POLICIES: FACILITIES & REAL ESTATE


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100 POLICIES AND PROCEDURES FOR NEW CONSTRUCTION, RENOVATIONS AND CAPITAL MAINTENANCE PROJECTS


These policies and procedures apply to the development and execution of new construction, renovations and capital maintenance projects.

The Department of Management Services (DMS) oversees and administers the temporal goods of the Archdiocese. The Executive Director of the DMS is the primary contact for the initiation of the capital project approval process.

The Division of Facilities and Real Estate Management (DFREM) supports capital projects from concept to completion and warranty.

These policies and procedures are reviewed by the Archdiocesan Facilities and Real Estate Advisory Commission (FREAC). FREAC’s membership includes pastors, construction, facility and real estate professionals with significant experience and technical expertise in the successful performance of capital and real estate projects. FREAC provides general advice in the development of policies and procedures, reviews capital projects and real estate transactions, and provides recommendations to the Archbishop.

The Division of Information Services provides assistance in the assessment and evaluation of technology needs (computers, wiring, phone and security systems), RFPs, cost comparisons, etc. The Director of Information Services also serves as a member of FREAC.

The Division of Risk Management is involved in bonding and risk coverage during and after completion. If the project is related to replacement or repair from an accident, fire or other physical damage, the Division of Risk Management assists in obtaining insurance funds for covered losses.

The Department of Development provides support for the evaluation of fund-raising opportunities, consultants and techniques


101 CAPITAL PROJECT CATEGORIES


Capital projects are classified into one of four categories based on the Total Project Cost (TPC) and whether the project involves certain environmental, structural, or liturgical aspects. The policies and procedures applicable to a project vary depending on project category.

Procedure:

A) TPC includes the cost of all phases of a project or program, regardless of duration or scheduling, including the cost of design, construction, furnishings, permits, contingency and inflation costs.

B) The Capital Projects Flowchart, available here, helps explain the proper categorization of projects.

C) The Capital Projects Lifecycle, available here, provides an overview of the process for completing a capital project from conception to completion and warranty.

D) The Capital Projects Required Actions by Project Category, available here, provides a summary of the actions required for each project category during the Project Lifecycle.

101.1 Category I Projects:

Category I includes any project, regardless of TPC, involving environmental issues (e.g., asbestos, lead/lead paint, underground fuel tanks, radon, indoor air quality or other hazardous substances/conditions), liturgical space (in particular, any work inside the sanctuary of a church or chapel), structural components or the roof of a building or property, or boiler replacement.

Procedure:

A) Category I projects must be approved by DFREM before commencement or contract execution.

B) Category I projects may also be a part of or classified as a Category II, III, or IV project based on TPC, provided that any more restrictive policies and procedures applicable to Category I projects must also be adhered to.

101.2 Category II Projects:

For parishes with annual offertory of $400,000 or less, Category II includes projects with a TPC of less than $30,000.  For parishes with annual offertory greater than $400,000, Category II includes projects with a TPC of more than $50,000.

Procedure:

A) Parishes/schools may proceed with Category II Projects without approval (except where the project includes a Category I Project).

B) DFREM staff is available for consultation and advice regarding Category II projects and has guidelines available for parish/school use regarding project evaluation, contract content and legal standards.

101.3 Category III Projects:

Category III includes projects with a TPC of more than $50,000 but less than $300,000.

Procedure:

Complex projects (including those with unusual project requirements or potential difficulties) may be included in Category III in the discretion of DFREM staff even if the project has a TPC of less than $50,000.

101.4 Category IV Projects:

Category IV includes projects with a TPC of $300,000 or more.



102 CONTRACT POLICIES


102.1 Legal Requirements:

102.1.1 Legal Review: Parishes, schools, and other related Archdiocesan entities shall contact Gallagher Evelius & Jones LLP, Archdiocesan Legal Counsel (ALC), for preparation and review of all contracts, leases, and any documents related to the alienation of property, including deeds, use agreements, licenses of property interests, title documents, surveys and/or other items to be recorded, unless expressly authorized to proceed without ALC review by the Policies and Procedures for New Construction, Renovations, and Capital Maintenance Projects.

102.1.2 Corporate Titling: Legal title to all buildings and real property (all land and improvements) shall be in the name of a corporation or other limited liability entity, as approved by DMS.

102.1.3 Handicapped Accessibility: All new construction and renovation projects must fully comply with all applicable laws, regulations, codes and ordinances regarding accessibility for persons with disabilities and with all accessibility guidelines and policies set forth by the Archdiocese, United States Catholic Conference of Bishops (e.g., Built of Living Stones) or other Roman Catholic governing bodies.   Every reasonable and practical effort shall be made to bring all existing buildings and properties into full compliance.

102.1.4 Compliance with Environmental Laws: All new construction, renovation, and maintenance projects shall comply fully with all applicable environmental laws and regulations.

Procedure:

A) Because of stringent federal and state laws regarding hazardous materials, any workers involved with demolition, additions, or renovations must be notified of those areas of any building that contain such materials.

B) DFREM must be contacted in advance for consultation on projects involving hazardous materials.

C) In school buildings, asbestos-containing materials are clearly indicated in the Asbestos Management Plan (AHERA Plan), which is kept on file by the principal and DFREM and available for inspection.  The Asbestos Management Plan must be updated if asbestos material is discovered or removed. Copies of any asbestos-related work documents must be filed with the DFREM and, if applicable, with the principal for updates to the Asbestos Management Plan.

D) Qualified professional personnel should carefully examine any suspect building material before it is disturbed.

102.2 Contract Policies:

102.2.1 Authorized Contract Signer:  Contracts over $300,000 and all contracts for professional services (architect, engineer, planner, etc.) may only be signed by the Archbishop.  Contracts under $300,000 may be signed by the pastor, Vicar Bishop, or PLD once all approvals required by these Policies and Procedures for New Construction, Renovations, and Capital Maintenance Projects have been obtained.

102.2.2 DFREM Review of Certain Contracts:  The following contracts must be submitted to DFREM for review by DFREM and ALC:

  • Category I, III, and IV contracts;
  • Contracts for soil investigation and engineering evaluation services during the design process;
  • Contracts for mandatory code inspection and testing services during the construction process; and
  • Contracts for independent onsite construction inspection or management services not required by code during construction process.

102.2.3 Professional Services Contracts:  Professional services contracts should follow the applicable amended American Institute of Architects (AIA) form or other approved form.

102.2.4 Change Orders:  All changes to any contract resulting in change of scope, credits, or extras, must be documented by a written Amendment or Change Order prepared by the Contractor, Architect or Project Manager, and accepted by the pastor and the Contractor or Architect as necessary.  Any amendment substantially altering the terms of a contract should be reviewed by DFREM and ALC.

102.3 Method of Delivery:

Projects shall be delivered by the Design-Bid-Build method.  Alternative methods of delivery, such as Construction Management or Design Build, are permitted only with written permission from the Archbishop.

102.4 Bonding and Insurance:

The following bonding and insurance requirements apply to capital projects as follows:

  • All Category IV Projects must have Contractor Performance and Payment Bonds for the full value of the project in the formats stipulated in AIA Document A312. The bonding company must be approved by the Division of Risk Management.
  • Bidders for Category IV Projects may be required to obtain Bid Bonds of a required percentage of TPC, guaranteeing that the contractor will enter into the contract for the amount of the bid.
  • Builder’s risk coverage shall be provided by the contractor on all projects.  This amount will vary by project and will be determined by the Division of Risk Management.
  • General liability coverage naming the Archdiocese as an additional insured shall be required of all contractors doing work on any Archdiocesan or parish/school property, in an amount determined by the Division or Risk Management.
  • Professional liability coverage naming the Archdiocese as an additional insured shall be required of all architects doing work for any Archdiocesan, or parish/school project.

The detailed insurance coverage requirements for capital projects are available here.

102.5 Applicability of Contract Policies:

A spreadsheet summarizing the applicability of the foregoing contract policies is available here.


103 POLICIES FOR PROFESSIONALS


103.1 Conflicts of Interest:

The retention of any consultant, contractor, or subcontractor shall be subject to and in accordance with the Archdiocesan Conflict of Interest Policy, available here. In general, a parishioner, or any company in which a parishioner holds a vested interest, shall not be retained as a consultant, contractor, or subcontractor on a project at a parish where the parishioner is registered.

103.2 Contract with Professional:

A contract reflecting the specific services to be provided shall be executed upon selection and approval of a professional.

103.3 Contractors:

103.3.1 Competitive Bidding: Competitive bidding shall be required for all Category I, III, or IV projects.  At least three (3) competitive bids are recommended for Category II projects.  Exemptions from this policy will be granted only in extraordinary cases where the Architect has provided sufficient information to allow DFREM to compare the scope of the work and price of the selected contractor with other contractors in the area sufficient to determine that the quoted price is competitive.

103.3.2 Prequalification of Contractors: DFREM will pre-qualify and recommend general contractors for all Category I and IV projects.

103.3.3 Licensure and Insurance: Certificates of insurance for the General Contractors and all sub-contractors meeting Archdiocesan requirements shall be filed with the Division of Risk Management with copies to DFREM.  Only licensed, insured, and certified contractors shall perform the removal of any hazardous materials (e.g., asbestos, oil tanks, etc.).

103.4 Architects:

103.4.1 Prequalification Required: Only prequalified architects may perform work on any Archdiocesan project, regardless of category.

103.4.2 Insurance: Certificates of insurance for the architect meeting Archdiocesan requirements shall be filed with the Division of Risk Management with copies to DFREM.

103.4.3 Project Selection Committee: For Category IV projects, the architect will be selected by a Project Selection Committee, which shall include the pastor, parish/school project chairperson, and a representative from the parish/school finance committee.  DFREM shall issue a Request for Proposal (RFP) to architects, and from the responses shall select no more than three (3) firms to be interviewed by the Project Selection Committee.  Following interviews, the Project Selection Committee shall make the final selection with the advice and approval of DFREM.

103.4.4 Structural Changes: Any structural changes required to any property must be designed and inspected by a registered structural engineer prequalified by DFREM.  Structural changes include the construction or installation of new buildings and additions and any modifications to a building/property that compromises the safety or integrity of a structure or site.

103.4.5 Changes to Building Systems: Any change, renovation, modification or addition to a major building system (e.g., mechanical, electrical, roofing, etc.) must be reviewed by a consultant recommended by DFREM before execution of any contract for such change.

103.4.6 Compliance with Archdiocesan Standards: The architect for any project shall comply with any Archdiocesan standards established by DFREM, including the “Electronic Standards for Facilities Management and Design.”


104 FINANCIAL POLICIES


104.1 Scope:

The following financial policies apply to all projects, except Category II projects.

104.2 Financial Requirements:

Except in exceptional circumstances, as determined in the sole discretion of the Archbishop or the Executive Director of DMS, the Executive Director of DMS must confirm that the following requirements have been satisfied before project approval will be given.

104.2.1 Contingency Fund:  To be prepared for contingencies, the parish/school must have reserve funds in the InterParish Loan Fund (IPLF) sufficient to meet the parish/school’s operating expenses for at least four (4) months.  This amount is in addition to the cash amounts that the parish/school is required to have on hand.

104.2.2 Cash on Hand:  The parish/school must have cash on hand of at least 50 percent of the TPC prior to bid solicitation, and must have completed a budget or financial plan approved by the finance committee chair and parish corporators sufficient to complete the project.  Funds equivalent to an additional 15 percent of TPC must be collected prior to project completion.

104.2.3 Financing Limit:  Financing for any parish/school construction/renovation project or property acquisition shall not exceed 35 percent of TPC, which includes, but is not limited to, construction costs, fundraising costs, architect/engineering fees, furnishings, escalation estimates, and appropriate project contingency reserves as reflected in the Project Cost Data Form, available here.

104.2.4 Loan Term:  The term on any loan required for construction, renovation, or property acquisition shall not exceed ten years.  With respect to IPLF loans, the IPLF Loan Committee, in consultation with the parish/school, shall determine the loan term and amount.

104.2.5 Approval of Large Projects:  Projects with a TPC over $2.0 million or with expected debt of $1.0 million or more must be approved by the College of Priest Consultors and the Board of Financial Administration (BOFA), who recommend approval to the Archbishop.  The Archbishop shall make the final decision regarding approval of the project, and issue his decision in writing.

104.2.6 TPC Increases:  Increases in TPC in excess of 5% must be approved by DMS.

104.2.7 Contingent Liability: The limit for direct debt or for contingent liabilities of the Archdiocese will be determined by a formula approved by BOFA.  BOFA shall review the contingent liability level on an annual basis to ensure that the Archdiocese’s credit rating remains at an acceptable level.  Priorities for the authorization of loans will be assigned by the Executive Director of DMS in consultation with the appropriate divisions.

104.2.8 Compliance with Reporting and Payment Obligations:  Before a project may be approved, all required financial reports must be filed by the parish/school and all Cathedraticum payments, insurance bills and other open items must be paid in full.  The parish/school must continue to comply with reporting and payment obligations throughout all stages of the project.

104.3 Funding for Category II Projects:

Generally, debt is not permissible for Category II projects.  Exceptions for entities that do not have sufficient funds on hand to complete a project must be approved by the Executive Director of DMS prior to initiation of the project.

104.4 Fundraising Campaign Approval and Restrictions:

104.4.1 Fundraising Campaign Approval:  In order to conduct a fundraising campaign, the parish/school must submit a “Permission to Conduct a Fundraising Campaign” form, available here, and receive approval from the Archbishop.

104.4.2 Compliance with the Law:  All fundraising campaigns and activities shall be conducted in strict conformity with federal, state, and local laws.

Procedure:

A) No consideration (such as a discount or reduction in school tuition) shall ever be offered in return for a tax-deductible contribution.

B) Questions about fundraising activities should be directed to ALC.

104.4.3 Cathedraticum Tax Exemption: A Cathedraticum tax exemption may be granted for an approved fundraising campaign for new construction, renovation, or loss reconstruction to the extent not covered by insurance.

Procedure:

A) An exemption should be requested on an approved Archdiocesan permission form, available here, and submitted to the Executive Director of DMS for review and recommendation to the Archbishop.

B) The Archbishop will review for approval exemption requests recommended by the Executive Director of DMS.

C) Exemptions will ordinarily be limited to one (1) campaign (maximum three (3) years) and one (1) campaign extension (maximum three (3) years).

104.5 Project Financing:

104.5.1 Approval Required: A parish/school seeking to borrow funds for the construction or substantial expansion or renovation of any facility must have the prior approval of the Archbishop.  This approval will be determined during the Needs Analysis Study described in Section 105.3 below, “Feasibility Analysis and Planning.”

104.5.2 IPLF Funding: Projects requiring financing will request funding from the IPLF.   To provide low-rate loans for capital projects, the Archdiocese has established lines of credit with financial institutions at favorable terms and conditions.

Procedure:

A) A parish/school seeking IPLF funding must submit the following project information:

  • The reason for the loan application.
  • The estimated costs of the project being funded in the standard format required by the Archdiocese.
    • The projected source of funds for repayment of the loan and estimation of probability of receipt of such funds.
    • An operating budget for the present parish/school facilities and projected for ten (10) years after project completion.
    • Reasonable projections (including lists of pledges receivable and collection projections) indicating that the borrower will meet its minimum cash requirement at the time of completion of the project.

B) Updated financial information must be provided at least annually.

C) The maximum amount of the loan will not exceed the borrowing level for the project as approved by AOB policy

D) Before loan funds are advanced, the parish/school provide documentation demonstrating its compliance with the policies and procedures contained in this Section.

E) A Capital Projects Report, available here, must be submitted with the regular annual financial report.


105 PROCEDURES FOR CAPITAL PROJECTS


105.1 Scope:

All capital projects are subject to the following procedures regardless of the type of project, facility, or cost.

105.2 Project Concept/Feasibility:

After initial discussions with the parish council/school board and the Office of the Vicar Bishop regarding the need for and feasibility of a new construction or renovation project, the pastor should make a written request for permission to pursue evaluation and conceptual development of the project to the Archbishop, with copies to the Vicar Bishop and Director of DFREM.  The written request should describe the project, anticipated TPC, and the method/means of funding.

Procedure:

A) Departments affected by the project will be asked to submit recommendations regarding the project to the Archbishop.

B) The parish/school should not take any further steps nor hire any consultant (architect, engineer, planner, interior designer, etc.), until the pastor has received written permission to proceed from the Archbishop.

C) The written request should include a facilities condition assessment and capital reserve study performed within the past thirty-six (36) months for each building in the parish/school complex.  This report is used to plan and prioritize work at the parish/school.

105.3 Feasibility Analysis and Planning:

105.3.1 Development of Feasibility Studies:  Depending on the circumstances, DFREM may request that the parish/school compile and submit a Needs Analysis Report – a summary report describing the present and future needs of the parish/school and the present and future use of its buildings and property. The parish/school may also be required to develop a programmatic spatial and site master plan for its buildings and property.

105.3.2 Use of Third-Party Consultant: Where appropriate, DFREM will recommend a consultant to work with the parish/school to develop the required Feasibility Studies.  The cost of the consultant’s services shall be borne by the parish/school.  A DFREM project manager (PM) may be assigned to oversee the third-party consultant’s services.

105.3.3 On-Site Meeting: DFREM may require an on-site meeting at the parish/school to review the Needs Analysis Report and discuss DFREM’s role, if any, in the proposed project.  The Executive Director of the DMS shall then make a recommendation to the Archbishop regarding concept approval.

105.4 Concept Approval and Creation of Committees:

105.4.1 Concept Approval:  If the Archbishop approves of a project concept, written permission will be provided to the parish/school to develop the concept further. DFREM staff shall meet with the parish/school to discuss Archdiocesan construction and fiscal policies and any specific stipulations that have been placed on the Archbishop’s approval.

105.4.2 Project Committees: A Building Committee, Finance Committee, and Project Team shall be created to continue work on the project.

105.4.2(A) Building Committee: The Building Committee includes the pastor/principal, and is typically composed of an additional two (2) to four (4) members of lay parish/school leadership and staff knowledgeable in the requirements of the project or with professional experience in the development, design or execution of buildings or building systems.  The Building Committee shall work in consultation with DFREM in the selection of an architect from the Archdiocesan prequalified list.  If the project is a renovation, the parish/school and DFREM must ensure that the architect makes a thorough assessment of the entire building to ascertain the soundness of all major building systems before proceeding.  The Building Committee also works with DFREM to develop a broad outline of the tentative project requirements together with a cost estimate.  The parish/school shall use the Project Cost Estimate Worksheet as a planning guide for the construction process.

105.4.2(B) Finance Committee: The Finance Committee includes the pastor/principal, and is typically composed of an additional two (2) to four (4) members of lay parish/school leadership and staff with finance and/or accounting experience.  The Finance Committee develops the Financial Plan (including income and expense, and cash flow projections) to execute the project considering the institution’s operating budget, cash reserves and any fund-raising campaign.  A minimum ten (10) year operating projection should be prepared, which includes the operating and depreciation (replacement) costs for the project and other facilities of the parish and/or school.

105.4.2(C) Parish/School Project Team: The parish/school project team shall include the pastor/principal, Building Committee Chair, Finance Committee Chair, and DFREM Project Manager (acting as the Owner’s Representative) and shall be responsible to oversee the project on an on-going basis.

105.5 Approval to Retain Architect:

If the Parish Council or School Board recommend approval of the project following the completion of concept development and any required feasibility studies, and the pastor agrees with that recommendation, the pastor shall forward to the Executive Director of DMS all relevant material including:

  • A financial statement listing all assets and liabilities.
  • An explanation of financial and fund-raising projections.
  • A statement of all reasonable alternatives to building or renovating, including the possible use of neighboring facilities.
  • A project scope and an estimate of the TPC including the construction cost, site development, landscaping, furnishings, professional fees, contingency and inflation as developed by the DFREM using the standard Project Cost Estimate Worksheet.

The Director of DFREM shall than make a recommendation on whether to proceed with the project and retain an Architect to the Archbishop.  Final approval to retain the Architect must be given by the Archbishop.

105.6 Retention of Architect for Project Design/Development:

105.6.1 Selection of Architect: Following approval from the Archbishop, DFREM will assist the parish/school in selecting an Architect from the Archdiocesan prequalified list using a Request for Proposal (RFP) method.  The final selection shall be made by an interview committee chaired by the DFREM and composed of the pastor and Parish/School Building Committee Chair.

105.6.2 Contracting with Architect: DFREM and ALC shall prepare the contract for services with the Architect using the appropriate AIA form. Typically, building design contracts shall be separated into two phases: 1) schematic design and 2) design/development through construction administration.  A requirement shall be made in the second phase for the provision of record documents or “As Builts” to be completed and delivered at the conclusion of the project.  After review and approval by the Director of DFREM, the Executive Director of the DMS, and ALC, the contract shall be submitted for the Archbishop’s signature.


106 CAPITAL PROJECTS – PHASES


106.1 Phase I – Master Plan:

After the necessary contract with the Architect is prepared and executed by the Archbishop, the Architect will:

1.   Meet with DFREM, the pastor and Parish/School Building Committee regarding the project and the expectations of the parish/school and DMS.

2.   Develop a site plan showing existing conditions to include boundaries, land contours, zoning/development restrictions (e.g. wetlands, steep slopes, woodland, soils, cemeteries, etc.), all utilities (water, sewer, electric, gas, cable), and all existing improvements (buildings, paving, etc.).  Special considerations, such as historic designations or environmental issues, must also be identified.

3.   Based on the Needs Analysis Report, prepare a spatial program for approval by the pastor, Parish/School Building Committee and the DMS.

4.   Based on the approved spatial program, prepare a master plan of the entire campus/property for approval by the pastor, Parish/School Building Committee and the DMS.

5.   A facilities condition assessment and a hazardous material survey must be completed for any/all buildings before any project is planned or undertaken.

6.   FREAC shall review and make a recommendation to the Archbishop regarding whether to approve the final plan.

106.2 Phase II – Schematic Design and Project Cost Estimate:

Based on the approved spatial programand master plan, a detailed site plan showing all existing conditions and restrictions, floor plans, and building elevations, and schematic drawings for the work contemplated shall be prepared by the Architect.  DFERM, in consultation with the Parish/School Building Committee and Architect, shall prepare a Project Cost Estimate Worksheet for review by FREAC.

106.3 Phase III – Design/Development:

106.3.1 Preparation of Design Development Plans:  The Architect shall prepare design/development plans and an outline specification for the project. The Architect’s design documents shall include: a detailed site plan (existing and proposed), floor plans, building elevations, building sections, material/color selection board; preliminary mechanical, electrical, plumbing and structural plans; and complete outline specifications.

106.3.2 Preparation of Revised Project Cost Estimate: A revised project cost estimate must be obtained from a general contractor or professional estimator recommended by the DFREM.  This estimate, together with the Capital Project Cash Budget Form, available here, must be submitted to the Director of DFREM for approval.

106.3.3 Meeting with FREAC: The design/development plans, Revised Project Cost Estimate, and Capital Project Cash Budget Form shall be submitted to DFREM for a review meeting with FREAC at the Catholic Center. The pastor must be present at the meeting at which FREAC’s review is performed.  Following DFREM and FREAC review, and any necessary revisions, the project will be recommended by the Director of DFRM   to the Archbishop for his approval.

106.3.4 Review of Renovations to Liturgical Areas:  The Archbishop will review and approve all renovations or changes to liturgical areas.

Procedure:

A) In the case of renovations to liturgical space, a color rendering or elevation of the interior space is required.

B) The rendering shall show such features as site lines, key liturgical furnishings and artwork elements (altar, tabernacle, crucifix, baptismal font, ambo, lectern, celebrant seating, reconciliation rooms, gifts table, reredos screen, choir, stations of the cross, stained glass, etc.).

106.4 Phase IV – Construction Documents:

106.4.1 Drafting of Construction Documents:  With the Archbishop’s approval, the design/development plans shall be expanded into construction documents, including working drawings and specifications.

106.4.2 Preliminary Review by DFREM:  When the construction documents are 50 percent complete, updated TPC estimates and supporting documentation must be submitted along with the draft construction documents to the director of DFREM for review.  Any changes identified during this review shall be forwarded to the Architect through the project manager for amendment of the construction documents prior to soliciting bids.

106.4.3 Final Review by DFREM: When the construction documents are 95 percent complete, the Architect shall submit a complete set of plans and specifications to the DFREM for final review and approval prior to release for bids.

106.4.4 Required Specifications: Specifications shall include: standard Archdiocesan General Conditions; Front-end Documents (AIA Section 800, as formatted by the Archdiocese) and form of contracts.

106.4.5 Required Construction Documents:  Construction Documents shall include:Statement of the right to accept/reject any and all bids; Standard General Conditions; Statement of Owner’s right to approve all principal subcontractors; and Requirement for Bid-Bond equal to 5 percent of the Contractor’s bid.

106.5 Phase V – Bidding:

106.5.1 Pre-Qualified Bidders:  DFREM will pre-qualify and recommend general contractors and certain principal trade contractors, (e.g. mechanical, electrical, masonry, roofing, etc.) for all Category I & IV projects.

106.5.2 Recommended Bidders:  DFREM shall recommend not less than three (3) bidders who have agreed in advance to submit a bid if invited.

106.5.3 Unqualified Bidders:  Contractors who are determined by the DMS to have discriminated in any way with respect to race, sex or national origin or to have failed to provide a living family wage reflective of the principles of social justice shall not be qualified to bid.  Subject to and in accordance with the Archdiocesan Conflict of Interest Policy, available here, parishioners or related parties shall not bid on projects for their own parish to avoid conflicts of interest. Requests for exception to the Conflict of Interest Policy must be approved by the Archbishop in writing.

106.5.4 Pre-Bid Meeting: A pre-bid meeting shall be held by DFREM, the Architect, and parish/school for the benefit of all bidders to clarify the scope of work and answer any questions.

106.5.5 Performance and Payment Bond: Contractors must furnish a Performance Bond and a Labor and Material Payment Bond in the total amount of the contract.  The name of the bonding company must be submitted to the Office of Risk Management for review and approval.

106.5.6 Receipt and Opening of Bids: Bids shall be received and opened at the parish/ school, the Catholic Center, or other location approved by DFREM.

106.5.7 Bid Evaluation and Selection: Bids shall be evaluated by the DFREM, Architect and Parish/School Project Team. The project shall be awarded to the lowest, qualified bidder.

106.5.8 Contract Preparation: The ALC shall prepare for execution an agreement with the selected bidder using the appropriate amended AIA form for review and approval by the Archbishop.

106.5.9 Final Bid Review: Before the contract is signed, DFREM, parish/school representatives, and the Architect shall review the bid proposal in detail with the successful bidder to insure that the bid covers and satisfied all specifications.

106.5.10 Distribution of Executed Agreement: Copies of the executed agreement shall be distributed as follows:

1.One (1) original to the Pastor or Head of the Institution;

2.One (1) original to the Contractor;

3.One (1) original to ALC;

4.One (1) original to DFREM;

5.One (1) photocopy to the Architect.

106.6 Phase VI– Construction:

106.6.1  Pre-Construction Meeting: After the contract is signed and prior to beginning construction, a meeting of the General Contractor, all Principal Subcontractors, the Architect, DFREM, the pastor or designated parish/school representative shall be held to review all aspects of the contract.

106.6.2  Progress Meetings: Progress meetings shall be held at least every two (2) weeks at the job site with the Contractor, Architect, DFREM and parish/school representatives. Minutes of all meetings shall be recorded by the Architect or Contractor and copies submitted to all present and interested parties.

106.6.3  Change Orders:

All Change Orders shall be processed and documented in a timely manner in accordance with section 102.2.4 of this Policy.

Procedure:

A) Any adjustments/changes to the authorized budget shall be approved in advance by DMS or Archbishop as appropriate.

B) Copies of all Change Orders shall be submitted to DFREM for its records.

1106.6.4  Payments to Contractor:  Payments to the Contractor shall be made upon monthly requisitions, after payments are certified by the Architect and forwarded to the Project Manager.  Five percent shall be withheld from each monthly requisition until the project is substantially complete.

106.6.5  Payments to other Professionals: Payments to the Architect and other professionals shall be paid in stages as set forth in the contract for professional services.  Ordinarily, professional fees for construction administration shall be paid monthly.

106.6.6 Pre-Acceptance Requirements: Prior to acceptance of the Work:

1. Parish/school representatives, Contractor, Architect and DFREM shall conduct an inspection of the Work, during which the Architect shall prepare a “Punch List” of all non-compliant work.

2. The Contractor shall obtain all Use and Occupancy Permits.

3. The Architect shall issue the Certificate of Substantial Completion identifying the date on which the Archdiocese, or parish/school was able to take beneficial occupancy and the Contractor Warranty Period initiation date for all satisfactorily completed work.

4. The Contractor shall submit all Operating and Maintenance manuals.

5. The Contractor shall train the Owner in the operation and maintenance of all systems.

6. The Contractor shall submit to the Owner all warranties, permanent keys, and all special tools.

106.7 Phase VII – Completion and Closeout:

106.7.1 Final Inspection: Final inspection shall be conducted jointly with the Design Team, PM, pastor and parish/school representatives.

106.7.2 Final Payment to Contractor: Final payment to the Contractor shall be made only after 100 percent completion of all punch list work including: punch list items; submission by the General Contractor and all subcontractors of a Release of Liens; the Consent of Surety to Reduction in Retainage, and Consent of Surety of Final Payment; submission of record drawings or “As-Builts” to the Design Team; and completion of any other requirements of the contract documents.

106.7.3 Final Payment to Architect: Final payment to the Architect shall be made only after completion of all aspects of the project by the Contractor as described above, submission of record documents to the parish/school and, one (1) electronic copy and completed final Project Cost Data Form to the DFREM.

106.7.4 Record Documents and As-Built Drawings: As part of their basic services, design consultants must continuously update and provide final record documents for all Category I, III and IV projects and final as-built drawings to the parish/school and DFREM.

Procedure:

A) As-built drawings shall be provided in hardcopy and electronic form.

B) The electronic form of the documents shall be in the format approved by DFREM at project completion.

C) All cross-referenced files and blocks shall be bound thereto and all files purged of unused layers and objects.

D) Drawing Execution shall conform to The U.S. National CAD current Standard  for Layering, Drafting, Schedules, Organization, Symbols, Referencing, Terms, and Code Conventions.

106.8 Phase VIII – Project Warranty Period:

Latent (hidden) defects in the Work of the contract discovered within twelve (12) months after the Architects’ issuance date on the Certificate of Substantial Completion and Punch List are considered warranty defects that the Contractor is required to correct at no additional cost to the parish/school.

Procedure:
Upon discovery of such defects in the Work, the parish/school shall notify the Contractor of the problem in writing with copies to the design consultant and DFREM.


200 ALIENATION OF PROPERTY


The following policies provide the process for review and evaluation of property alienation and acquisition. To assist in this process, the Executive Director of the Department of Management Services (DMS) may call upon various personnel and resources within Central Services and the Facilities and Real Estate Advisory Commission (FREAC) Subcommittee of the Board of Financial Administration (BOFA). FREAC consists of 8 to 16 external members who have expertise in real estate, land development, planning, architect, engineering or other related fields.  Members of the Division of Facilities and Real Estate Management (DFREM) will serve as staff to FREAC.  

Generally, FREAC will consider property transactions when the value of the transaction exceeds $300,000.  At the discretion of the Executive Director, transactions of lesser amounts may be reviewed by FREAC due to strategic or special circumstances. Conversely, certain actions above $300,000 may not require review by FREAC.  The role of FREAC will in no way supplant the roles of pastors, parishes, BOFA, or the Priest Consultors.

For the purposes of this policy, lease refers to a lease of five or more years.


201 SALE OF PROPERTY


201.1 Phase I — Identification of Property and Permission to Evaluate Sale:

201.1.1 Identification of Property for Sale: The pastor and parish council will identify certain surplus property that may be considered for sale or lease.

201.1.2 Permission to Evaluate Sale: After initial discussions with the Office of the Vicar Bishop and Director of DFREM regarding sale of the property, the pastor should make a written request to the Vicar Bishop for permission from the Archbishop to evaluate potential disposition of the property, including the reason for requesting alienation.

Procedure:

A)  Departments affected by the sale or lease will be asked to submit recommendations to DMS regarding the sale.

B) The parish should not take any further steps nor hire any consultant until the pastor has received written permission from the Archbishop to proceed.

201.1.3 Considerations in Determining whether to Sell Property:

The following questions should be considered in determining whether to sell

Archdiocesan property:

1. Why is the property no longer needed?

a. From a parish perspective?

b. From an Archdiocesan perspective?

2. Have all options been explored to insure the best use (including lease of the property) and/or highest purchase price?

3. If an unsolicited offer is received (e.g., to purchase vacant land), why should the offer be considered?

4. Have uses by Catholic Charities or other Catholic institutions or joint ventures with other Catholic institutions been considered?

5. What are the alternate uses for the property?

6. Do demographic/development trends indicate that the property may be needed in the future?

7. Has retention of the property to satisfy future needs of the Archdiocese been considered?

8. Will there be a Request for Proposal or other process to maximize price?

9. How will the proceeds from sale be used?

10. What is the expected use post-sale and is it consistent with the mission of the Church?

201.2 Phase II – Feasibility Study:

201.2.1 Determining Required Feasibility Studies: Once the Archbishop’s permission is given, DMS, with input from FREAC, will determine whether and which feasibility studies will be required (e.g., a Needs Analysis Report showing verifiable need and sound reasoning to sell the particular property).

201.2.2 Development of Feasibility Study: Development of the Feasibility Study may require the creation or compilation of the following supporting documentation:

  • Abstract of property, including physical details
  • Parish financials for past 5 years
  • Recent appraisal of the property
  • Market study and demographic analysis of surrounding area
  • Current Master Plan
  • Proposed use of funds received and
  • Operating expenses for property to be alienated.

201.2.3 Use of Third-Party Consultant: Where appropriate, DMS will recommend a consultant to work with the parish to develop the required Feasibility Study and any other necessary supporting documentation.  The cost of the consultant’s services will be borne by the parish.  A DFREM project manager (PM) may be assigned to oversee the third-party consultant’s services.

201.3 Phase III – Presentation and Approval of Sale:

201.3.1 Presentation to FREAC: The pastor and Director of DFREM will present the plan to FREAC.

201.3.2 Presentation to Priest Consultors and BOFA:  If FREAC recommends the sale of the property, the proposed transaction is added to the Alienation of Property Report presented to the Priest Consultors and BOFA.

201.3.3 Decision of the Archbishop: After receiving the evaluation of the Priest Consultors and BOFA regarding the sale of the property, the Archbishop will issue his written decision to the parish.

201.4 Phase IV – Request for Proposal and Selection of Offer:

201.4.1 Request for Proposal:  If approval to sell the property is given by the Archbishop, the PM and parish will prepare a Request for Proposal (RFP) to be sent out to the list of interested parties maintained by the DFREM.  DFREM will assist in the creation of the RFP.

201.4.2 Selection of Offers: The pastor and DFREM will review all offers in response to the RFP and select the best ones to proceed to final analysis.  DFREM will ensure that all offers are complete and responsive to all bid items in the RFP.  If certain proposals are non-conforming or need further clarification, the pastor and DFREM may re-poll all of the RFP participants for a Best and Final Offer.

201.5 Phase V – Negotiation, Due Diligence, and Closing:

The pastor will work closely with DFREM and the Archdiocesan Legal Counsel (ALC) to negotiate any and all necessary transactional documents, to assist the buyer with obtaining all necessary information required under the contract to complete the transaction in a timely manner, and otherwise to close the transaction successfully.

201.6 Archdiocesan Property Sales:

Archdiocesan-owned property sales generally follow the procedures in this Policy, except that a parish and/or pastor may not be involved.

201.7 Unsolicited Offers:

Review of unsolicited offers for the purchase of Archdiocesan real estate generally follows the procedures in this Policy.

201.8 Fee for Services:

A 5% fee on the sale price of a parish/school building is paid to the Archdiocese for services involving these transactions, unless a third-party broker is retained.  With respect to leases of parish/school buildings, a fee equal to 5% of the total value of rent paid in the initial term (or any renewal term for existing leases) will be paid to the Archdiocese for services. The fee for leases will be paid only once for each lease.

Services include:

  • Consultation services to identify highest and best use of property (excludes cost of appraisal).
  • Advertising and marketing of property –preparing  RFP’s, mailings, postage, phone calls, open houses, walkthrough tours and inspections, posting of notices
  • Assisting parish or school with negotiations of business terms for sale or lease
  • Legal work and title searches
  • Preparation of contracts of sale, condominium regimes and lease documents
  • Preparation of regulatory applications, registrations and permits in accordance with lease or sale
  • Inventory and property conditions reports
  • Representation at public presentations and forums
  • Research of credit worthiness of tenants.

201.9 Approval Required for Third-Party Brokers:

Third-party brokers are generally not used in real estate transactions, and may be retained only with the written approval of the Executive Director of the Division of Management Services (DMS) and in coordination with DFREM.

201.10  Repayment of Debts:

When a parish/school building is sold or leased, net proceeds shall first be used to repay any debts owed by the parish or school to the Archdiocese, including but not limited to debts owed for:

  • Insurance
  • Cathedraticum taxes
  • Previous unpaid Special Assessment of Parishes for the Support of Catholic Schools
  • Unfunded pension obligations
  • Outstanding loans from the parish or school from the Inter-Parish Loan Fund (IPLF) or other loans from the Archdiocese
  • Any other unpaid obligations of the parish or school.

202 PURCHASE OR LEASE OF PROPERTY


202.1 Phase I – Identification of Property and Permission to Evaluate Purchase:

202.1.1 Identification of Need for Purchase or Lease: The pastor and parish Council shall identify the need for the purchase or lease of property.

202.1.2 Identification of Property and Permission to Evaluate Purchase or Lease: After conducting preliminary surveys and market research, identifying specific properties that are available for purchase or lease that may fit the parish’s needs, and having preliminary discussions with the Office of the Vicar Bishop and DFREM, the pastor should make a written request to the Vicar Bishop for permission from the Archbishop to evaluate the purchase or lease of the desired property.  The written request should include a description of the proposed property that the parish seeks and its intended use, any other properties that the parish is aware of that may available for purchase or lease, and the anticipated purchase price.

Procedure:

A)  Departments affected by the purchase or lease will be asked to submit recommendations regarding the purchase or lease to DFREM.

B) The parish should not take any further steps nor hire any consultant until the pastor has received written permission from the Archbishop to proceed

202.2 Phase II – Feasibility Study: 

202.2.1 Determining Required Feasibility Studies: If the Archbishop provides written permission to proceed, DMS, with input from FREAC, will determine which feasibility studies will be required (e.g., a Needs Analysis Report showing verifiable need and sound reasoning to purchase or lease property, including the present and future needs of the parish and its buildings and property).

202.2.2 Development of Feasibility Study and Other Information Required for Analysis of Purchase: Development of the Feasibility Study may require the creation or compilation of the following supporting documentation:

  • Parish financials for past 5 years
  • Recent appraisal or market analysis of the property
  • Market study and demographic analysis of surrounding area
  • Current Master Plan indicating how the acquired property will affect the campus
  • Sources of funds for the purchase
  • Real Estate listing or abstract showing details of property.

In connection with a purchase, the following services are ordinarily required:

  • Environmental Phase I Study
  • Boundary/Topographical/ALTA Survey
  • Zoning
  • Environmental Studies (flood plains, wetlands, and critical areas)
  • Access/Ownership of property
  • Establish buffers and wetland delineation
  • Perc Test
  • Geotechnical Study (soil borings)
  • Title Search.

202.2.3 Use of Third-Party Consultant: Where appropriate, DMS will recommend a consultant to work with the parish to develop the required Feasibility Study and any other necessary supporting documentation.  The cost of the consultant’s services will be borne by the parish.  A DFREM project manager (PM) may be assigned to oversee the third-party consultant’s services.

202.3 Phase III – Presentation and Approval of Purchase or Lease:

202.3.1 Presentation to FREAC: The pastor and DFREM present the plan to purchase or lease to FREAC.

202.3.2 Presentation to Priest Consultors and BOFA:  If FREAC recommends the purchase or lease of property, the proposed transaction is added to the alienation of property report presented to the Priest Consultors and BOFA.

202.3.3 Decision of the Archbishop: After receiving the evaluation of the Priest Consultors and BOFA regarding the purchase or lease of the property, the Archbishop will issue his written decision to the parish.

202.4 Phase IV – Request for Proposal and Selection of Offer:

If written approval to proceed is received from the Archbishop, DMS will prepare an Offer to Purchase with the help of ALC and/or a real estate broker approved by the Archdiocese.

202.5 Phase V – Negotiation, Due Diligence, and Closing:

Once an offer has been accepted, the pastor and parish council will work closely with DFREM and ALC to negotiate any and all transactional documents, to obtain all necessary information required under the contract to successfully complete the transaction in a timely manner, and to close the transaction successfully.  Any costs to the purchaser associated with the purchase will be borne by the parish.

202.6 Responsibility for Purchase Price

Parishes and other legal entities of the Archdiocese are responsible to reimburse the Archdiocese for properties purchased by the Archdiocese on behalf of the parish or entity.

Procedure:

A) The reimbursement cost ordinarily shall consist of the purchase price, any other acquisition and maintenance costs, and an investment opportunity cost for the period between the original purchase by the Archdiocese and future reimbursement by the parish/mission.

B) The investment opportunity cost, as well as any loans associated with the reimbursements, shall be tied to a one (1) year Treasury bill index or such other measure approved by the Archdiocesan Priest Council (APC).

C) Parishes lacking sufficient financial means to acquire the land may request a loan from the Inter-Parish Loan Fund.

202.7 Archdiocesan Property Purchases:

Archdiocesan-owned property purchases will generally follow the procedures in this Policy, except that a parish will likely not be involved.


203 DONATED PROPERTY


203.1 Sale of Donated Property:

Donated property will be sold as soon as possible after the donation is received, unless the property has been given for a specific purpose (to which the Archbishop has agreed) or some other legal restriction precludes sale.

203.2 Treatment of Donated Property:

Real property that is donated to the Archdiocese or a parish will generally be treated the same as any other property being sold or purchased and subject to Sections 201 or 202 above.

203.3 Acceptance of Donated Property:

In connection with the donation of any property, the following actions should be taken before acceptance:

  • Physical inspection of the property
  • Review of any lease or inquire about any existing tenants
  • Title search
  • Phase I environmental study and home inspection, if applicable
  • Due diligence investigation regarding marketability of property
  • Analysis of future costs if the property is not sold promptly.

203.4 Acceptance of Donated Property:

If a parish is interested in accepting donated property, it must first make a written request for permission from the Vicar Bishop and receive permission from the Archbishop.


300 REAL ESTATE TRANSACTIONS INVOLVING BUILDINGS USED OR INTENDED TO BE USED
AS A SCHOOL


Under canon law, the sale or lease of a building used or intended to be used as a school is considered an act of extraordinary administration and, as such, requires approval of the Archbishop. This policy is intended to ensure that the sale or lease of a building formerly or currently used or intended to be used in the future as a school and owned by a parish or the Archdiocese will not impede the success of any Catholic School.


301 GENERAL PROVISIONS


301.1 Definitions:

Building formerly used, currently used, or intended to be used in the future as a school –includes a building or portion of a building owned by a parish or the Archdiocese (including a parish school, interparish or regional school, Archdiocesan collaborative school, or Archdiocesan school) and formerly used, currently used, or intended to be used in the future, for a preschool, elementary, middle, or high school.

Real estate transaction – the term real estate transaction includes:
(a) the sale of a building formerly used, currently used, or intended to be used in the future as a school and owned by a parish or the Archdiocese;
(b) a new lease of a building formerly used, currently used, or intended to be used in the future as a school and owned by a parish or the Archdiocese;
(c) a renewal or extension of a preexisting lease of a building formerly used, currently used, or intended to be used in the future as a school and owned by a parish or the Archdiocese;  and
(d) the sublease of a building formerly used, currently used, or intended to be used in the future as a school and owned by a parish or the Archdiocese.

Real Estate Transactions Advisory Committee (RETAC) – the Real Estate Transactions Advisory Committee is comprised of:

  • Vicar Bishop, of the vicariate where the building(s) is located;
  •  Vicar General;
  • Chair, Strategic Planning Committee, Archdiocesan Catholic School Board;
  • the Chancellor of Catholic Schools;
  • Superintendent of Catholic Schools; and
  • Executive Director, Office of Management Services

RETAC is chaired by the Vicar General for the purpose of administering requests, convening meetings of the Committee, and transmitting recommendations to the Archbishop.

301.2 Approval of Sales and Leases:

All sales and leases (including subleases) of any building formerly used, currently used, or intended to be used in the future as a school and owned by a parish, group of parishes, or the Archdiocese of Baltimore, require the approval of the Archbishop.

301.3 Request for Approval of Sale, Lease, or Sublease:

The pastor(s) or pastoral life director of a parish or the head of school (in the case of an Archdiocesan School or Archdiocesan Collaborative School) seeking to sell, lease, or approve a sublease of a building (or a portion of a building) formerly used, currently used, or intended to be used in the future shall make a written request for approval from the Archbishop.

Procedure:
The written request for approval shall include:

A) A complete description of the building(s) or portion of building sought to be sold, leased or subleased, including the legal description (plat information) and location of the building(s);

B) The name, address, telephone number, and email address of the prospective purchaser or lessee;

C) A detailed description of the intended use of the building(s) or portion thereof that is the subject of the sale, lease or sublease;

D) The impact that such a use may have on any area Catholic schools;

E) The purchase price or rent for the property that is the subject of the request, along with information about deposit and any financing, or leasing schedule information; and

F) If a lease or sublease, the term of lease and any conditions of the lease or sublease.

301.4 Processing Request for Approval of Sale, Lease, or Sublease:

Upon receipt of a request to sell or lease a building, the Archbishop’s office will forward the request to the Vicar General who will initiate the review process by RETAC.

Procedure: 

A) The Vicar General will notify RETAC of the request and direct the Office of Research & Planning to coordinate the preparation of a due diligence report examining the request and the impact that the disposition of the building may have on the viability and availability of Catholic schools in the Archdiocese.

B) The Office of Research & Planning will work with the Division of Facilities and Real Estate Management and the Department of Catholic Schools to prepare a report to RETAC.

301.5 Review of Sale, Lease, or Sublease by RETAC:

Upon receipt of the due diligence report, RETAC will meet and prepare a written recommendation to the Archbishop on whether to approve or disapprove the sale or lease, including in its communication a rationale for its recommendation.

301.6 Consultation with RETAC:

In his discretion, the Archbishop may choose to consult with RETAC or the Archdiocesan Catholic School Board to obtain their advice and input on the proposed transaction.

301.7 Decision of the Archbishop:

After receiving the recommendation of and consulting with RETAC as appropriate, the Archbishop will issue his written decision to the Parish or School regarding the sale, lease, or sublease at issue.


400 USE OF PROCEEDS FROM THE SALE OR LEASE OF SCHOOL PROPERTY


This policy applies to the sale or lease of any school building owned by a parish, group of parishes or the Archdiocese of Baltimore that has been used as a school since January 1, 1990.  Under canon law, the sale or leasing of a school is considered an act of extraordinary administration and as such, requires the approval of the Archbishop. This policy is intended to protect the intent of donors to schools.  Transactions that involve the suppression or mergers of parishes may follow other processes.


401 GENERAL PROVISIONS


401.1 Definitions and Scope:

This policy applies to the following:

Archdiocesan Schools – Any school that is owned and/or operated by the Archdiocese.

Independent Schools – Any school that is owned and operated by a religious community or owned by a civil corporation controlled by a lay Board of Directors.

Parish Schools – Any school that is owned and operated by a parish within the Archdiocese.

Interparish/Regional Schools – Any school that has been formed to serve two or more parishes in the Archdiocese and have parishes as sponsors and/or as affiliates of the school.

School buildings – Any building where the primary use is for the instruction of students or for the administration of educational programs.

School Funds – Any Catholic education fund for the furtherance of Catholic education administered by a governing body representing the Archbishop.

401.2 Approval of Sales and Leases:

All sales and leases of a school building require the approval of the Archbishop and will be managed by the Division of Facilities and Real Estate Management (DFREM).

401.3 Fee for Services:

A 5% fee on the sale price of a school building is paid to the Archdiocese for service involving these transactions, unless a third-party broker is retained.  With respect to leases of school buildings, a fee equal to 5% of the total value of rent paid in the initial term (or any renewal term for existing leases) will be paid to the Archdiocese for services. The fee for leases will be paid only once for each lease.

Services include: 

  • Consultation services to identify highest and best use of property (excludes cost of appraisal).
  • Advertising and marketing of property –preparing  RFP’s, mailings, postage, phone calls, open houses, walkthrough tours and inspections, posting of notices
  •  Assisting Parish or school with negotiations of business terms for sale or lease
  • Legal work and title searches
  • Preparation of contracts of sale, condominium regimes and lease documents
  • Preparation of regulatory applications, registrations and permits in accordance with lease or sale
  • Inventory and property conditions reports
  • Representation at public presentations and forums
  • Research of credit worthiness of tenants.

401.4 Approval Required for Third-Party Brokers:

Third-party brokers are generally not used in real estate transactions, and may be retained only with the written approval of the Executive Director of the Division of Management Services (DMS) and in coordination with DFREM.


402 USE OF SALE PROCEEDS


402.1 From the Sale of Parish School Buildings:

402.1.1 Repayment of Debts: When a parish school building is sold, net proceeds shall first be used to repay any debts owed by the parish or school to the Archdiocese, including but not limited to debts owed for:

  • Insurance
  • Cathedraticum taxes
  • Previous unpaid Special Assessment of Parishes for the Support of Catholic Schools
  • Unfunded pension obligations
  • Outstanding loans from the parish or school from the Inter-Parish Loan Fund (IPLF) or other loans from the Archdiocese
  • Any other unpaid obligations of the parish or school.

402.1.2 Proceeds Remaining after Repayment of Debts:  After repayment of any debts and obligations, the remaining net proceeds will be distributed as follows, based on the parish’s average annual offertory for the last three years:

Parishes with annual offertory of less than $300,000 per year (three year average).

Percentage Distributed to: Use
80% Parish Unrestricted Parish Use
20% School Fund Archdiocesan Education Endowment

Parishes with annual offertory between $300,000 – $399,999 (three year average).

Percentage Distributed to: Use
75% Parish Unrestricted Parish Use
25% School Fund Archdiocesan Education Endowment

Parishes with annual offertory $400,000 and over (three year average).

Percentage Distributed to: Use
70% Parish Unrestricted Parish Use
30% School Fund Archdiocesan Education Endowment

402.2 From the Sale of Inter-Parish School Buildings:

Distribution of proceeds between the sponsoring and/or affiliated parishes will be governed by the By-Laws or other governance documents. Each parish entitled to proceeds will distribute its proceeds according to one of the three formulas above as dictated by each parish’s annual offertory.

402.3 From the Sale of Archdiocesan School Buildings:

All proceeds from the sale of an Archdiocesan School building shall be paid to the Archdiocese unless the building was leased by the Archdiocese from a parish for its use as a school.   In that case, the proceeds from the sale follow the above policy with respect to the sale of parish school buildings.


403 USE OF LEASE PROCEEDS FROM PARISH SCHOOL BUILDINGS


Net proceeds will be distributed as follows, based on the parish’s average annual offertory for the last three years and whether the parish has outstanding debts and obligations, including but not limited for:

  •  Insurance
  • Cathedraticum taxes
  • Previous unpaid Special Assessment of Parishes for the Support of Catholic Schools
  • Unfunded pension obligations
  • Outstanding loans from the parish or school from the IPLF or other loans from the Archdiocese.
  • Any other unpaid obligations of the parish or school.
Parishes or schools that have debts and obligations to the Archdiocese

Parishes with annual offertory of less than $100,000 per year (three year average).

Percentage Distributed to: Use
47.5% Parish Determined by Parish
2.5% School Fund School Fund
50% Archdiocese Repayment of Debts and Obligations

Parishes with annual offertory of less than $200,000 per year (three year average).

Percentage Distributed to: Use
45% Parish Determined by Parish
5% School Fund School Fund
50% Archdiocese Repayment of Debts and Obligations

Parishes with annual offertory of less than $300,000 per year (three year average).

Percentage Distributed to: Use
40% Parish Determined by Parish
10% School Fund School Fund
50% Archdiocese Repayment of Debts and Obligations

Parishes with annual offertory between $300,000 and $399,999 per year (three year average).

Percentage Distributed to: Use
30% Parish Determined by Parish
10% School Fund School Fund
60% Archdiocese Repayment of Debts and Obligations

Parishes with annual offertory $400,000 and over (three year average).

Percentage Distributed to: Use
10% Parish Determined by Parish
20% School Fund School Fund
70% Archdiocese Repayment of Debts and Obligations
Parishes or schools without debts and obligations to the Archdiocese

Parishes with annual offertory of less than $300,000 per year (three year average).

Percentage Distributed to: Use
80% Parish Determined by Parish
20% School Fund School Fund

Parishes with annual offertory between $300,000 and $399,999 per year (three year average).

Percentage Distributed to: Use
75% Parish Determined by Parish
25% School Fund School Fund

Parishes with annual offertory $400,000 and over (three year average).

Percentage Distributed to: Use
70% Parish Determined by Parish
30% School Fund School Fund

500 POLICIES AND PROCEDURES FOR CEMETERIES, COLUMBARIA, AND MAUSOLEUMS


The following policies and procedures apply to Cemeteries, Columbaria, and Mausoleums unless otherwise noted.  Collectively, Cemeteries, Columbaria, and Mausoleums are referred to as Cemeteries.


501 APPROVAL FOR CREATION OF CEMETERIES


501.1 Approval for Creation, Design, Construction, or Expansion of Cemeteries:

The prior written approval of the Archbishop is required for the creation, design, construction, or expansion of any cemetery, columbarium, or mausoleum regardless of the dollar value of the work at issue.

501.2 Columbaria and Mausoleums:

Construction or installation of columbaria and mausoleums shall only occur on the land of existing cemeteries.

501.3 Legal Review:

Cemeteries shall contact Gallagher Evelius & Jones LLP, Archdiocesan Legal Counsel, for preparation and review of all contracts, leases, and any documents related to the creation, design, construction, or expansion of any cemetery, columbarium, or mausoleum regardless of the dollar value of the work at issue.


502 MAINTAINING ADMINISTRATIVE RECORDS


502.1 Required Forms:

The following forms shall be used to ensure the proper administration of cemeteries, columbarium,and mausoleums:

  1. Lot or Vault Card
  2. Sales Contract
  3. Certificate of Ownership
  4.  Application to Erect a Memorial
  5. Original Entry Form
  6. Interment Card

502.2 The Lot or Vault  Card:

Lot and Vault Cards shall be maintained for each cemetery lot, vault, or niche in order to allow cemetery management to monitor inventory, including sold grave sites, unsold grave sides, sold vaults, unsold vaults, lot or vault ownership, internments, and memorialization.

Procedure:

A) The reference number of the original sales document should be placed on the card to simplify locating the original sales document.

B) The use of a 5” x 8” Lot or Vault Card is recommended.

502.3 The Sales Contract:

A sales contract reflecting the purchase of the right of internment (burial) in a grave, crypt, vault, or niche shall be executed with the purchaser on the approved Archdiocesan form.

Procedure:

A) The Sales Contract is the first formal contract between the purchasers and the cemetery and establishes a long term, legal relationship between the purchaser and the cemetery.

B) The Sales Contract should include:

  • The name of the parish and/or cemetery as the seller of the interment right.
  • The contract number (a sequential numbering system should be used to prevent unauthorized sales).
  • The purchaser’s name(s), address, and phone number.
  • The date of the agreement.
  • The location of the lot or vault in the cemetery, columbarium or mausoleum.
  • Purchase price.
  • Payment terms, including financing.
  • Signatures of parties to the contract.
  • Any required statutory disclosures

C) A Sales Contract can also be used for the sale of additional products, such as memorials, and casket protection such as vaults, grave boxes or grave liners.

D) A Sales Contract for additional products should identify the type of product, the service to be provided, the costs and financing.

E) At least two copies of each Sales Contract should be made.  Once the contract is signed, one copy should be given to the purchaser and at least one copy should be retained by the cemetery.

F) Sales contracts should be filed by contract number. For ease of reference, the contract number should be included on other records.

G) The standard form sales contract and any updates to it are to be reviewed by legal counsel for the Archbishop.

502.4 Cemetery Certificate of Ownership Form:

A Cemetery Certificate of Ownership Form, a legal document assigning the interment right in a specific location to a specific individual or individuals, shall be executed on an Archdiocesan approved form.

Procedure:

A) A numbering system should be used in recording the Certificate of Ownership forms (either the same number as the original sales contract or a separate numbering system that is consistently used).

B) The Certificate of Ownership is a legal document for which there must be a record. One copy of the Certificate should be provided to the purchaser, while at least one copy should be retained by the cemetery.

C) The form of the Certificate must be reviewed and approved by legal counsel for the Archbishop.

502.5 Application to Erect a Memorial:

An Application to Erect a Memorial must be submitted and approved by the cemetery before a memorial from an outside dealer may be installed.

Procedure:

A) The Application to Erect a Memorial provides cemetery management the ability to control memorialization performed in the cemetery by an outside dealer.

B) This form must be completed by outside memorial dealers and approved by cemetery management.

C) The form should be used by cemetery management to:

  • Control quality, size and design of memorialization
  • Control work scheduling
  • Monitor work done by third parties and ensure appropriate insurance
  • Charge appropriate administrative fees
  • Update cemetery records concerning grave memorialization

D) The Application must include a specific description of the memorial.

F) The application should be signed by the owner of the interment rights and by the person supplying the memorial.

E) Cemetery management should approve the memorial application in writing, if the memorial is consistent with the cemetery’s rules and regulations.

F) Without prior written approval, outside contractors are not permitted to erect a memorial.

G) All outside contractors must provide a written certificate of insurance naming the Parish or Cemetery as additional insured prior to commencing any work.

H) A numbering system should be used in recording the Applications (either the same number as the original sales contract or a spate numbering system that is consistently used, such as consecutivelynumbering each Application).  All Applications and related documents must be accounted for by cemetery management and filed in such a way that future retrieval is possible.

502.6 Original Entry Form:

An Original Entry Form document shall be used to record information regarding internment.

Procedure:

A) An original and two copies shall be made.  One of the copies is retained by cemetery management.  One of the copies is used by the cemetery’s operations crew in preparing for the interment.  And the final copy is given to the family as a receipt.

B) This form is not meant to replace the sales contract, which sets out the agreement between the parties and is a legally binding agreement. The original entry form is an internal document to provide a format for collecting information about the interment and any related fees.

C) A numbering system should be used in recording the Original Entry Form (either the same number as the original sales contract or a space numbering system that is consistently used, such as consecutively numbering each Original Entry Form).  All Original Entry Forms and related documents must be accounted for by cemetery management and filed in such a way that future retrieval is possible.

D) A blank copy of the form is available through the NCCC.

502.7 The Interment Card:

An interment card shall be completed whenever a burial occurs in the cemetery or an urn is interred in a columbarium.

Procedure:

A) The primary copy of this card is filed alphabetically by the last name of the deceased.

B) For reference, a second copy may be filed may be filed by document number, providing a reference back to the initial sales contract, or chronologically, so that the number of interments in a particular period can be tracked.

C) The interment card is used in conjunction with the lot or vault card.  The burial location or vault niche identification on the interment copies provides the reference information needed to access the appropriate lot or vault card.

D) The use of a 2 ¼” x 3” interment card is recommended.

502.8 Rules and Regulations:

Every cemetery, in conjunction with its affiliated parish, shall maintain rules and regulations that outline the responsibilities, privileges, restrictions, etc. for all parties that have an interest in the cemetery or columbarium.

Procedure:

A) All legal documents (sales contracts, right of burial certificate, etc.) should reference the rules and regulations.

B) Cemetery management must be able to demonstrate that it advised interested parties that the cemetery rules and regulations are available for their review or that it provided a copy of the rules and regulation to such parties.

C) A well drafted set of rules and regulations can protect the cemetery from many legal difficulties while helping to ensure a harmonious relationship among all users of the cemetery.Legal counsel should review rules and regulations.

502.9 Recording Transfer of Burial Rights:

The transfer of interment rights from one individual to another is an important procedure that shall be addressed in the cemetery’s rules and regulations and documented on forms reviewed and approved  by legal counsel.


503 FINANCIAL AND ADMINSTRATIVE MATTERS


503.1 Endowment for Continuing Care of the Cemetery:

Parish and diocesan cemeteries, columbaria and mausoleums must save funds in a Catholic Community Foundation endowment that will produce a steady flow of earnings sufficient to cover the costs of maintaining the grounds after income diminishes or ceases.

Procedure:

A) Each cemetery is required to calculate the size of endowment required for continuing care of the grounds and contribute funds annually until the required endowment is established. Note, in general, for every acre of cemetery there is to be $100,000 of endowment.

At a minimum, 20% of revenue (including grave sales, columbarium vault sales, interment fees, foundation setting, vault handling, monuments and even grave blankets) must be transferred to the continuing maintenance endowment fund within the Catholic Community Foundation.

If the cemetery is no longer generating cash flow through grave or vault sales, is generating very little cash flow from grave or vault sales, or is not earning sufficient interest from the cemetery endowment to cover cemetery costs, the parish will have to budget for and pay for cemetery expenses through parish operations.

D) Parishes can fund or grow endowments through second collections, campaigns and/or appeals, and deposit the proceeds from these fundraisers into a continuing maintenance endowment fund.

503.2 Administration of Endowment:

The Catholic Community Foundation continuing care endowment must be administered to ensure that the principal balance of the fund remains intact and only the interest is used for cemetery care and expenditures.

Procedure:

A) The parish is required to establish the endowment fund in the Catholic Community Foundation.

B) The fund must be managed in keeping with the requirements of canon and civil laws.

C) Funds given for continuing care may not be used for any other purpose without expressed, written permission of the Archbishop. All who manage such funds must adhere to the requirement that any donation be used for the intention in which it was given (canons 1284, 1302, etc.).

503.3 Pricing of Internment Rights in Graves and Vaults:

Cemetery administrators and parish leadership entrusted with the care of  cemeteries must consider the continuing costs involved in the operation of the cemetery and the financial needs of the Catholic families when establishing prices for goods and services.

Procedure:
Many costs in determining grave and vault prices may be hidden from the administrator if costs are not analyzed carefully. Costs to be considered include:

  • Cost of replacing facilities
  • Cost of land, equipment use, development, landscaping, roads, fences and related costs
  • Cost of overhead, insurance, administration, supervision, office and clerical expenses, unusual or emergency situations
  • Cost of future maintenance
  • Cost of eventual renovation or rehabilitation
  • Cost of no-compensation services

503.4 Pastor as Cemetery Administrator:

The pastor ordinarily serves as the Cemetery Administrator and is responsible for ensuring effective parish cemetery operation, including overseeing the creation and maintenance of the record system, continuing maintenance plan, and continuing maintenance fund.

Procedure:

A) The Cemetery Administrator must devote sufficient attention to his duties to guarantee the cemetery’s orderly operation and record keeping.

B) The Cemetery Administrator may delegate duties to others and create a committee or appoint a member of the parish council to oversee the cemetery administration.

C) The Cemetery Administrator should have readily available the following cemetery information:

  • Description of cemetery property
  • Road and section layout
  • Grave and lot location including location of columbarium
  • Location of Easements
  • Income care records
  • Accounts receivable and accounts payable
  • Record of owners of burial rights
  • Burial records
  • Payroll reports
  • Equipment inventory and depreciation
  • Memorial and foundation applications and approvals
  • Contract copies
  • Accounting journals and general ledger
  • Periodic summaries and analysis

503.5 Moving of Remains:

The Parish or Cemetery is required to obtain the written approval of the Archbishop prior to moving or relocating any remains and must work with Archdiocesan legal counsel to ensure compliance all applicable laws.

503.6 Change of Parish Status:

If a parish is merged, suppressed or changed in any way, the civil and canonical documents must determine the status of the cemetery and ensure that the continuing obligations to care and fund the cemetery are properly addressed.

503.7 Exceptions:

Exceptions to this policy may be requested in writing and submitted to the Executive Director of Management Services for consideration. The Executive Director will evaluate each exception request and make a recommendation to the Archbishop for final approval.


600 GUIDELINES FOR USE OR RENTAL OF CHURCH FACILITIES
BY INDIVIDUALS OR OUTSIDE GROUPS


601 GUIDELINES


601.1 Use Guided by Teachings and Missions:

The use of parish and school facilities should always be guided by the teachings and mission of the Church.

601.2 Responsibility for Ensuring Consistent Use:

The Pastor/PLD is responsible to insure that all use of church facilities is fully consistent with Church teachings and supports the mission of the Church.

Procedure:

Any questions regarding the appropriate use of church facilities should be directed to the Chancellor.

601.3 Use by Individuals and Outside Groups:

The Archdiocese recognizes that parishes and schools might permit their facilities to be used or rented by individual parishioners, families of school students, or by groups not directly affiliated with the parish.  Such use should support the religious, educational, or charitable mission of the parish.

601.4 Receipt of Rental Income:

Consistent with the questions and answers that follow, parishes can receive income from the rental of parish facilities to parishioners or nonprofit organizations.

601.5 Other Rental Restrictions:

Church facilities should not be rented to commercial entities or to individuals with no connection to the parish/school, and users must comply with the Archdiocese’s contract, insurance, and child protection policies including those discussed in the following Questions & Answers.


602 QUESTIONS AND ANSWERS GUIDING USE OR RENTAL OF CHURCH FACILITIES BY INDIVIDUALS OR OUTSIDE GROUPS.

Q:  Does this policy address long-term leasing or licensing of property owned by a parish or school?  

A:  No.  Questions regarding leasing or licensing should be directed to the Archdiocese’s Division of Facilities and Real Estate Management.

Q:  Who can rent or temporarily use our parish/school facilities?

A:  In addition to the parish or school itself, facilities can be used by individual parishioners or school families or by nonprofit or community organizations to assist with the Church’s mission.  Facilities should not be rented to commercial, for-profit entities.  For example, a parish hall can be rented to a parishioner for a reception after a wedding or to the alumni group of a local Catholic high school for a reunion, but not to a for-profit dance studio for paid classes.

Q:  How does our parish/school determine if a particular request to use our facilities is from an outside organization rather than from the parish/school itself?

A:  If the group requesting to use the facilities is separately incorporated or has its own nonprofit designation, it should be considered to be coming from an outside organization.  If the request is coming from a group and the event is not solely for the benefit of the parish/school and is not controlled by your parish/school, it should be considered to be coming from an outside organization.  If there is a particular request for the use of your facilities and you are unable to determine the status of the requestor, please contact the Chancellor.

Q:  For what purpose can our parish/school allow an individual or outside organization to use facilities?

A:  Any proposed use must be consistent with the mission of the Catholic Church and of your parish/school and, at least, must not conflict with the teachings of the Catholic Church.  If you have concerns about whether the proposed activities are consistent with Church teachings, please contact the Chancellor.

Q:  Is a written agreement required for use of parish/school facilities by an individual or outside organization? 

A:  Yes. A written agreement, in a form approved by the Archdiocese, is to be completed every time an individual or outside organization uses your facilities. A standard facility use agreement is available from the Archdiocese’s Office of Risk Management (410-547-5424).

Q:  Are there any restrictions or limitations as to the duration for which we make our facilities availability to a particular individual or outside organization?

A:  Yes. These guidelines pertain to individuals and outside organizations that use your facilities for a single event. A single event is defined as not exceeding 72 hours straight in duration or for no more than 12 single day events within a 12 month period. If the frequency or term of use will exceed these parameters, you need to have a lease or licensing agreement in place with the individual and/or outside organization and should consult with the Archdiocese’s Division of Facilities and Real Estate Management.

Q:  Are there any insurance requirements related to use by an individual or outside organization? 

A:  Yes. In accordance with the Archdiocese’s Facility Use Agreement noted above, a certificate of insurance demonstrating the individual or outside organization carries a minimum of $1,000,000 in general liability coverage must be provided. The certificate must also name your parish/school (using your location’s legal name) and the Archbishop of Baltimore, a Corporation Sole, as additional insureds under the insurance policy for purposes of use of the facilities.

Q:  Can anything be done for an individual or outside organization that does not have the required insurance coverage?

A:  You should contact the Archdiocese’s Office of Risk Management  (410-547-5424).  Through the Office of Risk Management, the individual or outside organization can arrange for a one day special event policy or a recurring events policy that fulfills the obligation to provide $1,000,000 in general liability coverage.

Q:  Can an outside organization and/or individual have alcohol available while using our facilities? 

A:  Under no circumstances can a parish/school permit a “bring your own bottle” (BYOB) style event.  It is within your discretion to allow individuals or outside organizations to serve alcohol responsibly and in a manner permitted by law, if proper insurance, supervision, permits, and security is in place. As part of allowing the consumption of alcohol, it is extremely important that the individual or outside organization be reminded that they must obtain any necessary permits from the local liquor board. Evidence of proper licensing and liquor liability coverage must be provided to you prior to the event.

Q:  Can an individual or outside organization have gambling activities while using our facilities? 

A:  It is within your discretion to allow an individual or outside organization to engage in lawful gambling activities as part of their use of your facilities. As part of allowing the lawful gambling activities, it is extremely important that the individual or outside organization be reminded that they must obtain all necessary permits from the local licensing department. Evidence of proper licensing must be provided to you prior to the event.

Q:  Can an individual or outside organization use our facilities for their own business purpose?

A:  No.  Use of parish/school facilities by or for outside businesses raises numerous problems including possible loss of tax exemptions, exposure for licensing and permitting violations, creation of unrelated business tax liability, and creation of a public accommodation.  For example, a parish/school should not allow an individual to utilize its commercial kitchen facilities to operate a catering business nor should a parish/school rent its facilities to a for-profit company.

Q:  Can an individual or outside organization use our facilities for partisan political purposes?

A:  No.  A parish or church may not make its facilities available to an individual or outside organization for partisan political activities nor to candidates, political parties, or any political organizations that support or oppose political candidates.  This does not restrict approved church-sponsored events which are not partisan and do not support or oppose a candidate—such as Maryland Catholic Conference events or parish events supporting/opposing referenda.

Q:  Can the Archdiocese help develop a standard policy that addresses detailed issues related to allowing individuals and outside organizations to use our facilities? 

A:  Yes.  The Archdiocese encourages parishes and schools to develop a policy document that addresses the range of practical issues that arise in the rental and use of facilities.  Having a documented policy in place helps ensure consistency and best practices, and the Archdiocese Office of Risk Management has an outline of issues for such a policy and can consult with you in developing such a policy.

Q:  Can our facilities be used by an individual or outside organization for making a motion picture or television production?

A:  Not without consultation and written approval from the Archdiocese’s Director of Communications.

Q:  What are the restrictions on a parish or school advertising its facilities for rent?

A:  Parishes and schools should not advertise the use or rental of their facilities to the general public, for example through general circulation advertising.  Internal communications, such as parish bulletins and school newsletters, can be used to inform parishioners and school families regarding available facilities.

Q:  Are there any restrictions on the individual or outside organization when advertising or marketing their event?

A:  Individuals and outside groups should be informed that any advertising or publicity material in which your location’s name or images are used in the advertising must have your prior approval.

Q:  What are the Archdiocese’s child and youth protection policy requirements for individuals or outside organizations who use our facilities?

A:  According to the Archdiocese of Baltimore’s Statement of Policy for the Protection of Children and Youth, when parishes or schools rent or allow the use of their facilities for programs in which adults will have “substantial contact” with children, the parishes or schools must obtain written verification from the individuals and/or organizations that their staffs/volunteers have had a background check screening for a history of child abuse or criminal convictions.  The insurance policy of the individuals or organizations (naming the location and the corporation sole as additional insureds) must include coverage for sexual abuse of minors.  These expectations must be written into the contract as well.  “Substantial contact” is defined as contact with children in which the duration and scope in both time and exposure to children is neither rare nor limited and may occur on a routine and/or ongoing basis. This includes all overnight activities with children.  Events such as wedding receptions, parties, etc. would not be considered as having substantial contact with children.  However, events such Girl Scout meetings, Home School functions, etc. are considered programs/services where adults may have substantial contact with children and youth.

Q:  What is a public accommodation? 

A:  Under Maryland law, the definition of public accommodation includes hotels, restaurants, places of exhibition or entertainment (including movie theaters and concert halls), retail establishments (offering goods, services, entertainment, recreation, or transportation), and similar facilities.

Q:  Are rented parish and school facilities considered public accommodations? 

A:  Generally not, but the determination of whether a facility is a public accommodation is made on a case-by-case basis.  Restricting the use and advertising of parish/school facilities as indicated in these questions and answers reduces the chance that your facilities will be considered public accommodations.

Q:  Why does it matter if a parish facility is considered a public accommodation? 

A:  Public accommodations can be subject to additional legal claims from the government or individuals based on allegations of discrimination on the basis of race, sex, age, color, creed, national origin, marital status, sexual orientation, or disability.  Further, if a parish/school facility is a public accommodation, it might be required to make additional structural modifications necessary to make the facility suitable for access and use by an individual with a disability such as accessible entrances, restrooms, parking spaces, seating locations, and walkways.

Q: Can a church facility refuse to rent to a same-sex couple in connection with their wedding or wedding reception?

A:  Yes, Maryland law is clear that an Archdiocesan parish/school may refuse to rent its facilities in connection with a same-sex wedding or wedding reception.

Q:  Does the parish have to pay income tax on the revenue from the rental of its facilities?

A:  Generally not. Most rental income from real property (i.e. renting the building) is excluded from the application of the unrelated business income tax.  However, to qualify for the exclusion, the rent must not be calculated by reference to the net income or profits of the tenant.  In addition, the parish/school may not provide substantial services to the tenant (e.g., food and beverage service, set-up/clean-up), unless such services are rendered by non-employee volunteers.  The parish/school can also rent personal property (e.g., tables and chairs) in connection with the rental of facilities as long as the rental of personal property is 10% or less of the total rent paid.  The parish/school may provide utilities, janitorial and security services.

Q:  Are there special tax rules for rental income if there is debt owed on the particular facility being rented (e.g. by a loan from the IPLF)?

A:  Yes.  If the rented property is “debt-financed,” meaning the parish has unpaid debt incurred to acquire or improve the property, the rent will be taxable if less than 85% of the property is devoted to its tax-exempt (charitable/religious) purposes.  This determination is based upon all of the facts and circumstances, including the amount of time and portion of the property that is used for exempt (religious and charitable) purposes as compared to all purposes.

Q:  Are there special income tax rules for rental income from infrequent activities?

A:  Yes.  If the rental activity is very infrequent (i.e., not more than a few times per year), it will likely be deemed not to be “regularly carried on,” and the revenue, regardless of the application of the above-described rules, would be exempt from unrelated business income tax.

Q:  Can the rental of parish/school facilities jeopardize our federal 501(c)(3) tax-exempt status?

A:  Renting parish/school facilities should not jeopardize the parish/school’s tax-exempt status as long as the revenue, together with all other revenue from activities not related to the parish’s charitable purposes, does not represent a substantial portion of the parish’s total income.  The IRS and the courts have not quantified what amount of unrelated business taxable income would endanger an organization’s exempt status, but where the rental of facilities is a small part of the overall parish/school activities and revenue, it is unlikely that the rental of parish facilities would cause a parish to lose its 501(c)(3) tax-exempt status.

Q:  Can the rental of facilities affect our real property tax exemption under Maryland law?

A:  Yes.  The exemption from real property taxes under Maryland law generally requires the property of nonprofits to be “actually” and “exclusively” used for the nonprofits’ charitable and/or religious purposes.  Use or rental of facilities by commercial entities or individuals unconnected to the parish/school creates undue risk that your real property tax exemption could be affected.

Q:  Whom should I call with questions about the use of facilities?

A:  Central services of the Archdiocese would welcome the opportunity to discuss these issues with you in further detail and we encourage you to call any of us with any questions you have:

Contracts and Insurance: Tom Alban, Director of Risk Management, 410-547-5424

Child Protection: Alison D’Alessandro, Director of Child and Youth Protection, 410-547-5555

Consistency with Church Teachings: Diane Barr, Chancellor, 410-547-5303

Facilities Use: Nolan McCoy, Director of Facilities, 410-547-5335

Legal: Dave Kinkopf, Gallagher Evelius & Jones, 410-727-7702