A District congregation is facing the loss of its sanctuary after amassing hundreds of thousands of dollars in unpaid property taxes, despite city officials’ efforts to exempt it from tax rolls.
The 13th Street Church of Christ had until the close of business Friday to turn over $100,000 to Eagle Bank to retain the building in Northwest Washington. That deadline had been extended from Christmas Eve, when the church was supposed to hand over $200,000.
The church’s minister, Graylon Freeman, said he and other church leaders worked feverishly this week and managed to raise about $80,000.
Now, church officials said, the bank has given them another reprieve: They have until March to come up with the remaining $120,000.
How the church, which has been at its current location for more than six decades, ended up nearly out of a home is a story of mistakes in financial management by church officials and of government trying to fix a problem without the funds to do so.
In 2007, church officials decided that they needed a new home. They used its building, which had been paid for in the early 1980s, as collateral for a $1.75 million loan. The money was to be used to buy land at 3418 Fourth St. SE and construct a new building.
The new church would be a “community hub” for the Congress Heights community, church secretary Joan C. Rajah told D.C. Council members at a hearing in 2010. It would offer day care for children and seniors, tutoring and family counseling.
But church officials couldn’t come up with the construction funds. If a building had gone up, the church would have received tax-exempt status. But because the site was vacant, taxes accrued.
Church officials went to the city for help, and in 2010, council members passed a tax-relief bill specifically for the church.
Mayor Vincent C. Gray (D) signed the bill into law, but it was never funded.
“Most of these tax-abatement bills pass without funding,” said D.C. Council member Marion Barry (D-Ward 8), who introduced the bill on behalf of the church.
The D.C. Council’s Committee on Finance and Revenue noted at that 2010 council hearing that “funds are not sufficient in the proposed FY2011 budget and financial plan to implement the proposed legislation.” It also stated that if the church didn’t receive a property-tax exemption, “the negative fiscal impact would grow by approximately $3,500 per month.” According to the legislation, the church had to build its new sanctuary by a certain date or forfeit the tax exemption.
The taxes did grow, along with other problems for the church.
The church owned three other buildings on Irving Street NW, so it sold two of them to put the funds toward the purchase of the land in Southeast. A third building was sold, reducing the loan to $800,000.
But the loan came with a balloon payment. Church officials initially paid only interest on the loan, about $4,000, and were told that they would have to pay the balance of the loan by May 2010. It was a deadline church officials would miss.
Taxes, interest and fines of close to $600,000 have accrued, substantially more than the $400,000 the church paid for the Southeast property. They couldn’t get an exemption by occupying the space because they were still in the old building.
In October, Eagle Bank told church officials that it wanted $200,000 by Dec. 24. The bank then extended the deadline and lowered the payment to $100,000, church officials said, adding that they are hoping an agreement can be reached.
Eagle Bank officials did not return several telephone calls seeking comment.
“The council members thought they were doing a good thing when they created an incentive for builders not to sit on vacant properties,” Freeman said. “But they didn’t take into consideration small churches that don’t have deep pockets to build quickly.”
Some say the D.C. government is partially to blame.
“So many people sacrificed so much to purchase the sanctuary and three properties adjacent to the church,” Rajah said. “My mother sold dinners to raise money, and now all of this could be lost because lawmakers didn’t follow through on their promises.”