Understanding Due Diligence for Church Facility Development
Due Diligence is a fancy word for “Do your homework”. Many times churches will buy property without investigating issues that it might have regarding putting a new church facility on it. Due diligence is essential.
An example would be what my friend, Pastor Wally Webber experienced in 1990. He called and told me that he just purchased 19 acres of beautiful property. It was nine acres of flat land covered by an apricot orchard and then 10 acres that went up a hill. He was so excited! We went our to look at the property and he was visualizing a new worship center and everything he could do on the property. He told me what the property cost, and I thought, “Boy that seems odd,” because it was very inexpensive compared to other properties in the area. Unfortunately, they had already sold their old church and taken the cash to buy the property. It was a done deal. Pastor Webber and the church bought the property without doing their homework or an investigative analysis of the land prior to closing escrow. It was up to me to try and find out more about the property. What I found out was nothing short of amazing and disastrous. The list of complications is rather extensive, so I’ll try and go through it quickly for you.
The property was divided by Piedmont Road. The city required the church to realign Piedmont Road to connect with Calaveras road. It needed to intersect at a convenient place where the church would have to put in a four-way light interchange. The road would also cross over a hundred-year flood plane, so the church had to build a bridge for the new road to go over. Everything went downhill from there. There was an old, historic, Spanish Adobe on the property that was built by the Spaniards who originally sailed to California. We couldn’t tear it down and had to bring it up to code, and make it handicapped accessible. We had to take the area for the flood plane and line about a quarter of a mile with erosion-control riprap. We had to bring up a new sewer line from Park Victoria Road—that was a mile and a half away. When realigning Piedmont Road, it was closer to some existing homes. That meant we had to put a sound wall along their backyards. The sound wall would trap heat in their backyards, and we can’t have that. So we had to air condition those twelve homes. Things were getting really bad. This was horribly expensive! The reason the property was fairly flat for the nine acres and then 10 acres that went uphill was because right where the land transitioned from flat to hillside—that was the Calaveras earthquake fault line. It is the second most active fault line in California, behind the San Andreas. You don’t want to build anywhere near that thing. Every now and then, it tends to go up and down and shake and move around. It was not an easy place to build!
Things were looking absolutely horrible. We did the soils report: where you do borings underground to find out what kind of soil you’re building on. The first boring we did; we dug up a dead Indian. We had to call the archaeologists to come out. They performed numerous studies; did all sorts of research and determined what the church had bought was a full-blown Indian burial ground. There were 2000 dead Indians buried on that property over a 1500-year period! There were so many things wrong with the property.
My recommendation to the church was to give the property to the City of Milpitas as a gift. Then count the millions of dollars they had paid for it as an education and let’s go find another piece of property we could actually develop. They decided not to do that – because of the congregation. So they moved into a school. They were there for more than ten years. We tackled one item after another until we were actually able to put a building on that property.
We did a 17-unit residential subdivision to sell homes to generate money to cover the outrageous costs associated with the property. We took 600,000 cubic yards of dirt from the hill and built the pad up over all the Indians so that the deepest footing in the building is six feet higher than the shallowest grave.
All of this to say: Do your homework! When you buy a property you have a period of time called Escrow—it should be 90 – 120 twenty days, whatever you negotiate. That is the time you want to find out everything about the property before you actually own it.
We are ready to help you avoid disasters like this one. Call me at 719-439-3019. You can also download e-books on our website. Get the e-book on Site Development. It will walk you through how to do complete due diligence on any property.
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