Special Session FAQ's
The following are questions that have been asked by members of the annual conference about the special session of annual conference concerning the new conference center. The question are divided into three areas: 1) procedural matters, 2) building and construction questions and 3) financial questions.
Procedural Questions
What matters will be discussed and voted on at the special session of annual conference? A special session of annual conference has been called to vote on a proposal to increase the budget for the new conference center. The budget is listed with the legislation that accompanies these FAQ’s
Will any other matters be discussed or voted on?
No. TheBook of Discipline prohibits any legislation other than what the special session has been called for. Only the budget of the new conference center will be considered.
Who is eligible to vote?
Those eligible to vote are outlined in section 1 of our rules. It includes:
· full, associate and provisional clergy members of the annual conference,
· full and local part time pastors under appointment to a pastoral charge,
· local church lay members elected by their congregation or the alternate if the lay member is not able to attend, and
· equalizing lay members who were elected by theBoard of Laity.
Why did we need a special session?
The 2013 annual conference session approved the original budget and is the only body that has authority to change the budget.
Building Questions
It has been mentioned in the responses to other FAQs that the new building would provide an opportunity for revenue from "rentals." What is the anticipated square footage being set aside for rental/lease to entities outside the connection? How much revenue is being anticipated?
The building has been designed so that portions of the first floor could be rented in the future. Estimates for rental income have not been included in financing of construction.
Why don’t we reduce the size of the building?
This option has been looked at very carefully. Thecontractor and architectwere asked to create an estimateto reduce the building size. The Trustees, inconcurrencewiththe Council on Finance and Administration and the Connectional Table Executive Committee,are not recommending this option for several reasons:.
1. The savings is only $204,000 which is not a good value for the conference. The reason that there is such a small savings is because many of the aspects (elevator, two stair towers, bathrooms and a number of other features)are requiredstill requiredif we reduce the building by 5,000 square feet.We would incur additional costs for redesigning, resubmitting our plans to the township, and re-engineering aspects of the building.
2. We would have to reduceoreliminate some of the programming and flexibility of the buildingincluding adapting itfor other uses in the future.
3. By reducing the size of the building,we would reduce income that the larger building will generate for us.
Why don’t we stay in our present building?
The present building needs major repairs and has lost value. It is no longer good stewardship to invest in the building. It is also located in a residential neighborhood. The building was originally a home, which limits its ability to function as an office. Additionally the conference program has outgrown the building.
Will the new conference center still be a green building?
There will be a number of energy efficient technologies to be good stewards of creation. We wanted the building to be greenerand explored the use of solar and other technologies. Due to cost, we are sacrificing a couple of our commitments to green technology. Some of the more expensive technology to make the building greener has been taken out of the project. The conference leadership encouraged the trustees not to sacrifice some of these items.
Financial Questions
What are the present financial circumstances related to the new conference center?
The projected cost for the new conference center is approximately $1,000,000 (18%) more than the funds allocated for the project. The annual conference set a ceiling of $4 million dollars to build the new conference center. The original bids for the building came in at $5.5 million. Value engineering and other cost savings reduced the cost to $4.7 million including land and site development. Contingency funds and furnishings were added to the budget bringing the costs to $5,028,000. The annual conference must approve any additional funds.
Why is the project over budget?
The new conference center was originally budgeted to cost $120 per square foot for construction. The actual price will be closer to $175 per square foot. There are several reasons for the difference. First, the original estimate was too low. Second, contractors are charging more and including a premium because of increased construction in New Jersey due to a stronger economy and more demand for contractors due to Sandy repairs. Material costs have also increased. Construction in general has risen by 10-15% over 18 months which when applied to our original budget equals $400,000 to $600,000. This type of increase was not anticipated. We also have encountered that our project is not large enough to attract larger contractors without a significant premium and is too large for smaller contractors which has impacted bidding.
How does $175 per square foot compare to other similar projects in our region?
Construction projects for 20,000 square foot office buildings are generally running more than $200 a square foot. Six years ago, our architect designed an office building similar in scope to ours that was built for $176 per square foot. Like ours, it is a modest building that makes good use of stewardship.
Why does our square footage cost so much less than the rate of other projects?
We have been blessed by a general contractor who is United Methodist, an architect who is a man of faith, and some subcontractors who are United Methodist. Each are finding ways to provide quality work and materials at the best price. We are also receiving some good advice about engineering the project that is saving money.
Are other projects experiencing similar challenges as we are experiencing?
Yes. A Future with Hope ministry has experienced a 10-15% increase in material and labor costs since we started repairing Sandy homes. A United Methodist institution in New Jersey is building a 35,000 foot building and the board just approved a $2.5 million increase in the construction budget which equals a 35% increase. Other organizations that began with plans two years ago are experiencing similar challenges.
The original discussions in February 2013 had $500,000 for land/site which increased to $750,000 for the current budget and we are now being asked to approve $1,054,295 while architectural and engineering costs would go from $200,000 to $276,132. How much has been currently spent on these two line items?
The amount spent on the categories per the legislation is $453,335 for the land and $219,372 for architectural and engineering costs for a total of $672,707 as of 09/23/14.
The Trustees were originally in February 2013 going to provide $629,975 and that went to $750,000 for the current budget. Now, the Trustees are supposed to provide $1,100,000—an increase of $350,000. Where are these additional funds coming from? What is left for the Trustees to use for other important projects and needs?
The Trustees are carrying additional contingency funds of $250,000. They are adding $100,000 in surplus funds for a total of $350,000 from the Trustees. The Trustees are in process of selling a property that will replenish surplus funds.
Can you explain why we spend $96,000 for renting meeting space?
The costs for the rental of meeting space is contained in various places in the budget for meetings, retreats, and training. The New Conference Center will also provide opportunities for rental and usage of space.
It is reported that we currently spend $86,000 of the $96,000 listed above for commercial facility fees for meeting space outside of local churches. How many of those activities can we realistically expect to meet at a new conference office building?
We pay fees to outside facilities for a variety of reasons including annual conference session, clergy convocation, laity training, etc. The $86,000 do not include all of the expenditures to outside vendors, only the ones that can be housed in the new conference center.
Where will the money come from for the additional costs and will it increase apportionments?
The increase will NOT increase apportionments. There is no apportionment budget increase for the 2015 conference budget which includes the new conference center. The following sources will be used for the project:
1. The sale of our present building - Our present building was purchased more than 10 years ago at a cost of $1.3 million. It was purchased at a time of high real estate prices. We budgeted $500,000 for the sale of the present conference center. An independent appraiser appraised the building at $440,000. We are budgeting $440,000 for the project.
2. Contingency funds - The Board of Trustees has been carrying $250,000 for contingency that the trustees are making available to the project.
3. Undesignated funds - $500,000 from an undesignated dividend.
To see all of the funding for the project see chart 1 that accompanies the legislation. I don’t understand the dividend. Why did we get it? If the local churches paid into Healthflex, why don’t we use that money to lower our health insurance premiums so that it helps local churches?
In the past we have received two Healthflex Dividends. There is no guarantee that we will receive these funds in the future. To fully understand the nature of the dividend, one needs to know the history. Several years ago, the conference experienced significant health care losses because of a high number of severe health concerns within the clergy. This increased our premiums significantly. Instead of charging this entire increase to the congregations, conference funds were used to help address the spike in health care costs. The conference put $5 million toward the Healthflex premiums increase to address the added costs. Now that our health care losses are at an average or below average rate, money is being returned. This is essentially replacing the $5 million of conference funding utilized so that churches would not receive significant increases. The conference leadership is looking at how to handle dividends that may (there is no guarantee) come to the conference if we have better than average years. Overall, we have lowered the cost of health care and will continue to find ways to keep health care costs as low as possible. We do not feel it is a good practice to lower the cost with a dividend because the local church would have to absorb the cost the following year and any possible increase which will create serious challenges for many of our churches.
If the current building sells for more than we anticipate, how do we apply that money?
The money will be applied to the construction project and any excess funds received for the project after construction completion will be utilized toward payment of the mortgage.
At last year’s special session it was announced that we were receiving $1 million as a result of a mistake from the treasurer’s office. How did we use/apply that money?
The announcement at Special Session of Annual Conference 2013 was that the Treasurer’s office discovered a mistake which was settled and enabled the conference to receive a onetime settlement of approximately $1 million dollars. The Conference Council on Finance and Administration proposed to the annual conference session to utilize $409,067 of this settlement to help offset the cost of the two new Connectional Ministries positions and a webmaster in the 2014 budget which will be applied over a three year period from 2014-2016.
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