Suntec Singapore issues stakeholder CHC a license agreement for the use of the building; it is a win-win arrangement for both.
|PHOTO COURTESY OF SUNTEC|
On March 6, 2010, City Harvest Church announced that it will be moving to a new, central location at Suntec International Convention and Exhibition Centre in March 2011.
The primary reason for this move is to house its growing congregation of 33,000, and to allow the church to better serve its members. Currently, CHC operates out of two locations: its Jurong West Street 91 premise which holds 2,300 in its auditorium, and Singapore Expo Hall 8, which the church has been renting since the end of 2005 to hold two English services on the weekend.
As the church has many activities during the week, such as leaders’ meetings, prayer meetings and Bible study sessions, members regularly have to commute across the island for different meetings at different locations across the island.
Currently, the smaller services such as those for the intellectually-challenged (Jesus for All Minds or JAMs service) and the elderly are only held at at the Jurong West church. This means that such individuals in the East may not have a chance to attend service due to the distance.
Having a central location would mean that members have ease of access by public transport, and would take less than an hour to commute to from nearly any other part of Singapore.
The hunt for a central location began in 2005 and has culminated with Suntec Singapore. From April 2010, Suntec Singapore will be within walking distance of three MRT stations: City Hall, the Promenade and the Esplanade. There is also ample parking within Suntec and the surrounding areas, including Marina Square and Pan Pacific Hotel.
In its license agreement with Suntec Singapore, CHC has use of the Level 6 convention halls, the Gallery on Level 3 and the 600-seat Theatre on Level 2. With the amount of space CHC now has access to, the Church can bring all its services under one roof.
Facts And Figures
Suntec Singapore was acquired by ARA Asset Management Limited through the ARA Harmony Fund last year. Harmony Fund’s investors comprise Suntec REIT (which holds 20 percent) and a consortium company which holds 80 percent. CHC has bought a stake in this consortium.
Through a special purpose investment holding company wholly-owned by CHC, the church has acquired and holds an indirect minority stake in the holding company of Suntec Convention Centre. Using this special purpose investment allows for distinct accounting for the investment and segregates the investment from other regular activities of CHC, meaning that the financial risk for the Church is limited to that company. This private entity does not have charitable status and is not entitled to any tax or other concessions.
The issue has raised some questions, as the media inaccurately reported that CHC directly holds the stake in Suntec Singapore and purchased it for S$310 million.
As reported in the March 6 issue of City News, the sum of S$310 million covers rental costs, renovation and equipment costs, rental deposits, periodic shifting costs and other items, over and above the cost of the shares. (See What Does Our S$310m Building Fund Pay For?)
The arrangement of space usage between CHC and Suntec Singapore is similar to what CHC has had with Singapore Expo since 2005. The key difference is that CHC is a shareholder in Suntec Singapore. This means that it will receive dividends as a shareholder. It is CHC’s intention that the dividends it receives as a shareholder be ploughed back into rental, making the use of Suntec self-sustaining after a period of time. That is the nature and intent of its investment.
As a charity body, CHC is allowed to invest donor funds into different investments such as stocks, bonds, currency deposits and properties, as stated in its constitution. The Church’s Management Board engaged in much deliberation and calculation before making what is a prudent and considered decision. This investment is specifically intended to hedge the Church against its rental costs at the same convention centre, using the dividends received to help defray rental costs.
CHC has been transparent with its voting members, who are presented the detailed income and expenditure of the building fund at each year’s General Meeting. The Church has taken great care to operate within the proper guidelines of corporate governance, and makes it a key priority to deploy the funds that have been donated in the most responsible and effective way possible.
John Lam, a member of the Management Board, says, “In 2006, the executive members at the General Meeting came to an agreement with the Board to look for a venue that could house its growing congregation. The vision was to look for a stadium, concert hall or auditorium that can sit between 10,000 to 15,000 people, in a central location.
“The Board has also regularly given updates to the voting members about the land search and our building fund collection. We have also made clear to the members that it would take a number of years of fundraising, as the estimated cost of embarking on such a project would be between S$200 and S$500 million.”
Business As Usual At Suntec
Suntec Singapore will be the new location of CHC. It will rent the spaces in Suntec just like clients such as NATAS or IT Show do.
CHC and Suntec Singapore have a license agreement that will come into effect in March 2011. Suntec Singapore has built flexibility into its agreement with CHC to allow for the retention of events.
CHC plans to construct an auditorium with the latest sound system in the Level 6 Convention Halls. The Church will use the Level 6 auditorium for its services. This auditorium will be available for Suntec Singapore to market for Meeting-Incentive-Convention-Event (MICE) business, and other concerts and performances during the week. There will be additional meeting rooms built in the Gallery on Level 3. These rooms are not used exclusively by CHC and the license agreement has flexible arrangements for the licensed areas to be given up during certain periods to accommodate mega shows and global conferences.
Therefore, business will continue as usual at Suntec Singapore—there will be no changes to its operations. Suntec Singapore will continue to function as Singapore’s premier MICE location, and will continue to bid for large-scale events. It is the venue for the upcoming Youth Olympic Games in August. It has also partnered with MCI Group and Resorts World to enhance and attract more events to Singapore. Any improvements or additions to Suntec Singapore’s business will benefit all stakeholders, CHC included.
How does it benefit Suntec Singapore to have CHC as a tenant?
CHC’s congregation is a potential crowd for Suntec Singapore’s lease tenants (Food Republic, Joachim Buffet Restaurant, Pearl River Palace, Starbucks etc), as well as for other vendors who want to hold sales or events and tap on the congregation’s buying power. It’s for the same reason that John Little gives CHC’s congregation coupons when it holds a sale at the Singapore Expo.
Clearly, this arrangement benefits both Suntec Singapore in terms of greater traffic for its vendors, and CHC in that the Church gets a venue in the heart of the marketplace.
What Does Our S$310m Building Fund Pay For?
CHC pays Suntec Singapore a rental fee for the use of Level 6 convention halls, the Gallery at Level 3 and the 600-seat Theatre at Level 2 on weekends.
Renovation and equipment
CHC’s new auditorium will require renovation to create seating space for up to 12,000, plus meeting rooms. There is also the cost of equipment such as staging, lights and sound system.
Periodic shifting costs
The shifting cost from Singapore Expo to Suntec Singapore. Also for the various times that CHC will need to move to another location to accommodate mega shows and global conferences at Suntec Singapore.
Professional building fees
These are fees used to engage architects, designers and consultants.
These are deposits that will be refunded at the end of the license period.
ARA Harmony Fund shares
Part of the building fund goes to the cost of owning shares in a consortium that holds 80 percent of the ARA Harmony Fund that has acquired Suntec Singapore. CHC as shareholder will receive dividends which will be used to defray rental costs.
WHAT THE MEMBERS SAY
Elim Chew, 43, founder and president of 77th Street
“I’ve been a church member for 19 years and my life has been transformed by CHC. I believe in the leadership of our church—our leaders have always been wise and prudent.”
Cheo Meng Chin, 37, Manager
“When I first heard about Suntec Convention Centre, my first thought was, what a brilliant idea. We won’t have to go through the hassle of construction and architecture, and deal with the cost of maintaining a large building.”
Lim Lay Hoon, 34, vice-president in an investment bank
“People who have been in CHC for a while will know the number of venues we’ve used as our congregation grew! The amount we have spent on rental in the last 20 years has not been a small sum. So to me, this model makes perfect sense—we get dividends even as we pay rental.”
Ignatius Yeo, 39, business owner
“Non-disclosure agreements s are perfectly normal, to protect the interests of both parties. This clause is not exclusive to CHC—it’s common practice in organizations. Some things are confidential for commercial reasons—disclosing everything may jeopardize the deal. Whatever the Church can disclose, I believe it has already done so.”
Joshua Xu Fu Ming, 35, realtor
“The authorities are privy to details that the public are not—and as long as they are kept aware as they have been, and give their approval, then there is no issue.”
Jared Lim, 30, credit professional in an investment bank
“Over the years, Pastor Kong always shared with the executive members about the various locations that we tried to get. It’s been a four-year journey for all of us as a whole. I feel that with most of us being savvy, schooled individuals, it’s hard to pull wool over our eyes. The Church Management Board has always been transparent, and has consistently acted in the best interests of the church.”
Ruth Yong, 36, risk consultant
“I am not an Executive Member who is entitled to vote, but whatever information is shared at broad to the Church is sufficient for me. The Management is not obligated to tell me everything; especially not if they have an agreement to honor. Knowing the details is not an issue for me, as long as I know that the money I donate is managed well; which in my opinion, it is.”
Jonathan Kang, 34, banking business manager
“To new members or to the public, who do not have the benefit of our history as a church and what we have been through together, they may not realize that this is not just one man’s dream. It is a corporate vision we have as a church. The desire for a central venue is not just the leaders’, it is also our our desire.”