CCC : The Alarming Facts

EGM Update Part I

The recent EGM of Calvary Church on 20 May 2011 was specifically convened to seek the members’ approval for the increase of RM50 million in the Calvary Convention Centre (CCC) project cost, thereby increasing the previously approved budget of RM150 million to RM200 million.

The EGM was attended by 230 voting members.  The resolution was approved by the majority of the members present with 2 objections recorded. This was not unexpected, considering that a third of the voting members present were the church staff, pastors, deacons and their families. A notable number of members present neither voted for or against the Resolution.

The main presenters were the CCC Finance Committee chairman, Ding Lai Hong and the CCC Building Committee chairman, Deacon Ngeow Zoo Gin.

Bro Ding explained that the CCC project is now divided into 2 main phases:-

Phase 1 will see the completion of the main 5,000-seat auditorium, classrooms, library, visitors’ lounge, book shop, cafeteria and an open plaza. These facilities will be fully-fit out while the rest of the building will remain shell and core with only the basic electrical installation and certain infrastructure put in.

Phase 2 will be the completion of the rest of the building which is the fit-out, Interior Design (ID) and ancillary works of the remaining facilities namely the 3 languages chapels, multi-purpose hall, meeting rooms, nurseries, entire upper floors of the institutional block, dormitories and apartments. This phase is also referred to as the deferred portion. No timeline was given for this Phase 2.  

Phase 1 is further sub-divided into Phase 1A and Phase 1B.

Phase 1A will comprise of  the RC Structure, Roof and Steel Structure, Facade, Cladding and other ancillary works and will cost RM73.5 million.

Phase 1B will comprise of Preliminary work, Architectural, ID, M&E and other ancillary works and will cost RM82.1 million. Of this amount, a sum of RM7 million is set aside to complete the infrastructure and M&E works of the deferred portion under Phase 2. Phase 1B will take 15 months to complete and therefore, to meet the targeted date for practical completion of end 2012, Phase 1B work has to start in June/July 2011. Tender prices and firm quotes had been obtained for most of Phase 1B but is valid until end of June 2011

Upon completion of Phase 1A and 1B at end 2012, application for Certificate of Fitness can be submitted and the facilities under Phase 1 will be usable. The targeted timeline will enable Senior Pastor Guneratnam (PG) to host the Pentecostal World Conference in Aug 2013.

Prior to the commencement of Phase 1A, the church had already incurred a total of RM38.6 million for the foundation, sub-structure work and work done by Nam Fatt. This cost plus the cost of Phase 1A and Phase 1B add up to a sum of RM200 million, an increase of RM50 million from the previous approved budget of RM150 million.

The following sequence of events was presented by Bro Ding in his justification for the additional RM50 million costs:-

1. 28-10-05 EGM - Members approved a budget of RM150 million, of which RM100 million was for the building and RM50 million was for soft cost.

2.  March 2006 EGM - CCC cost maintained at RM150 million.

3.  Feb 2007 - Board awarded sub-structure work to Sunway Piling for RM12 million under Contract 1.

4.  March 2007 AGM - Cost remained unchanged at RM150 million but it was mentioned that in view of tenders to be called later that year for the super structure, it was uncertain how the cost would have increased because of increases in material and labor costs.

5.  Sept 2007 - Tender called and closed at end of 2008.  Nam Fatt was successful as the lowest tender.

6.  March 2008 - Contract 2 awarded to Nam Fatt.  Total building cost had increased from RM100 million to RM146 million including the RM12 million under Contract 1.   Therefore, together with the budget of RM50 million for soft cost, the total cost of CCC would be RM196 million. Board then proposed to do value engineering and deferment exercise to bring cost closer to the approved RM150 million.

7.  June 2009 AGM - The church, with consultants and specialist contractors, managed to cap the building cost at RM150 million through further value engineering and deferment.

8.  Nov 2009 - Nam Fatt was terminated.

9.  4 June 2010 - In CCC update, it was announced that a fresh tender exercise was carried out.  Cost to complete CCC on a deferred basis has risen to RM188 million.  But due to legal constraints, Board could not proceed with the award.  Therefore, the church opted for Stage Method.

10.  Oct 2010 AGM – The church proposed a budget of RM198.6 million based on Stage Method.

11. “Today (20 May 2011), we have confirmed quotations and tenders giving us a firm figure of RM200m to complete Stage 1 of the CCC,” he concluded.

 

Next Bro Ngeow then presented on the funding of the project.

He informed the meeting that as at the end of 2010, the church has already paid out a total of RM43.3 million towards the CCC building. Therefore, the balance which needs to be raised is RM156.7 million to complete the Phase 1A and 1B.

To finance balance cost of RM156.7 million:

Fixed Deposit as at end 2010 : RM26.5m

Projection of income surplus  :  RM12.2m for 2011/2012

Available loans  :  RM43.0m (Alliance Bank 35m, Public Bank 8m)

The shortfall after the above sources of funds, will be RM75 million.

1.  The plan is to unlock the value in the 5 Damansara Heights (DH) bungalows. The valuation carried out this year on the said properties was RM35 million. However, this value can only be unlocked after CCC is completed.

2.  There are also proposals from developers for joint venture (JV) on the small plot of commercial land next to the CCC on a profit-sharing basis.  Calvary Church’s share of the profits is estimated to be RM50 million.

3.  As unlocking the value of all the properties will take time, therefore, in the meantime, there is a need to raise a further loan of RM75 million. The finance committee is confident of raising the additional RM75 million loan.

4.  The total loans will be RM118 million while the advances due to members is RM6 million, making a total debt of RM124 million. The estimated bank interest over 10 years is RM30 million, thereby making a grand total debt of RM154million.

This will be repaid from the sale of the bungalows (RM35 million) and profit from the joint venture (RM50 million), leaving a balance of RM69 million. The board is confident of paying off the balance RM69 million over 10 years at RM6.9 million per year. This translates to a repayment of RM575,000 per month.  

Bro Ngeow expressed hope that the CCC will bring in more people and that there will be extra income from rental of the auditorium and carpark.

Next: CCC: EGM Update Part II