‘In a Tailspin,’ Says 2nd Baptist Church

They say no good deed goes unpunished, and God’s Open Door, as the 2nd Baptist Church is also known, is feeling a pain in its wallet from an ambitious one. What started as a fine idea to build low-income senior housing in a largely empty parking lot has ended up putting church finances “in a tailspin,” said Pastor Wallace Shepherd, who began to lead the East Mason Street congregation a couple years after the venerable Pastor Leander L. Wilkes retired in 2004. Civil and criminal cases have been filed in the building snafu, but what greatly worries the pastor is that the church sold its 0.57-acre property to get out from under the project’s debts.

“The oldest African-American church in Santa Barbara!” Shepherd exclaimed. “Our 107-year-old church may go defunct.”

The problems first began last March when the church’s construction lender refused to pay several invoices, Shepherd said. The lender claimed the contractor, NE Construction of Woodland Hills, was billing for a different job or had cancelled the materials being invoiced. Other problems surfaced, Shepherd went on, and the builder insisted they’d done nothing wrong. A flurry of court filings ensued, including a mechanic’s lien in May by NE saying it was owed about $90,000, against which the church had to post a $127,000 bond, said Shepherd.

After a civil suit was filed by the church in July, NE Construction cross-complained, stating it had been hired on Shepherd’s mother’s recommendation and that the church was equally culpable for its woes. When contacted by phone, NE’s principal, Noah Engelman, who sounded just as upset as Shepherd, asserted he had done everything he’d been asked and worked very hard. He stated his attorney would speak for him, but the attorney did not return calls.

The group of investors who bought the property in September — and gave 2nd Baptist a year rent-free — are completing the senior units and have offered the property back to the church at 110 percent of their costs, Shepherd said. He ballparked that the six units — one bedroom apartments of about 600 square feet with nice-sized decks — would be finished and rentable by April. The pastor hoped their income stream will convince a lender that the church could afford another loan to buy itself back. Otherwise, he worried, the investors have suggested going back to the city to be re-permitted for market-rate housing. “We’re trying to do something good here,” he protested, but feels they might be boxed into a corner.

Of the $1.8 million the church received for its property — about half its market value — most was used to clear the church’s debts. Some of that was a mortgage from their move into the Mason Street building in 2000 after a long tenure in an arch-windowed building at Gutierrez and Anacapa. It’s now occupied by a skate shop, whose name the pastor could not bring himself to say aloud.

For the moment, the civil case is on pause until the criminal matter is concluded, church attorney Dennis Merenbach said. In the criminal case, the contractor was charged last fall with three felony counts of diversion of construction funds, explained Senior Deputy District Attorney Brian Cota, and could face a penalty that ranges from felony probation to prison time. The preliminary hearing has been pushed forward on a monthly basis since September, according to the court file, with bank records being subpoenaed most recently. The next court date is set for March 11.