First Family Church ousted
First Family Church ousted

First Family Church ousted from home, will ‘re-launch’ Sept. 18
By JUDY L. THOMAS - Kansas City Star, 9/4/2011 - Original
The First Family Church once claimed a membership of more than 4,200, but that appeared to have diminished by the time this view of its complex at 7700 W. 143rd St. in Overland Park was taken on a Sunday morning in July 2011.

Facing foreclosure for several months, First Family Church — once described as among the fastest-growing in the country — announced Sunday that it is losing its building and everything in it.

The Overland Park church, founded by the Rev. Jerry Johnston, will hold its final service at its location near U.S. 69 and 143rd Street on Sept. 11, the board announced.

The church plans to “re-launch” on Sept. 18 at Olathe East High School under the name New Day Church Kansas City, the board said.

“In the providence and sovereignty of God, it has become clear that we must take a new direction,” the church’s board of elders announced on the First Family website and in an email sent to followers about noon Sunday. “And, our pastors have total peace.”

Regions Bank filed a foreclosure petition in Johnson County District Court in January, saying the church owed more than $14 million in mortgage and other costs. The bank asked that the property be foreclosed and if payment was not made, that it be sold, with the proceeds applied to the debt.

A spokeswoman for the Alabama-based bank declined to comment Sunday.

The First Family board of elders said Sunday that “after exhausting every option with Regions Bank, we have no alternative … now they will take our building and every item in it: Our tables, cribs, sound system, TV cameras, chairs — literally everything. But Regions will not take the Church. We will rebuild!”

The pastoral staff “will be leading church in a new beautiful location, Olathe East High School … in a dynamic re-launch entitled ‘New Day Church Kansas City,’ ” the board said.

The church office was closed on Sunday afternoon, and neither Johnston nor board chairman Robert Ulrich responded to requests for comment.

An official with the Olathe School District has confirmed to The Kansas City Star that First Family Church has rented space at Olathe East to hold church services beginning Sept. 18. The church told the district that it planned to have 500 to 800 in attendance.

Four years ago, the church boasted more than 4,200 members, a $17 million annual budget and a TV ministry that had gone global. But in recent years, attendance has dwindled.

Numerous staff members have been let go, and the names of three board members have been removed from the church’s website.

Johnston’s son-in-law Christian Newsome, who was an assistant pastor at First Family, also has left to start a new church in Lee’s Summit. That church is scheduled to launch on Sept. 18 as well.

Sunday’s announcement by the First Family board said church leaders had “attempted every conceivable solution to satisfy Regions Bank.”

The board said that after more than 18 months of negotiations, Regions Bank had agreed to a reduced settlement of $8.85 million on July 8. The bank demanded four $50,000 payments over four weeks as good-faith deposits, the board said. Those payments were made on July 18, July 25, Aug. 1 and Aug. 8, the board said, with a closing date on the new agreement set for Aug. 15.

According to the statement, the church’s new lender required a current appraisal of the First Family campus and said it would only finance 50 percent of the value. The August 2011 value came in at $15 million, the board said, which was below the amount required by the lender.

“An adjusted cash offer was immediately presented to the bank according to the new appraisal, which Regions rejected,” the board said.

The church said it then found a second lender that was interested in financing First Family — AG Financial Solutions, the lending arm of the Assemblies of God denomination. Regions Bank demanded $25,000 to extend the closing to Aug. 31, the board said, and on Aug. 30, AG Financial made an offer to Regions Bank to finance the church’s mortgage.

Regions rejected that offer, the board said.

However, the board said, “The work of our church must go on. Our vision to reach the lost of our city has never been stronger.”

In its January court foreclosure filing, Regions Bank included a Sept. 2, 2010, letter demanding payment from the church, saying the church’s obligations had matured on Aug. 16, 2010.

“This letter provides notice to you that you failed to pay the obligations within ten days of that maturity date, and the entire amount of the obligations is now due and payable,” the letter said.

According to the January foreclosure petition, the church owed $13.7 million on two loans plus $630,384 in interest. The interest continued to accrue at the rate of $2,740 a day, the petition said.

When the foreclosure petition was filed in January, the church’s elder board issued a statement saying Regions Bank had unexpectedly called the church’s mortgage, demanding full payment within 30 days — “terms which were financially impossible for the Church to comply with.”

The January statement called the situation “another reality of our country’s economic crisis.”

The statement said Regions Bank had recently accelerated the mortgage maturity from 30 years to five years, “forcing this situation even while First Family Church was current in its obligations.”

In February, Regions Bank asked a Johnson County District Court judge to appoint a receiver pending completion of the mortgage foreclosure proceeding. Among the reasons the bank cited for putting the church under a receiver were the salaries of Johnston and several of his family members.

The court filing put Johnston’s annual salary as of August 2010 at $400,000; his son, Jeremy, at $210,000; and son-in-law Christian Newsome at $180,000. Johnston’s wife, Christie, made $60,000, the document said, and his daughters, Danielle Newsome and Jenilee Johnston, earned $40,000 and $25,000.

Through its attorney, the church said in February the salary figures were inaccurate. “There are only three members of the Johnston family on the church payroll — Jerry, Jeremy and Danielle Newsome,” the attorney wrote in an e-mail to The Kansas City Star. “The annual gross salaries for those three employees total $316,800.”

A later motion the church filed said salaries “have been cut drastically in recent months.”

In March, a judge sealed the court documents involving Regions Bank’s request that he appoint a receiver to take over operations of First Family. Johnson County District Judge Kevin Moriarty said in his order that he sealed the proceedings to protect both the church and the bank.

In 2007, The Kansas City Star reported that hundreds of members had left First Family Church in previous years over concerns about financial accountability. The newspaper also found that the church was structured in a way that provided little financial oversight.

Shortly after that, the Kansas attorney general launched an investigation into the finances of the Rev. Jerry Johnston and his church after receiving complaints alleging that Johnston had misused church money. The investigation was later closed, an attorney general spokesman said, because it did not find any activity that violated the Kansas Consumer Protection Act.

Complaints also were filed with the Internal Revenue Service. In 2008, the IRS attached tax liens to the church property, citing more than $107,000 in unpaid payroll taxes from 2007. The church quickly settled, and the lien was released.

Sunday’s announcement surprised some former First Family associates.

“This may provide some closure to the people impacted by FFC over the years,” said Paul Davis, a former independent contractor for the church who filed complaints with the Kansas attorney general and the IRS.

“Hopefully another church will come in to the building and bring the gospel message to the people of Overland Park.”