Why we refinanced the church

Posted by & filed under Grace Notes, Voice of the Vestry.

By Donna Olendorf
Senior Warden

Senior Warden Donna OlendorfBefore I joined the vestry, I never worried much about church finances – the pews were full, the liturgy was rich, and our outreach programs won grants and accolades. Then I became a member of the group responsible for church finances and suddenly the picture reminded me of Dorian Gray – unblemished from the outside, but marred by profligacy from within.

Last year, we “borrowed” $42,000 from the Grace Church savings account to pay our monthly bills. We intended to repay the money, but we never made up the loss and the savings account was never replenished. Since we had the money in savings, no red flags were raised.

This year, we vowed to create a balanced budget. After all, we had an excellent stewardship campaign and pledges at nearly $450,000 reached an all time high. Unfortunately, so did expenses. For the first time this year, the national church mandated that all full-time staff be offered health insurance at the same level as our pastor. Our insurance expenses shot up $28,500.

We could have cut programs, but felt it was not what God wanted for Grace. We could have cut staff, but felt strongly that downsizing would send the wrong message and hurt good people. The third option was to refinance the church – and after much discussion and prayer, that is what we did.

Last Thursday, we signed a new loan agreement with Traverse City State Bank. Our payments will drop from $6954/mo to $3081. We are borrowing $409,367 @4.2% with a five year balloon payment. The first payment will occur in July. That’s the nuts and bolts of the refinance, but here’s what it will allow us to do:

  • Balance the budget
  • Protect the savings account
  • Take advantage of lower monthly payments without an increase in interest rates
  • Contribute more than the monthly allocation without any prepayment penalties
  • Focus on our spiritual mission

This new refinance doesn’t mean we can’t continue to pay down our debt ahead of time.  And that is our hope for the future.  In the words of junior warden Jeff Tibbits, “let’s prayerfully request God to help us to roll up our sleeves, joyfully work together to do God’s work through our ministries and throughout our local and global communities, and pay this puppy off as soon as possible. “

If you have questions or concerns, don’t hesitate to ask me or any member of the vestry. We appreciate your interest and are happy to talk with you. God Bless!

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