Unused Church properties find new purpose amid serious real estate challenges

 

Seattle, Wash., Dec 11, 2024 / 06:00 am (CNA).

The Catholic Church in the United States is facing a real estate reckoning. Declining congregations, shifting demographics, and aging infrastructure have left thousands of Church properties underutilized or vacant. As dioceses merge and parishes close, leaders grapple with determining the future of these valuable yet costly assets.

The Church’s predicament is a delicate balancing act between financial pressures and mission objectives. Burdened by immense financial obligations — maintenance deficits often soaring into the millions — these properties are more than assets on a ledger. They are sacred spaces with spiritual significance, historical landmarks, and community pillars. These values transcend monetary measurement, yet decisions must be made.

“Many of these properties are dilapidated or just unused, and the overhead costs are immense,” said Michael Lyons, founder of [Y] Impact Ventures, an impact investment firm focusing on driving social good and financial return by boosting the value of housing through community building. “At the same time, the Church lacks funds from a ministry standpoint. There’s an arbitrage that needs to be addressed.”

Amid a national housing shortage and the aftershocks of the COVID-19 pandemic, some dioceses are adopting creative approaches to repurpose Church properties, aligning financial obligations with their mission.

Austin’s blueprint for balancing mission and finances

Facing mounting costs to maintain aging facilities, St. Austin Catholic Parish in Austin, Texas, saw an opportunity in its prime location near the University of Texas. In 2020, the parish entered a 99-year ground lease for half of its acreage with developer Greystar.

“The income from that lease allowed us to rebuild our school,” said Trish Dolese, partner at Emmaus Projects LLC, who guided the parish. “We tore down everything except the church and now have brand-new school and ministry spaces.”

Dolese highlighted the challenges the Church faces in real estate decisions.

“The Church always thinks long term,” she said. “This can make them reluctant to make quick decisions about investing in real estate assets, which often conflicts with development timelines.”

The $45 million project was primarily funded by lease income, covering 88% of the costs. The parish raised an additional $7 million to complete financing. Despite the development, St. Austin retains ownership of the land and will regain full control — including all improvements — when the lease concludes.

“They built a 29-story student housing tower with affordable units and included a gym for our school and parish,” Dolese explained. “Because it’s a school, we can take tax-exempt status.”

By leveraging their proximity to the university, the parish found a win-win solution. “We still own the property, and life continues to happen in this church,” Dolese said.

Lyons points to this project as a model. “Instead of having to fire-sale the property, they maintained control and bought themselves time and financial runway,” he said.

Mission-driven repurposing of Church properties

Many parishes prioritize mission-driven initiatives, using their properties to serve vulnerable populations.

In Philadelphia, the Sisters of St. Joseph transformed a former convent into a men’s transitional home for immigrants and refugees. Since 2017, the SSJ Newcomer Housing Alliance has provided shelter and support to over 50 men from various countries.

“Each of those has been a success story,” said Sister Eileen McNally, the refugee coordinator. Building on this success, they plan to renovate another convent to accommodate 12 families of newcomer women and children within the year.

Their efforts won the “To the Heights Award” at the Church Properties Conference at the University of Notre Dame. “The $15,000 prize money will probably go to repairs,” McNally added.

“It’s about more than just housing,” she said. “We’re offering a supportive environment where newcomers can adjust to life in the United States.”

Reviving sacred spaces for redemption

In Cincinnati, the Serenelli Project aims to build a supportive community for individuals transitioning out of incarceration. Named after Alessandro Serenelli — who experienced a profound conversion after murdering St. Maria Goretti — the initiative seeks to restore the unused Our Lady of Perpetual Help Catholic Church.

“We expect to close on the church and rectory by the end of 2025,” said Marty Arlinghaus, founder of the project. “We’re actively searching for a director of community life to kick-start the monastic brotherhood.”

“Our goal is to provide a place where men can live in a structured, faith-based environment,” Arlinghaus said. “It’s about healing, redemption, and giving individuals a second chance.”

Navigating challenges and charting a path forward

Despite innovative projects, many Church leaders struggle with managing real estate assets effectively. The complexities of property management, combined with the Church’s mission, present significant hurdles.

“There is a broad lack of appreciation for the financial realities of Church property,” said Maddy Johnson, program manager of the Church Properties Initiative at Notre Dame’s Fitzgerald Institute for Real Estate. “Many of these properties are running seven-figure maintenance deficits.”

According to a 2020 Faith Communities Today report, two-thirds of churches in the U.S. have annual incomes of less than $100,000. “They face capital repairs that easily run into millions, plus ongoing costs to maintain these buildings,” Johnson said.

Administrators often have “dollar signs at the top of their minds” for good reason, she added. “A paradigm shift is required if these properties are to be reused within the life of the Church.”

Timing is another significant hurdle, as institutional processes can impede prompt decisions. “There are high bars bishops have to pass to divest property,” Dolese explained. “We have to balance our long-term vision with development timelines.”

Prolonged deficits pose additional challenges. “It’s crucial for dioceses to get ahead of these issues,” Lyons said. “Those who recognize issues early can pursue innovative solutions.”

Yet, Johnson sees a positive shift.

“We’re witnessing dioceses adopting creative, mission-aligned strategies,” she said. “Groups like the Loretto movement and the Sant’Egidio Community are laypeople united in ecclesial forms. This is a promising model for transferring responsibility when an asset can still be used within the Church.”

“There’s a lot of hope in this,” Lyons affirmed. “By finding creative solutions that align financial realities with the Church’s mission, we can help institutions adapt while staying true to their core values.”

Dolese believes reimagining Church properties is essential.

“The future use has more to say than our current use,” she said. “There’s value in preserving that legacy while adapting to new realities.”