Churches are worth billions and are stepping up to help solve the housing crisis

Friday, 16 July 2021

Vacant land beside churches, such as St Matthews in Wellington's Titahi Bay, is being earmarked for social and affordable housing.

Churches that own billions of dollars in assets are stepping up to help solve the escalating housing crisis.

Some churches are spending millions building social and affordable accommodation on surplus land, and there is pressure on others to ensure their considerable investments reap social rewards as well as financial ones.

Paul Gilberd, a senior member of the Anglican Church who works in the finance sector, estimates the Anglican, Catholic and Methodist churches are collectively worth more than $10 billion, and he says they could be the “nation’s life preserver” if they put more of their massive wealth into housing.

“If you were saving for a rainy day, well it’s raining.”

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The Anglican Church has at least $3b in total assets and a recent report on their use has encouraged more “socially responsible” investments, including community housing, and renewable energy such as solar panels on church roofs.

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Gilberd was involved in writing He waka eke noa (A waka we are all in together), a hard hitting report looking at future use of Anglican cChurch assets worth more than $3b.

It says the credibility of demands made by church leaders in annual meetings with the prime minster “have for years been undermined by our lack of courage and action given the collective billions in assets we hold within the church”.

The report points out the church is a significant landowner, with some of that land gifted by Māori, and given the desperate housing needs, particularly for Māori and Pacifica, it should be mindful of criticism in the Bible about “those who own land and do not provide housing for the poor.”

After receiving He waka eke noa, the Anglican general synod which sets church rules, passed a motion asking those responsible for managing its assets to ensure investments were “mission-aligned” and met standards of “fruitful stewardship”.

Wellington Anglican Diocesan trust board development manager Nick Young at St Matthews Church in Titahi Bay where five social housing units are planned. He says there is a genuine desire to help alleviate the housing crisis which is showing up in rural areas as well as cities.

Social and affordable housing topped of a list of possible investments worth considering, and dioceses will report back next year on efforts to meet synod expectations.

The Wellington Anglican Diocesan trust board has already evaluated the use of its $290 million in assets, much of which is held in property.

Board development manager Nick Young hopes the first of 26 social housing units costing $7m will get underway next year on four sites around the region, and he says more are planned.

Chris Chamberlain, senior minister at the Oxford Terrace Baptist Church says an apartment block will be built on land beside the new church complex in central Christchurch.

About a third of the 60 parishes in the region, which loosely covers the lower North Island, have identified surplus land that could be potentially be used for up to 200 homes.

Young says the trust board has also put $1m, about 2 per cent of its total capital, into Christian Savings, an ecumenical finance company with about $180m on loan to churches and faith-based charities.

“There are these historical endowments and funds that are sitting in industry-standard investment portfolios, why don't we look at relocating some of these funds to try and change the world?”

Christian Savings lending manager Dan Mazengarb says that $1m allows organisation to lend almost $18m for residential projects.

Oxford Terrace Baptist Church wants to build two and four-bedroom units and senior minister Chris Chamberlain says efforts by churches to do more in the way of social housing “are definitely coming to the boil”.

Demand for community housing finance has tripled in the last five years and now makes up about 20 per cent of lending.

Recipients include the Oxford Terrace Baptist Church in Christchurch which is furiously fundraising for a $6m block of 11 apartments.

Senior minister Chris Chamberlain says the church was debt free before the 2011 earthquakes, but the disaster gave it an opportunity to take a serious look at the good it could do with its resources, including land.

The Salvation Army opens its doors to a new housing estate in Royal Oak.

“It’s not acceptable to simply mow the grass …. that’s why we’ve gone out on a limb and got a large mortgage.

“If the church is going to be true to its calling it has to attend to those that miss out. Sitting on lots of money is not doing that.”

Chamberlain is appalled at how much the Government is spending on emergency accommodation in motels.

“I said to the minister of housing, ‘you’re spending $1m a month in Christchurch on motels, give me six months worth’.”

Mazengarb says it is a sore point that the big three churches – Anglican, Catholic and Methodist – are happy to borrow from Christian Savings, but tend to put their deposits elsewhere, even though Christian Savings has a good record and can offer a higher rate of return.

“We’ve never lost a dollar in lending in nearly 60 years.”

To overcome regulatory limits on its lending capacity, Christian Savings set up Community Finance to provide capital for community housing.

It has raised $71m through bond issues, lending $40m to the Salvation Army to build 118 Auckland social housing units, and over the next three years it has more than 1000 houses in the pipeline throughout the country.

Vacant land in the Anglican Wellington diocese is being earmarked for social housing. Nationally more than 40 per cent of the Anglican Church wealth is in property.

Salvation Army national director for social housing Greg Foster says a lot of churches would be uncomfortable taking on the level of debt they have, but the need was proven when 800 people applied for 50 tenancies in its Royal Oak development, and there were 300 referrals from within the Salvation Army for 46 places in its new Flat Bush community housing.

“To the army’s credit they’ve seen the impact these new developments have made on people’s lives, and they have allowed us to borrow more. So over the next five years it will be building a lot more units and borrowing more money.

Housing projects costing north of $50m are in the works for Auckland, Hamilton, Wellington and the South Island, a mix of build-to-own and private developments the Salvation Army will lease via 25 year contracts with the Ministry of Housing and Urban Development.

Foster says those lengthy government contracts are the key to getting finance, something that is often an uphill struggle for churches wanting to build housing on surplus land.

In South Auckland an $8.5m 21-unit development by a Baptist trust was saved by a partnership with community housing provider Habitat for Humanity, and a loan from Community Finance.

Lyndon Twemlow is co-lead pastor for the Manurewa Baptist Church associated with the trust.

He says private developers won’t touch two-bedroom units because the returns don’t stack up, yet that is where the demand is, and the church is prepared to forgo short term gains to meet the need.

The site being blessed this weekend has already sucked up $1m to cover costs like the infrastructure upgrades (power, water and sewage) required to replace a single dwelling with a three-storey building.

The prospect of a $1m GST bill came close to killing the project completely.

Twemlow says, although the trust is a charity and could technically recoup the GST, the fact that units will be rented out means they are treated like any other developer and he suggests GST exemptions for such projects, with protections in place.

“If we sold it on for a profit within a 15- or 20-year period, we’d have to pay [the GST] back.”

Resistance to change

The Methodist and Anglican churches joined forces to shift these relocatable houses to a new site in the Christchurch suburb of Shirley.

At the end of March there were nearly 24,000 households on the public housing waiting list, 45 per cent more than a year earlier, far surpassing the extra 8000 housing places the Government aims to deliver by 2024.

Despite churches’ willingness to do more in this area, it may not be straight forward if trust deeds do not allow for it, or if some trustees are reluctant to play ball.

The Anglican’s He waka eke noa report says there is some unwillingness to share information on church assets, “it seems unusual” for the value of Auckland diocesan property to be lower than that for Wellington or Christchurch, and the data collected does not include Pakeha private schools.

Gilberd, who is also the general manager of Community Finance, says some members of the church are receptive to change, while others will resist it strongly.

“There are large Anglican trusts who have gone out and sought legal opinions of their own to validate their current operating model to resist change, so this is really tricky territory.

“A lot of these people are hiding behind this concept that says, I have got to make more money out of the money that I've got.”

Trust Investment Management is owned by the Auckland Anglican diocese and manages $2b for 250 trusts and charities, the majority of them Anglican.

Chief executive Grant Hope says the asset management firm only advise on investment decisions which are ultimately made by its clients, and adopting a different focus may require amendments to trust deeds.

Historically, “impact investing” was regarded as providing “suboptimal returns,” Hope says, but that is changing and some clients invested in Community Finance bonds for the Salvation Army housing project.

Making social housing work

Community housing provider VisionWesthas between 1200 and 1500 tenants, mostly in Auckland, and it is increasingly approached by churches interested in alleviating the dire housing shortage.

Head of service development and partnerships Brook Turner says there is huge potential for them to help, but housing more vulnerable New Zealanders takes more than money and good will.

“You don’t build 20 units in a high density block and put people in them who come from struggling backgrounds, and expect it to be automatically harmonious.”

Turner says there is probably a degree of naivety about what it takes to get social housing up and running, and he would like to see more church collaboration.

“Instead of everybody getting a building development unit, everyone having their own architects, maybe if we got smarter we could have syndicates of churches working together on a common cause of housing, pooling resources to make it stack up economically.”

Methodist Alliance national coordinator Carol Barron says that is already happening and cites the example of Methodists shifting 15 units previously used as temporary post-quake housing on to vacant Anglican land in Christchurch.

Already a big accommodation provider, the Methodist Church intends building 52 new homes over the next few years and it is looking to buy land in Blenheim to address the housing crisis there.

Barron says the Anglican report has sparked considerable discussion and that is a good thing.

“It’s about time the church, which is asset rich, does more and stands by its values, and looks after people.”