Welcome to Future@TempleChai’s Question and Answer page, your comprehensive collection of information about Temple Chai’s exciting next chapter.
The Questions and Answers are categorized into general topics like Financial Considerations, Land, Operational Issues, Building/Structure, etc. If you find that your question is not (yet!) answered here, please submit it to firstname.lastname@example.org and we will try to post a response.
לָךְ-לְךָ (Lech-Lecha), let us go forth together. Those are the words which began the Jewish journey when God said them to Abraham, calling on him to leave his native land. Let us take them to heart as we prepare to move forward as a congregation.
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Is temple chai ok?
Temple Chai is more than OK! We have a vibrant and engaged membership, strong leadership (both lay and professional), inspiring worship, engaging educational opportunities, and meaningful programming. That is not changing. Temple Chai is a community, not a building, and not any specific leader or rabbi. (May 2021)
What do we know about Temple Chai’s future?
We know that moving forward with the Board’s proposal will allow Temple Chai to thrive and to find, develop, or build space that meets our needs today and into the future. It means that we will have a building that serves us, rather than having to constantly adapt our programming to meet the demands of our existing space. It means that we will have a physical home that is as warm and welcoming as our spiritual community.
Why are we just hearing about this? Why all the secrecy?
Until a couple of days ago, the people working on this on behalf of Temple Chai were legally prohibited from talking about it. The Board, and key representatives like the Executive Director, signed Non-Disclosure Agreements preventing them from discussing or disclosing any part of what was being considered—or even acknowledging that anything was being considered. That is quite common in significant commercial transactions, since even disclosure of the fact that a sale is being considered can greatly impact the price. Second, until there was agreement on terms, and a recommendation from the Temple Board endorsing consideration by the members, there was nothing to say. Whatever rumors may have circulated, and regardless of who said what to whom, Temple Chai was legally prevented from saying anything, or confirming anything--until this week. Within days of coming to agreement on key terms, the Board acted and communication with members began. As soon as something could be said, it was said. There is a communication plan to assure broad and wide discussion amongst the members; there is no secrecy. The board is committed to full and open communication—now that that is possible.
What is the Board Recommending? What is Particularly Appealing about this Offer?
What is the offer?
Scottsdale Christian Academy (SCA) has offered $5.1M for Temple Chai’s land, contingent upon Temple Chai member approval. The offer is for the land and the buildings (improvements) on it. The essentials are:
Temple Chai can remain in its current location, and maintain current operations for two years, with an option for an additional (third) year at fair market rent, approximating our current costs.
The two additional years, and the right to exercise the option for a third year, are valued at $300,000. This “leaseback” includes the main Temple facility and the main (north) parking lot.
The south parking lot, the ancillary structures adjacent to the south lot, and the ALP school property are not included in the leaseback. While these go to SCA at closing, Temple Chai maintains the right to additional parking for the High Holidays and may seek accommodation from SCA for other events. Access for the Pre and Religious Schools is being maintained, and a pick-up and drop-off plan is being developed and will be circulated before Fall.
After the $300,000 offset, Temple Chai receives $4.8M less mortgage obligations and will net approximately $3M.
Temple Chai will maintain the cost of its operations for the transition period and maintains rights to take meaningful personal property (the Ark, Memory Wall, etc.) when leaving.
Is this a good offer?
The Board believes it is an outstanding offer. In 2020, Temple Chai received two unsolicited offers to purchase the property, both from commercial developers. SCA’s offer was meaningfully higher than previous offers. From SCA’s $5.1M offer Temple Chai will realize $4.8M less mortgage obligations and closing costs.
Why is this offer being presented to the members for consideration?
Temple Chai’s land is of such value to this specific purchaser that it is willing to pay a premium. Should Temple Chai not sell to SCA, SCA will pursue other options such as (a) buying an expansion parcel elsewhere or (b) buying a large parcel elsewhere to consolidate on an entirely new campus. If we do not act now, this offer will not be on the table when we do go to sell.
Would SCA be making This offer, including the premium, for different land?
Absolutely not. They have a unique interest in our property.
Has the property been appraised? What is the appraised value of Temple Chai compared to the proposed sales price with SCA?
With a unique property such as ours, formal appraisals are of limited value. The property is worth whatever the market says it is worth. There are not really any “comps” to compare it to. We did have three offers, which gives us a good basis for comparison. The offer from SCA was significantly higher than the other two.
Why was the property not listed publicly versus privately (only through the real estate consultant hired by the congregation) to get a broader set of offers to maximize our selling price? Given our current financial and future needs, wouldn’t it be prudent to cast the widest net for potential offers to get the best price/maximize our sales price?
The SCA offer was unsolicited. The board would not make a choice to list the temple property without the support of the congregation for its sale. We also had two other unsolicited offers at the same time, which gave us a solid basis of comparison. After engaging in negotiations with all three parties, the offer from SCA was meaningfully higher than the other two, including an offer made for residential use. We were also able to obtain the “lease-back” provision. Based on those negotiations, our extensive conversations with experts in the area, and the need to move quickly enough to meet SCA’s timeline, we decided there was not enough to gain from publicly listing the property.
Who is the real estate broker who was engaged?
Craig Coppola, CCIM, CRE, SIOR, a principal at Lee & Associates, was engaged to assist Temple Chai. Lee & Associates is a nationally recognized commercial broker, and Craig is an experienced and knowledgeable resource Temple Chai is happy to have.
What is my role, as a member, in this process?
You are the decision maker. According to Temple Chai’s Bylaws, members in good standing must approve relocation. It is very clear to the Board, and to SCA, that this choice belongs to the members. Until members vote to approve, this is an agreement in principle only.
How will members vote?
A virtual Special Meeting will be scheduled. You will be notified at least 15 days in advance of that meeting. Members in good standing will be able to cast electronic ballots approving (or disapproving) the SCA offer. To be a “member in good standing” and to vote, dues must be current.
Who will conduct and monitor voting? Can we have confidence that the voting will be done fairly and effectively?
Absolutely. The vote will be managed by eBallot. Based in Virginia, eBallot provides secure, auditable votes and elections online, with features including authentication and anonymity. Using a secure cloud-based platform, eBallot will conduct the election and will certify the results. eBallot is recognized as a reliable and reputable resource with clients including Wyndham Hotels, Credit Suisse, Better Business Bureau, Tesla, the Baseball Hall of Fame, and many others.
Teens are an important part of Temple Chai, and their voices matter, so why can’t they vote?
Everyone agrees teens are important, and that their voices matter. That is why special outreach is underway to engage those who are interested to participate in a teen-oriented, or teen-focused dialogue about the opportunity at hand with the SCA offer. However, according to the Temple bylaws, only “members in good standing” are eligible to vote, and that does not include teens.
Even if the membership accepts the offer, is there a chance the agreement will not go through?
As in any real estate transaction, there is always such a chance. The sale is subject to SCA securing financing for the purchase. It is also subject to customary closing conditions (clean title, inspections, environmental review, etc.), and due diligence must be conducted to the satisfaction of SCA’s Board. Although there is always some risk in such a transaction, the board believes the risk to closing is low.
Assuming the sale occurs, do we know what SCA’s timetable is with respect to the development of the rest of the property? What safeguards are in place in the contract of sale to protect Temple Chai’s rights to peacefully enjoy the property during any construction; possible impact on the outdoor space if there is construction going on?
The portions of the property that become SCA’s upon sale will be theirs to develop. Temple Chai will be able to peacefully enjoy the main property until the time when we vacate the property.
What Financial Challenges does Temple Chai Currently Face?
Do dues and fees cover Temple Chai’s operating costs?
No, and they have not for some time. Fees and dues yield about $1M annually, less than half of the annual operating budget of $2.5M. Other income from programming, tuition, gifts, Rabbi’s Circle, etc. provides the rest of the funds needed to operate. About 36% of dues paying members seek and are granted some relief or reduction, such as senior status.
So, does Temple Chai operate at a deficit?
Yes, often a significant one. Even after refinancing its mortgage and taking other cost saving steps, Temple Chai operates at a deficit. This deficit is structural, meaning there is no foreseeable way to eliminate it and no path to breaking even financially absent serious measures (see below).
Where does the money go?
Other than paying fixed costs such as the mortgage, utilities, insurance, etc. the largest budget item is for salaries. Even so, staffing is tight, with operations as lean as realistically possible while maintaining services and programming to meet human and congregational needs. Volunteers are an essential, and enormously appreciated, facet of operations.
What does it cost to operate Temple Chai each year? How, if at all, has COVID changed operating costs?
The average annual cost to operate the synagogue as a whole is around $2.5M. Our costs pre- and post- COVID are not materially different now that salaries have been restored. Our largest recurring costs are primarily labor and property (mortgage, utilities, repairs, etc.).
Who produced the report identifying issues on the Temple Chai campus and what did they do? Can I see the report?
RAL Consulting, Inc., a leading Phoenix environmental and construction consulting firm, which has been providing inspections for all types of commercial properties since 1980. They completed a comprehensive inspection of the grounds, buildings, roofs, mechanical and electrical, plumbing and life safety systems was done. The report includes a cost breakdown of deficiencies, a Repair/Replacement Summary, as well as a 5-year Capital Expense projection providing contains detailed data, based on real costs.
The lion’s-share of what is needed to bring the campus up to current standards relates to the original administration building which needs replacement or a complete overhaul. The HVAC systems, roof, etc. are also in need of attention or will need replacement in the foreseeable future. The RAL report did not address security issues or costs related to security, although we know that addressing those concerns will require additional spending.
The full report runs 43 pages. The full report is available for review upon request.
Can we pay for the deferred maintenance from our reserves?
No. Although we have made some modest and important progress on this front, Temple Chai does not have, and has never really had, significant reserves, certainly not anything approaching $1M, moreover $4M. We have invested our funds into ongoing work, such as services and programming.
What would it take to pay for the necessary maintenance and improvements if we do not sell?
Dramatic measures would be needed. We would need to increase dues 300% and raise the equivalent of $8,000 per dues paying membership--somehow. This is neither palatable nor likely.
Is there an existing mortgage on the property?
Yes. The mortgage is approximately $1.5M, which would be paid off at the time of the sale. Due to ongoing operational deficits, obtaining or restructuring the mortgage has only been possible through the intercession of various (and gracious) members with commercial banking relationships. In one instance, a member had to personally guarantee Temple Chai’s debt. This is unlikely to occur again.
What about security?
While the security of our congregation has always been a foremost consideration, this issue is now more relevant than ever. The world is simply more dangerous than it was a generation ago. The current campus poses costly challenges in the area of security—in addition to the $4M in deferred maintenance. Temple Chai does not have funds to address this issue.
What other physical challenges does Temple Chai face?
Temple Chai is technologically challenged, and a technology upgrade is overdue. As we have learned during this past year, connecting through technology is critical and likely to be only more so in the future.
Location, Location, Location
Will Temple Chai be Temple Chai if it moves to a new location?
In every way. One thing we learned this past year is that physical location does not determine what makes up a classroom, a school, a funeral, a Mitzvah, a Shabbat service, a concert, or much else. Temple Chai is, and will always be, more than bricks and mortar; it is a community and spiritual home to its members. Temple Chai started in a storefront; change is inevitable. Prayers can be said, together, from many places and in many ways.
Where would Temple Chai go?
Fortunately, Temple Chai would have two, possibly three, years to decide and implement a change. This is one of the most exciting facets of the proposal. We can plan with a blank slate, and seek or create space that meets our needs today and going forward. We can design a location that is flexible enough to contain whatever we can dream of. There are many options to explore; a committee has been formed and options are being identified, even at this early stage. A real estate professional has been identified to assist and support the committee.
Is the plan to look for available properties in the same general area as the current location?
That is certainly one of the leading options. The recent congregational survey indicated that congregants would prefer a new location to be within 5 miles of Temple Chai’s current location. But we go into this process with an open mind.
Do we believe there are suitable properties near the current location that will be suitable to our needs and within our current budget?
Yes. We are currently working to identify our needs as well as potential properties. We will look at a range of properties, both vacant and with existing buildings, as well as rental options. Again, we go into this process with an open mind.
What type of physical space will we be able to afford? Will we build a new facility, buy and remodeling an existing site, rent a space, etc.? Would we outsource or offsite certain services? Will we have a facility big enough to house all congregants during the High Holidays?
Those are all great questions, and ones we are not yet ready to answer. We cannot answer those questions because they belong not to the board but to the congregation. Those decisions will require an extensive, internal process. That’s why it is so important that the agreement with the Scottsdale Christian Academy includes a two-year “lease back” provision (with an option for a third at market rates).
Perhaps we will decide that it makes most sense for Temple Chai to move into a scaled- down version of our existing building. Maybe a radically different new building, or sharing space with another institution, leasing space, putting our office space near but not within meeting/worship space….or any of a dozen other options. We have a chance to create exactly the home we need for today, and for the future.
Given our current dues structure, what size facility in the current and near-term market can we afford to transition to? Can we reconcile our identified needs with our ability to pay for those needs without resort to and reliance upon major gifts and other extraordinary funding options?
A couple of reactions here. First, reducing our operating footprint is absolutely essential to this effort. We need to be in a space that is the right size for us, and that is energy efficient. Second, just as we go into the search for a new location with an open mind, there is no reason to take as a given that our current dues structure would continue indefinitely.
Two years can go by quickly, what is being done about this key element?
A committee has already been formed a real estate professional has been engaged, and they are developing a strategy for going forward. Greg Cohen is chairing this committee.
What About Raising the Money for Renovations Rather than Moving?
Can we sell part of the property and use those funds for needed renovations?
No. This option has been explored. Potential buyers were asked about their interest in purchasing part of the property and only expressed interest in purchasing all the property, not a portion. Proceeds from a sale of part of the property would not be sufficient to pay for needed renovations while also paying our mortgage. Conversely, selling the portion of the property containing Temple Chai’s main buildings, which has the most value, would leave us with no sanctuary. A partial sale isn’t viable.
Has Temple Chai tried to raise the needed funds through gifts?
Very much so. No $5M donor has stepped forward—nor have five $1M donors. This would be a different conversation if such had occurred. Absent money falling from heaven, like Manna, philanthropy is not coming to the rescue. We continue, of course, to welcome any and all donors, but we are facing a fundraising need on a far different scale than we have ever raised before.
Why not run a Capital Campaign to raise the money?
We would need a whopper of a campaign, larger than any in Temple Chai’s past, by multiples. Absent achieving a goal between $4-$5M, we would be in the same position we are today—but without this buyer. Based on history, the likelihood of achieving such a goal is miniscule. This is in part because during the last significant campaign Temple Chai had more members than it has today.
Operational Issues—What is on the Table?
What does “creative operations” mean and what could that look like?
Well, nobody is absolutely sure. What is wonderful is the fact that there are many possibilities. Again, this last year has been instructive. We have learned that some functions do not have to be provided as they have been. Being open to finding partners, sharing functions, changing how things are done - may be better than past practice. We cannot provide a template now but we can say that we will remain committed to Temple Chai’s outreach, its human services and support network, to its educational and critical functions, to our music and shared prayer, to Rabbinic and Cantorial leadership, and to each other. The things which define Temple Chai – community, intimacy, spirituality, education – will continue wherever we are located.
How will decisions about future operations be made?
Outreach to Members will be a priority, seeking involvement and meaningful input into how Temple Chai will look and function.
What did we learn from the survey—and how will that info be used?
The survey provided a host of interesting data. Among other things, we learned that over 2/3 (69%) of respondents were open to exploring or learning about alternative program models. We saw, not surprisingly, that most members would prefer a new location as close as possible to our current location. What members ranked as most important in a new space varied a great deal based on age and age of their children (if any). Overall, there was strongest support for a large social hall and a space large enough to have the congregation together for the High Holidays.
How does our Rabbinic Transition Impact this Decision?
More information focused specifically on the rabbi search will be posted separately.
How will this change, or uncertainty, affect the Rabbi search?
These factors represent Temple Chai’s reality. Dealing with our financial challenges responsibly will assist the search, since candidates who would consider Temple Chai will know that they are not walking into a financially troubled situation. Being creative, focusing on our community, and maintaining our commitment will, we hope and expect, speak to someone interested in being our new Senior Rabbi. It seems as much, or more, a positive than a negative. Here’s another way of thinking of it: those who are attracted by the opportunity to lead our community in a time of physical transition will be the right candidates for us; those who find that prospect uncomfortable will simply not be right for us at this time.
But, still, shouldn’t we wait until we have a Rabbi in place before we consider such a significant change?
Maybe, if all other things were equal. But they never are, and they certainly are not here. We need to respond to the offer before us today. And there is no guarantee that the interest, or the interest of others, will be on the table in 18 months when we expect to have a new Senior Rabbi. Also, we do not know what considering a change means at this point, and the process may (or may not) allow us an opportunity to obtain input from a new Senior Rabbi. We do not have enough information at this time to say. What is clear is that if we do nothing, we would not be acting in the most responsible way for Temple Chai.
Will philanthropy, and the Rabbi’s Circle, continue to be important?
Absolutely. The Rabbi’s Circle is a foundational part of the Temple. It has grown into a great success, providing an opportunity for those who are committed to Temple Chai to do something extra. For some it may have been about a relationship with a specific Rabbi, but for many participation has afforded time with, and exposure to, others especially committed to Temple Chai and as well as a learning opportunity. We hope and trust that this will not change. Any Rabbi looking at Temple Chai would be drawn in by the Rabbi’s Circle. Now is the time to especially support the Rabbi’s Circle.
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