Sustainable Feature #1 // Xeriscaping

We will take a look into incorporating Xeriscaping into our RED Church Development.

Xeriscaping is a landscaping alternative that reduces or eliminate the need for supplemental water from irrigation. It is promoted in regions that do not have easily accessible, plentiful, or reliable supplies of fresh water, and is gaining acceptance in other areas as climate patterns shift. (Wiki) Most Xeriscape installations rely on local vegetation and plant life for the plant selection. Xeriscaping follows 7 guidelines when planning for a xeriscape. These guidelines are:

1. Planning and Design
2. Soil Improvement
3. Appropriate Plant Selection
4. Practical Turf Areas
5. Efficient Irrigation
6. Use of Mulches
7. Appropriate Maintenance

Xeriscaping is a word originally coined by a special task force of the Denver Water Department, Associated Landscape Contractors of Colorado and Colorado State University to describe landscaping with water conservation as a major objective. The derivation of the word is from the Greek "xeros," meaning dry, and landscaping-thus, xeriscaping. Source: Colorado State Extension

Costs will vary for installation of a xeriscape. Sophisticated irrigation systems may be needed and may cost more than traditional systems but the payback period may be short due to less water use, fewer maintenance requirements, and the potentially lower cost of installation. Sustainable Cities Institute

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I was dependent upon obtaining a quote from a professional landscaper, but was unable to do so in a timely manner. It was assumed that the professional landscaper would share the costs of installation and any cost savings due to reduced water consumption and usage for irrigating the property. We are unable to make a professional estimate of these costs without employing the expertise of a landscaper. The Xeriscaping installation was assumed to be comparative in price or slightly more, but the savings would be drastic resulting in a positive net benefit. 

After Its All Said and Done

After reviewing the required revenues and expenses, I have found that I have had to make many assumptions in each blog in order to evaluate and "practice" planning and projecting for each target of analysis. In a real world situation, I will conclude that it is not feasible to go forward with development. The revenues from Church giving do not exceed the necessary amount to operate. This analysis lends more insight into why volunteering is so crucial with many ministries and other non-profit organizations that rely on the benevolent and philanthropic giving of its congregation and proponents. 

Facilities Management

An initial plan for Facilities Management has been put in place. A Property Management Company will be utilized for providing many of the resources and services that the tenant RED Church will need. A collaborative approach will be taken in that some of the responsibilities will be shared between the Property Management Company and the Administrator at RED Church. This has resulted in a lower negotiated Property Management Fee of 4% of the Effective Rental Income which is payable by the property owner.

• Property Management fees of 4% of the ERI payable by Property Owner
• A Property management Company is utilized for their resources, connections, and expense management and rent collection

All Expenses Listed below are paid by RED Church and coordinated with the Property Managements Companies assistance. 

• Administrator for RED Church will be $12/hr for 40 hours a week
• Handles Light Cleaning, Paperwork, and any other coordination of services and events
• Security
• $15/hr for 5 hours on Wednesday evening (5:30pm-10:30pm) and Sunday Morning (8am-1pm)
• Lawn care
• Mow, Edge, Clean Parking Lot, Gather Debris
• $125 every 2 weeks
• Janitorial and Custodial
• Bathrooms, Vacuuming and Floor Cleaning, Windows, Sanitizing
• Cleaning once a week at $150
• $600 /month

This list is not meant to exhaust all of the required expenses for operating RED Church and the Property. It is purely for the sake of Facilities Management and the expenses that can be identified from surface-level planning. 

Marketing Plan

The Marketing Plan for RED Church will include some assumptions which were not included in our initial development analysis. We will assume that the property will be leased from a property owner as opposed to the new construction and financing for RED Church. We will be leasing at a rate comparable to the surrounding area. We will also assume that the asking rent is feasible in providing the property owner with his required rate of return for development and property ownership. We will be using the 1 acre lot and 5,500 sqft building option.

Leasing Terms

• Triple Net Lease (NNN). All expenses are paid by the Lessee.
• 5 Year Fixed Lease. Afterwhich, (2) 2-year Renewal options at current contract rent.
• $13.50 sf/year of built area (5,500 sqft) paid monthly
• 3% Rent Adjustment each year

Leasing Commissions

• 4.5% per month of Lease Payment

Comparables for Rent

• Indian Restaurant - 9,667 sqft Building, Land, and Parking Lot $14.40 /sqft/yr
• Other Office and Retail uses are leasing for $10-$15 in surrounding areas. Includes building only. Not full use of entire property. 
• Source: LoopNet

The annual rate of $13.50 was chosen since the property is not in the immediate area of many of the comparables, though it is relatively close. Though, the property does retain full usage of the building and site.

Sustainable Feature #3 // Flooring

We will be looking at the possible options of flooring which include Hardwood Flooring, Bamboo Flooring and Stained Concrete. 

Intro and Descriptions

Wood Flooring is a type of flooring made from the timber of hardwoods, or of spruce or hard pine. There are two basic manufactured types of hardwood. Wood flooring comes unfinished, and once installed is sanded, then finished on site.  More modernly, the product is pre-finished in a factory.  The products that are pre-finished are often a polyurethane finish tat has added aluminium oxide, however some companies use titanium dioxide or other oxides instead. These metal oxide finishes are used in various types of floor coverings and increase the wear a hardwood floor can handle.

Bamboo Flooring is growing in availability and popularity in the United States. Although bamboo has a number of attributes that make it a suitable flooring option, one of the primary marketing points has been its perceived environmental benefits. Bamboo is a tree-like grass. There are thousands of species of bamboo that grow around the world, including some in the United States. Some species of bamboo can grow well on poor and unstable sites, which makes it a useful crop alternative. Bamboo has the potential for rapid growth: shoots have been observed to grow over 3 feet in a single day.  It is the rapid growth and natural regeneration properties of Bamboo that are primarily responsible for the "green" reputation for bamboo. The Bamboo plant grows so fast that it matures to reach market in about four years. With the exception of quick-yield trees, hardwood species take about 60 or 70 years to reach harvesting age.

Stained Concrete and Decorative Concrete flooring is a perfect example of the synergy of beauty, sustainability and economy, giving a durable, low-maintenance floor that will last the life of a home. Concrete floors, when left exposed, conserve resources by functioning both as a foundation slab and finished floor.  This eliminates the need for carpeting and other floor coverings that would eventually require replacement. In addition to conserving materials, decorative concrete flooring offers many other environmental benefits, such as contributing to better energy efficiency, improving indoor air quality, and design versatility. 

Assumptions

We will assume that the space to be analyzed for flooring will be 400 square feet, which is an estimate for (2) bathroom areas and the potential office space (pending architectural design). 

Comparative Cost

Lowes experts were employed for providing an estimate on potential flooring costs which includes the cost of installation. Note that these costs are purely an estimate based on comparable alternatives. Actual figures will vary based on the type, quality, and extent of detail. For the sake of this analysis we will go with the figures provided as they will sufficiently display the costs in comparison to one another.

Locking flooring was chosen as a comparison between Hardwood and Bamboo Flooring.

Hard Flooring / Wood Flooring

     Brand: Bruce Hardwood Floors
     Type: Gunstock
     Lifetime Warranty
     Price: $3.78 /sqft
     Boxes needed for 400sqft: 19 @ $83.16 equals approximately $1710
     Moisture Barrier: $.50 / sqft equals $200
     Installation is $1.99 per sqft
     Installation for 400 sqft = $796

          Total: $2706

Bamboo Flooring

     Brand: Natural Floors
     Type: Natural Bamboo
     25 Year Warranty
     Price: $3.28 /sqft
     Boxes Needed for 400 sqft: 24 @ $55.44 equals approximately $1440
     Moisture Barrier: $.50 / sqft equals $200
     Installation is $1.99 per sqft
     Installation for 400 sqft = $796

          Total: $2436

Stained Concrete

     Product: Quikrete Staining Kit
     Price: $99
     Installation: Approximately $250

          Total: $349

These costs represent the initial costs of product and installation.

Considerations

Some considerations that need to be made are about maintenance costs. Bamboo is still a relatively new alternative to traditional Hardwood flooring and the longevity and maintenance are not fully determined. The principle of "what you pay is what you get" is applicable. Bamboo is reported to be softer than hardwood, but is certain species are comparatively as dense as hardwood. Maintenance revolves around refinishing and protecting the floor. Preventative maintenance such as cleaning debris and mopping help to reduce the potential costs of maintenance.

Conclusions

At this point, it is purely a decision of preference by RED Church. Each product offers it's own benefits and psychological satisfaction. The Hardwood flooring is traditional and proven. The Bamboo Flooring is a more modern approach to flooring and considered environmentally sustainable. Stained flooring is the cheapest alternative and uses the least products. Whatever the choice, RED Church will end up with handsome flooring.

Sustainable Feature #2 // Photovoltaic System

Photovoltaic System

We will be analyzing the use of a Photovoltaic System for RED Church to determine of this sustainable feature will be feasible and/or desirable to include in the development process. The system analyzed will be a 5 kW system. 

What is a Photovoltaic System?

Photovoltaic Systems (PV system) use solar panels to convert sunlight into electricity. A system is made up of one or more solar panels, usually a controller or power converter, and the interconnections and mounting for the other components. A small PV system may provide energy to a single consumer, or to an isolated device like a lamp or weather instrument. Large grid connected PV systems can provide the energy needed by many customers. 

Assumptions

We are assuming a 5kW system. We are unable to assess at this time what the actual electricity usage is for the property but believe that 5kW will be a good base of implementation of this sustainable feature. The energy output from the PV system will offset the energy consumed by RED Church from traditional energy sources. 

Analysis

A cost/benefit approach will be utilized. The PV system produces a projected amount of energy each month to offset energy consumption from the "grid". The idea of the analysis is that there is an initial cost to purchase and install the system and then there is a cost savings (benefit) every month which will be the payback of the investment. 

Rates

Local rates are averaging at $.084 per kWh.

Dallas Electric Rates

Tax Credits

No tax credits are available for Churches, Religious Organizations, and other Non-Profit Organizations since no taxes are paid initially.

Initial Costs

Average costs which include the PV System plus installation are $30,000. 

Solar Power Authority

Calculate Cost Savings (Benefit)

A formula for to calculate the benefit of the PV system is provided through the "Energy Savers" website.

1) Calculate the Electricity Production from the PV System

          = (kW of PV System) * (kWh/kw-year) = kWh/year

          = (5 kW) * (1700 kWh/kW-year)

                    ***1700 kWh/kW-year is based upon geographic location and can be found on the Energy                    

                    Savers website***

          = 8,500 kWh/year

2) Calculate the Electric Bill Savings

          = (kWh/year) * (Residential Rate)

          = (8,500 kWh/year) * ($ .084 /kWh)

          = $714 Savings per year

          = $59.50 per month

Conclusion

Based on our Financial Analysis, we obtain an annualized $714 savings per year ($59.40 per month) from our grid electricity consumption. The resulting payback period is 42 years. As a matter of opinion, this is not an aggressive payback period from an investment perspective. At this point, the decision will be at the choice of RED Church to include the PV System in its initial development. 

It is notable that many Religious Organizations and Non-profits invest in sustainable features not just for their sustainable benefits such as reduced expenses, environmental conservation, etc., but for the image displayed to the public. Many organizations have found favorable treatment in receiving grants and other monetary gifts based upon the development, sustainability, and independence of the organization. Organizations receive praises when they strive to reduce their expenses through initial development efforts and inclusion of sustainable features like the currently discussed PV System. 

Sustainable Features

A determination has been made by the development committee at RED church to examine the potential utilization of 3 distinctive sustainable features. A summary will be provided with some background information for each feature as well as a Cost/Benefit Analysis for each feature. The goal is to find features that can be included in the development of the Church Property that will provide future cost savings and other tangential benefits. 

These features include:

• Xeriscaping
• A Photovoltaic System
• Wood Flooring vs Bamboo Flooring vs Stained Concrete Flooring

For the sake of this analysis we will assume that the property was feasible to develop. For each feature, other assumptions will be made. Please keep an eye out for these assumptions. Any analysis on an individual feature will be viewed as an isolated feature and measured using an incremental DCF (Discounted Cash Flow) Approach. 

Feasibility?

After reviewing all of the information collected so far, there are a variety of options to consider.

Site Consideration

RED Church needs to determine if they are wanting to maintain at a size of 100 people or grow. Depending on this decision, RED Church may need to acquire a larger piece of land.

Market Analysis

The market does not seem to thick of churches. Being the bible belt, it is expected to have plenty of churches, and with a large population in such a small area, the market can take another benevolent institution.

Regulatory Analysis

Churches find favorable treatment when considering taxation and land use. The only obstacle will come down to obtaining a building permit for each of the sites. Since there is a loss of revenue, the city may not want to give the building permit for a church on the 6.4 acre site which is Dallas North Tollway Frontage.

Financial Analysis

Financial Analysis is where everything starts to get heated and fall through. Based on the financials and projected giving of the congregation, many of the options for land purchase or even the leasing option of the current Indian Restaurant are not feasible. Without having a pro-forma budget for church expenses we can not make an accurate decision and recommendation. Ball-parking the allowed property expense (whether lease or debt service) at 50% of the annual receipts allows for a $60K payment. The only option that comes close to that is the 1.14 acre lot with new construction. Projected debt service is $83,863. This is 68% of the budget. It seems like this will not be a viable option.

Unless RED church has additional funds for an equity investment into a property, it does not look like any of these options are feasible.

Financial Analysis

One of the most important aspects of Church Sustainability is the amount of giving from its attendees. Tithing is the church practice of giving 10% of a member's own income to the church for operational and benevolence reasons. Actual statistics have recorded that the average church-goer gives 3% of their income. 

• 100 church members with a Per Capita Household income of $40,594 have a total Congregation Household income of $4,059,400
• Based on a 3% average giving percentage, the church would receive $121,782 annually.

Construction cost of two properties (1 acre and 6 acre)
Construction is 103.72 per square foot.

Option 1 -Build 5,500 sqft church for 100 people on 1 acre lot

A 5,500 sqft construction would cost $570,500. (5,500*$103.72)

Land + Building = $975,500

Option 2 -Build 15,000 sqft church for 300 people on 3 acre lot and sell the other 3 acres

A 15,000 sqft construction would cost $1,555,000. (15,000*$103.72)

Land + Building =  $4,955,000 - 1.5M for 3 acres (conservative) = $3.455M

Option 3 -Convert 9,667 sqft Restaurant into Church (Lease, not purchase)

$14.40/sqft/yr = $139,204.80 / YR

Financing

Assuming 100% Financing

Regulatory Analysis

Taxation
Title 1. Property Tax Code, Subtitle C. Taxable Property and Exemptions, Chapter 11 Taxable Property and Exemptions, Subchapter B. Exemptions, Sec 11.20 Religious Organizations.

      (a) An organization that qualifies as a Religious Organization as provided by Subsection (c) is entitled to an
      exemption from taxation of:
           (1) The real property that is owned by the religious organization, is used primarily as a place of religious
           worship, and is reasonably necessary for engaging religious worship:

Zoning
The 6 acre lot is currently zoned as MU-2 Office.
The 1 acre lot seems to be zoned as Retail. Would be clarified with more information from broker.

Churches can be built in any residential or non-residential zoned district except a P(A) district.
http://www.dallascityhall.com/zoning/html/ics_-_church.html

GIS Maps below.

1.16 Acre lot. The back part of the property is considered flood area and part of a park. It is heavily treed. We will need to verify if the property can be cleaned up and how far back. http://gis.dallascityhall.com/zoningweb/

6.4 Acre Lot

Market Analysis

Market Demographics are obtained from the following sources for area code 75287:

• Dallas Economic Development
• http://www.dallas-ecodev.org/resources/demographics/
• CLR Search
• http://www.clrsearch.com/Dallas_Demographics/TX/75287/
• 2010 Census Information from CLR Search
• Population 62,669
• Per Capita Household Income $40,594
• Income is normally distributed from a low range of Less than $15K to a high range of $250K+
• 65% of the population is between the ages of 18 and 65
• 18-65 Population roughly 40,750 
• These are the prime church members by opinion
• Divorce - 15.59% of the population is divorced.
• 
  

Top 3 Tapestry Segments for ZIP Code 75287
http://redlandsbaoapp1.esri.com/ZIPCodeLookup/Default.aspx?ZIP=75287

Competition

Using Google Maps, there are 5 churches that are in the 75287 zip code. There are also others that border the zip code. 1 of the 5 churches is a Korean church, 2/5 are Presbyterian, and 1/5 is Catholic and should not be direct competitor since RED Church desires to be a mixed non-denominational congregation. 2 of the 5 churches would be competitors in the area: Valley View Christian Church and Life Church.

1) Valley View Christian Church

2) Bethel Presbyterian Church

3) Church of the Holy Communion

4) Korean Bethe Presbyterian Church

5) Life Church

Existing Built Property Sites

It is stated in Church Building Guidelines that 30-55 sqft of space per person is required for each person. On the high end we will need 5,500 sq ft of space with the ability to have a large area for the sanctuary. Other Church Building Guidelines state to build a church to 3 times current capacity for future growth. This results in  roughly 15,000 sqft space for 300 people. Storefronts will allow for the church to use the space as needed as opposed to being restricted by an existing use. An existing church building would also be another feasible option. Other special-use properties would require extensive retrofitting in order to create a sanctuary. Therefore, they will be left out of the analysis as options.

5,500 sqft properties

• None

15,000 sqft properties

• None

 Other Size

• 9,667 sqft Restaurant property convertible to a church (for Lease at 14.40 sqft/yr)
• http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=17529822&SRID=2543527425&StepID=101&LinkCode=20280

No properties were found for sale that would be sufficient. The only other options that would have been available were to purchase an entire strip center and then lease out the other units, or to purchase a large lot and subdivide the lot as needed http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=14064457&SRID=2543560445&StepID=101 6.4 acre lot. (As of 4/21) 

Note: When performing Feasibility Analysis on properties, depending on the systems and solutions utilized, notifications and triggers can be set where a developer analyst is notified when a lot or property comes available that fits the developers criteria.


Courtesy of Loopnet

Raw Land Sites

As previously stated, a 1 acre lot is a good rule of thumb for a congregation of 100. For a congregation of 300 a 3 acre lot would be needed.

• 1.16 Acre Lot on Rosemeade and Marsh for $405K
• http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=13908187&SRID=2543454190&StepID=101
• 6.4 Acre Lot for $3.4M
• http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=14064457&SRID=2543567959&StepID=101

Pictures and Videos

1.16 Acre Lot

6.4 Acre Lot

Church Building Feasibility Study

RED Church is looking to build a small church for a congregation of about 100 people in the zip-code area of 75287. We are comparing the possibility of purchasing an existing church property, converting a commercial property for church use, or build an entirely new property. In popular Church building consulting guidelines, when building a new church, one acre of raw land is needed for every 100 people. So we will need 1 acre of land to build on. http://www.churchbizonline.com/church_building_guidelines.htm