The Church at South Las Vegas, known for its outreach to prostitutes in Sin City, has filed for bankruptcy protection.
Members of the church agreed to not pay the church’s mortgage after they found out that they owed the bank more than three times the amount that the church building was worth. The 23,635 square foot church building is worth only $2.375 million compared to the $7.653 million owed in mortgage, according to Vegas Inc.
“After much deliberation, the leaders and the congregation said, we don’t want our donations to keep going down a black hole with no light at the end of the tunnel,” said Pastor Benny Perez to The Christian Post on Wednesday. “So, it became a stewardship issue. We stopped making payments [on] May 1.”
The 4,000-member church filed for Chapter 11 bankruptcy protection last Friday.
Perez said that First Bank, the church’s largest creditor, took action against the church last month when the bank found out about its plan to default on mortgage payments. First Bank filed a lawsuit against The Church at South Las Vegas on June 17 seeking to foreclose the property and appoint someone else to supervise the church’s finance.
The Las Vegas church didn’t know about its “upside-down” mortgage until it received an appraisal of the property while planning to construct a new worship center. Church attorneys said they tried to negotiate with the bank to reduce the principal down to $2.5 million after they discovered the property’s true value, but the bank refused.
“At that point, we had to look and say that we cannot expand because of the situation that we are in. The bank is not letting us build [the new worship center] with cash. We have a $53,000 a month mortgage that we’ve been making,” Perez said.
The Las Vegas pastor asserts that the church didn’t “start this fight with the bank.”
“We knew that if we built that building it would solve the upside-down situation, because we would be improving our property and it would add $4 to $5 million worth of equity,” Perez maintained, “Which is a gift to the bank. [But] the bank refused.”
“For us that was unreasonable and illogical. That started this whole progression. We didn’t wake up one day and file Chapter 11,” he said.
The Church at South Las Vegas has several ministries that it is well-known for, including one that partners with Hookers for Jesus, which reaches out to prostitutes in Las Vegas. The church also provides financial support for Destiny’s House, a nonprofit that provides housing and transitioning services to former prostitutes.
Church members also helped provide 63,000 pounds of food for a local food pantry last Easter. And currently, the church is working with schools in the area that are financially strapped, providing services the schools can’t afford, Perez said.
“If First Bank forces us into total foreclosure it is going to impact our ministries. It’s going to impact our ministries to the hungry, to the homeless, to the prostitutes, and the young people,” he warned.
Las Vegas has the most home foreclosures and bankruptcies in the country, according to U.S. financial reports.