The economic horizon was rosy in 2007. Wall Street was riding high, and investors were bullish on the future of the economy.
In this environment, many businesses, schools, nonprofits and other entities took on debt for new facilities and other projects to expand their reach and capitalize on growing public demand for goods and services.
Then, in December, the recession hit. And hit hard.
As unemployment rose, the stock market contracted, putting the squeeze on investors. Suddenly, some of the investments that seemed like well-calculated risks earlier in 2007 became problematic. Companies defaulted on loans and declared bankruptcy, and many of the projects they had planned stalled or were left to dry up as the economic tides receded.
Here in Madison County, we felt the pressure of the recession acutely. Unemployment rose above 12 percent, and many who could find work had to settle for jobs that paid a fraction of their former wages. Businesses and the real estate market suffered.
The recession officially ended in June 2009, but its repercussions continue to echo in Madison County, which was already reeling from the failure of the American auto industry.
Before the recession hit, Madison Park Church of God took the bold step of building a new mega-church on the outskirts of Anderson, with visibility from Interstate 69. The church had outgrown its previous location along Scatterfield Road and was looking to spread its wings. To purchase 200 acres near the interstate and build the beautiful facility, the church took out a $17.5 million loan, backed by the sale of bonds.
The new church facility, with its gorgeous lobby and splendid auditorium, as well as other amenities, was instantly a jewel of the community. But it was costly, and when the economic roof collapsed during the recession, church leaders could see difficult times ahead. A $5.8 million balloon payment on the loan loomed in July 2012, and suddenly there was no market for the properties that Madison Park had planned to sell to finance the lump-sum payment.
All of this culminated in the church’s announcement last week that it would file for Chapter 11 bankruptcy reorganization in July. Prior to that, church leaders had taken austerity measures — reducing staff and benefits and cutting the missions budget, for example — to help meet the organization’s financial commitments.
Senior Pastor Jim Lyon says the church is in no danger of losing its assets, and those who bought bonds will collect on their investment. The reorganization removes the balloon payment while extending the life of the initial 30-year loan by an additional year. (Lyon will leave the church this summer to take a position as general director-designate with Church of God Ministries. He says his departure is not related to Madison Park’s financial reorganization.)
While church leaders have publicly kept a stiff upper lip, their pride is certainly bruised and they most assuredly would rather do without the publicity of a debt reorganization announcement.
But we have to remember the context of their decision to invest in the new property off of I-69. It was indeed a bold move, but one that made sense in early 2007.
The cliche that rewards do not come without risks certainly rings true when considering the story of Madison Park and the loan for its new facility. Church leaders took the risk of securing a loan to build the facility. The reward: It’s an attractive addition to the city, and a highly functional building for worship and a variety of events — concerts and other community gatherings, such as a job fair the church recently hosted.
Madison Park Church of God remains an active partner in charity pursuits and other activities that benefit the community. There is every reason to hope that the financial reorganization will help the church return to full health and remain a strong thread in the fabric of Madison County.
In summary There is every reason to hope that financial reorganization will help Madison Park Church of God return to full health and remain a strong thread in the fabric of Madison County.