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Fiscal year 2001-2002: The renovation will take place primarily during the course of this year and will be paid for initially out of contributions to the Capital Campaign, some of our cash reserves, the Maryland bond, then out of the proceeds of member loans, and finally by drawing on the bank loan. Our debt, thus, will gradually increase during this year. Service on that debt will consist just of interest during this year (not principal) and can be paid out of the continuing contributions to the Capital Campaign. As a consequence, there will be no debt service costs that need to be paid out of the operating budget during this fiscal year. But the operating budget will have to fund the continuing costs of our relocation and eventual move back to CCC.Increase in operating budget needed to pay relocation costs: $40,000 (Note: With other increases in the budget for cost of living increases, utilities, etc., this means our pledges need to increase by at least 10 percent above their current level.) Fiscal year 2002-2003: During this year we will have to start paying both principal and interest on the bank loan and will continue to pay interest on member loans.
Thus, our debt service costs during this year will be $150,218 - $191,330 in total (or $12,518 - $15,944 each month). Until the end of the Capital Campaign in February, 2003, these costs can be paid by the continuing contributions to the Campaign. But after February they will have to be paid out of the operating budget. Increase in operating budget needed to pay debt service costs for 4 months: $50,072 - $63,776 (Note: With other increases in the budget for cost of living increases, utilities, etc., this means our pledges to the operating budget will need to increase by 15-20 percent above the current level.) Fiscal year 2003-2004 (and succeeding fiscal years): During this year and succeeding years the full cost of debt service would have to be carded by the operating budget. Increase in current operating budget needed to pay debt service costs: $150,218 -$191,330. * (Note: With other anticipated increases, our pledges to the operating budget will need to increase by 40-50percent above the current level.) * Note: These costs do not include repayment of the principal of the member loans. How we can help bridge the Gap! To bridge the gap in the financing of the renovation, there are a variety, of ways that we as members and friends of CCC can help. Each of us is at a different stage of our life with different types and levels of resources available for contributing to this project. Although we may feel thai our individual contribution is just a "drop in the bucket", these drops add up and soon the bucket can be overflowing. No gift is ever too small or too big. Please review the following list and prayerfully consider how we, collectively through our individual contributions, can help bridge the gap.
Together, we reached our initial Keystones Capital Campaign goal ($2 million)! Now together we can bridge the gap. Our congregation is richly blessed in so many ways. Our abundance promotes even richer commitments. We have moved and continue to move forward with the renovation process. We wait expectantly, but impatiently to return to our own church at 9525 Colesville Road. We can find the worldly dollars because we have said we would. We give thanks to one another as we give and live and build together.
A. A gift is more valuable to the church than loan monies and should reduce the amount we shall need to borrow from the bank and ourselves. Q. Is it true that an increased Keystones pledge would not be helpful unless it is paid now i.e. in the fiscal year prior to July 31 20017 A. Increases in pledges to the building program are welcome at any time, but particularly during the construction process. Any gift received prior to May 2002 will help our cash f low.Q. If my total 3-year pledge amount were paid now would that help meet the funding needs of the church and reduce the amount needed from loans? A. Accelerating pledge payments will help cash flow and reduce the amount of loans required during construction. We are likely to need member loans unless thc total of pledges increases by some $400,000 very rapidly. Q. Do I obtain a greater tax benefit from a gift to the church than from making an interest-bearing loan to the church? A. Gifts to the church i.e. your pledge payments, qualify as a charitable contribution and you are entitled to a deduction for these on your tax return. A loan will not qualify tbr a tax deduction unless the loan is forgiven at some future time. We are not expecting members to forgive loans although it is likely that some will. The interest received on your loan has to be declared on your tax return. If you subsequently gift the interest to the church you will need to enter both the interest income and make a deduction for the gilt. Q. If the church defaults on my member loan will I be entitled to a tax deduction in the same way as if I had made a gift? A. If the church were to default and the loan became worthless the loss of the principal could be claimed as a capital loss on the investor's tax return. There would have to be a determination of when the loss had occurred, i.e. when it was clear that the return of principal would not be possible. Loss of interest would not qualify for a deduction. Q. If I should die while the loan is outstanding what would happen to the loan? A. The loan balance would form part of the assets in your estate and accrue to any beneficiaries you have designated. Q. What if I should need repayment of my member loan prior to maturity? A. The Board of Trustees will consider all requests for early repayment of member loans. It is anticipated that requests will be limited to necessity, and as such would be dealt with expeditiously. |