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Decision No. 664

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October 24 1991
In Re: Restrictions in ¶ 2542 on Use of Proceeds from Mortgage or Sale of Church Property.

Digest of Case

Par. 2542 strictly prohibits mortgaging a church building or parsonage to provide for current expenses, including facility repairs of an emergency nature. It also prohibits the use of the principal proceeds of the sale of such property to be so used.

Statement of Facts

The Eastern Pennsylvania Conference at its session June 9-11, 1991 adopted Resolution No. 9103 requesting a declaratory decision regarding ¶ 2542 of the Discipline. The motion, made by the Rev. Annette B. Bolds, pastor of the Bickley Memorial United Methodist Church of Philadelphia, was made on behalf of that congregation. It stated: Whereas facility repairs of an emergency nature do not fall under the category of ordinary budget expenses, Whereas many congregations do not have endowments or any other funds available to care for these unseen emergency expenses, Whereas a congregation's failure to make emergency facility repairs can seriously jeopardize the health and safety of those who are using the facility. Whereas Paragraph 2542 (Restriction on Proceeds of Mortgage or Sale) of the 1988 Book of Discipline of The United Methodist Church states that "no real property on which a church building or parsonage is located shall be mortgaged to provide for the current (or budget) expenses of a local church, nor shall the principal proceeds of a sale of any such property be so used," but it does not explicitly prohibit the use of these funds for emergency facility repairs, Whereas persons within leadership positions of the Eastern Pennsylvania Annual Conference have interpreted this paragraph to mean that these funds cannot be so used, Therefore be it resolved that the 1991 Eastern Pennsylvania Annual Conference request a ruling from the Judicial Council of the United Methodist Church as to whether or not Paragraph 2542 is intended to preclude the use of the principal proceeds from the sale of a church building or property for facility repairs of an emergency nature. Be it further resolved that this matter also be referred to the Eastern Pennsyvlania Conference Commission on Equitable Salaries for further examination and investigation by its newly created Housing Allowance Task Force. JURISDICTION The Judicial Council has jurisdiction under ¶ 2615 of the 1988 Discipline. ANALYSIS Paragraph 2542 of the 1988 Discipline places this restriction on the proceeds of a mortgage or sale: No real property on which a church building or parsonage is located shall be mortgaged to provide for the current (or budget) expense of a local church, nor shall the principal proceeds of a sale of any such property be so used. This provision shall apply alike to unincorporated and incorporated local churches. The issue at point is a separation between current operating funds and needed capital funds. The Discipline makes such a distinction in ¶¶ 2542 and 2543. Par. 2542 refers strictly to current expenses and is clear and unambiguous in stating that no property shall be mortgaged to provide for such expenses, nor are principal proceeds of a sale of such property to be so used. There is no provision made for repairs, even of an emergency nature. Financing of buildings is provided for in ¶ 2543 which provides the procedures and safeguards for such planning and funding. In Judicial Council Decision No. 399, the Council affirmed the prohibition of the use of such proceeds for current expenses and now reaffirms that position. We do not render an opinion as to whether the particular project in this case is within the scope of ¶ 2542.

Decision

Par. 2542 strictly prohibits mortgaging a church building or parsonage to provide for current expenses, including facility repairs of an emergency nature. It also prohibits the use of the principal proceeds of the sale of such property to be so used.

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