[NYTr] Church Wants to Use Indust'l Development Bonds to Fund Expansion

[All the News That Doesn't Fit]

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Arizona Republic - Sep 13, 2007
http://www.azcentral.com/community/chandler/articles/0913cr-churchbonds0914.html


Church wants to use industrial development bonds to fund expansion

Edythe Jensen
The Arizona Republic

A Baptist church and school moving to Chandler from Tempe wants
Chandler's blessing to borrow $5 million through tax-exempt industrial
development bonds designed to attract commerce and jobs.

That has a Chandler lawyer vowing to oppose the move because, he said,
it violates constitutional provisions calling for the separation of
church and state and will bring no financial benefits to the city.

"It's nothing more than using government to advance and promote
religion," said Marc Victor, a criminal defense attorney who lives and
works in Chandler.

The Tri-City Baptist Church's request got a preliminary recommendation
for approval this week from the Chandler Industrial Development
Authority Board. The request faces another board hearing and City
Council vote before the bonds can be sold.

IDA bonds are similar to those sold by governments to finance public
projects. They carry lower interest rates and investors pay no taxes on
income. No government funds are used to finance IDA bonds; money comes
from investors seeking the tax advantage.

The Rev. Mike Sproul said the church plans to build a college,
residence hall, sanctuary and athletic field on 12 acres southwest of
Dobson and Germann roads and is selling the 9 acres it has outgrown at
2150 E. Southern Ave. in Tempe. The industrial development bond money
would be used for the school's athletic fields and infrastructure, he
said, because tax-exempt bonds cannot be used for religious purposes.

According to the church's Web site, Tri-City paid $2.25 million for the
Chandler land and construction has started on a cluster of buildings.
Church property is not taxable and non-profit operations pay no sales
taxes.

That's a concern for Victor, a member of the national Freedom From
Religion Foundation who said allowing the church to sell tax-exempt
bonds at low interest rates constitutes government subsidy of religion.

"Churches get huge tax benefits, and approving these bonds would be
outrageous," Victor said.

Sproul said the church's bond attorney has investigated the legalities
and Tri-City would use the bond money to build a soccer field and
infrastructure for the church's college campus, which is separate from
the sanctuary.

Brian Ritschel, city of Chandler accounting manager, said this week's
IDA board approval is a preliminary recommendation. The board will now
ask church officials about their credit worthiness and nature of the
building project. Then the request comes back for a second advisory
vote before it goes to the Chandler City Council.

Ritschel said other church projects in Arizona have received IDA bonds
but he couldn't name one. The only IDA-funded projects listed on the
Chandler Web site are commercial and industrial. The city describes the
purpose of its Industrial Development Authority as seeking "to assist
companies to finance their expansions and create new, quality jobs for
Chandler residents."

It goes on to say, "Over the past, the CIDA has assisted many companies
to expand and diversify Chandler's economic base."

City Councilman Martin Sepulveda said allowing the church to sell
tax-exempt industrial bonds without showing a benefit for all Chandler
residents "doesn't appear to make a lot of sense."

"If the purpose of the IDA is to fund projects that benefit the city
with jobs and generation of revenue, this doesn't appear to be in the
best interest of the city," Sepulveda said.