
- Construction would be completed nearly one and a half years before the capital campaign is completed. Thus, the total potential construction loan amount could be 2.4 million dollars.
- In phase one of the financing, the 2.4 million dollar construction loan would be converted to a mortgage in January of 2020. This loan would be a 25 year loan at approximately 4.5%. The ELCA Mission Investment Fund loan department has provided us with interest rates in the range of 4.175% to 5%. However, capital campaign income will continue to come in to reduce that amount. By September of 2021, it is projected that our mortgage balance would be $1.684,173.00.<
- This loan would be re-amortized in September of 2021. At this point, the monthly mortgage payment would be $9,361. If additional principal payments are made, the loan can be re-amortized once a year to reduce monthly payments further.
- Bryan provided us with some history on the most recent construction project of the Activity Center in the late 1990’s. We had two pledge drives in 1996-1999 and 1999-2002. (We do not have any records on the dollar amounts raised for each pledge drive.)
- 1998 – $1.2 m construction loan converted to mortgage 20 years 7% $9,071 monthly payment
- 2001 – loan was re-amortized at $712k $5,644 monthly payment
- 2003 – loan was re-amortized at $437k $3,749 monthly payment
- 2010 – loan was re-amortized at $150k $1,978 monthly payment
- 2011 – loan was re-amortized at $131k $1,310 monthly payment
- 2014 – mortgage was paid off as a result of the “50 & Free” special pledge campaign
- Some additional thoughts were provided on how we might sustain the budgetary impact of the mortgage:
- What amount of income growth can we anticipate by 2021? From 2015 to 2018 our annual income increased $60,000 or 6.4%.
- We are in negotiations with Lincoln Public Schools on the use of our educational area as a pre-school facility. LPS desperately needs pre-school space. The pre-school students in our facility would be students from the Morley school area. Rental income from such an arrangement will be $20,000- $25,000 per year.
- Other budget adjustments:
- For example, we are currently providing $20,000 per year for the new chapel at the Lutheran Center. This 3 year commitment ends in 2020.
- We could offer a second “low pressure” 1-3 year capital campaign to reduce the principal as we did in 1999-2002.
I hope this information demonstrates that we are giving careful consideration to the financial impact of this building project. We are so very grateful to Bryan Hanson and Brian Niebuhr, our Church Treasurer, for providing us with this helpful information.
If you have further questions or suggestions regarding the funding of our project, please send it to me via email or call our church office at 402-488-0919.
We will also have updated photos of the project on our website later this week.
Please plan to attend the congregational meeting at noon this Sunday, July 29, to vote on these important proposals.
Blessings and Peace Be With You All,
Pastor Dan
