Lease vs Build

For over five years we have been working alongside the City of Surrey looking at various options, initially searching for an existing structure that could be leased and/or bought and renovated. As we continued to grow, we eclipsed zoning allowances which ultimately resulted in the search for land. A thorough Lease vs. Build Analysis was conducted that led us to the decision to build. A summary of some of the highlights follow.

Lease

Weaknesses

• unavailability of suitable space for our unique needs and size
• lease costs are more expensive over the long term
• vulnerability to potential intolerance from government-controlled buildings
• unavailability of an alternative venue similar to Bell Preforming Arts Centre
• vulnerability to short 3-6 month cancellation clauses
• inability to hold regular weeknight events
• unpredictable rates and rising costs
• current ministry centre cannot take advantage of tax breaks as primary gathering space (currently $75,000 annually)
• high costs of mobile infrastructure and technology
• zero equity appreciation

Strengths

• less up front capital
• no responsibility of ownership and maintenance
• ability to move or change quickly
• in the event of a catastrophic failure, only lease costs are paid out

Build

Weaknesses

• high up front costs
• maintenance costs/responsibility
• catastrophic failure may mean selling the asset

Strengths

• the better financial decision when considering the costs over the long term
• an intact investment with appreciating land value
• a building specifically designed for our needs
• the ability to capture video content in a controlled environment which is mission-critical for our church
• we would own and control the venue
• a new facility attracts more people and thus a larger financial base to fund it
• a potential mortgage payment (if necessary) would be less than or equal to what we presently pay in rental costs (assuming the land is owned)
• better use of staff resources and equipment than a mobile infrastructure
• take advantage of significant tax savings
• opportunities to engage the community for concerts, graduations, and other rental partnerships

The Build decision

When we analyze how much of the Build project requires financing, we see the obvious savings when less financing is required. In all cases, the Build scenario is more favourable than a Lease scenario. This is primarily due to the land value and the appreciation of it (which has already risen +$300K/acre). If we assume the land can be purchased quickly with no financing, this adds additional savings. However, even at the maximum of 70% financing, leasing is still more costly in the long run. (Note: the costs in the analysis only applies to replacing the rentals associated with the Surrey South location (Bell), current Ministry Centre, and weekly program rentals in other venues. Rental costs associated with Langley North and Langley South locations continue on as is.)

The analysis exposes three key factors that favour a “Build” over “Lease” decision:

  1. The high level of vulnerability in relying on a Lease solution from public and government facilities given 6-month cancelation clauses as well as growing intolerance to some of our theological positions;
  2. The lack of suitable options to lease that fit our needs, even when considering a multi-building/locations solution, and
  3. The financial analysis showing cost savings of a Build solution over both 20 and 30-year scenarios.

The precarious position we are in now demands a more secure solution within the next 3-5 years.

Over this fall and into 2018, we are excited about designing this stable and permanent Ministry Centre in which ministry will be done on a daily basis. A 3-4 storey building (~70,000 sq. ft) will include an auditorium with 1,500-2,000 seats to accommodate many events including weekend services. It will also be used for developing leaders, holding conferences/classes, mid-week kids/youth/young adult programs, counselling, local mission, Christian education, Canada-wide operations—reaching out to the city, region and nation with the transforming power of the gospel.

It starts with Step 1—securing the Land.        Pledge here now.