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Churches: The New Risky Bet
Steeple Chase: U.S. church construction peaked in 2002, according to research from McGraw-Hill Construction. And it started to decline long before the 2008 recession. The most dramatic declines were in 2010. While square footage was still down 13 percent in 2013, actual spending went up 1.1 percent.

Less than 30 minutes from Disney World, Celebration of Praise Church of God has 1,200 members and a 47-acre campus. The Clermont, Florida, church boasts an Olympic-size swimming pool, a spa, a gym, and the county's largest auditorium. It also has a $7 million "balloon" payment due on its mortgage. All the church lacks is the funds to pay it.

It looks like Celebration's story will have a happy ending of sorts—it's currently selling its property to the city for $6.3 million, and will be able to rent the property for Sunday and Wednesday meetings.

But things haven't been so good for nearby Lakeland's Without Walls International, once the fastest-growing church (and among the 10 largest churches) in the country. The Evangelical Christian Credit Union (ECCU) foreclosed on the church in 2008 over a $13.9 million loan default. That case has been in the courts ever since, with claims, counterclaims, and the church founded by Randy and Paula White sitting dormant.

The 5-year-long dispute and the empty 9,600-seat sanctuary symbolize the state of church-building finances during that time period.

Hundreds of congregations have filed for bankruptcy or defaulted on loans. University of Illinois law professor Pamela Foohey, who tracks church bankruptcies, says more than 500 congregations filed Chapter 11 between 2006 and 2011—and the pace hasn't slowed since. About 90 congregations filed for bankruptcy in 2012, even as the overall rate of bankruptcy filings declined 13.4 percent.

Meanwhile, the church bond market, once a refuge for cautious investors, is now a black hole, says Rusty Leonard, CEO of Stewardship Partners, a Christian investment management firm.

Before the 2008 ...

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