The 9:30 Club In Gallery Place *Updated*

12:00 noon – January 15, 2006

QUESTIONS AND ANSWERS

To prepare for the vote on site redevelopment on January 22, the Site
Development Task Force has addressed some of the questions and
concerns the congregation has posed. As background, please see the
FCC Annual Report, 2006, Site Development Task Force Report.

As we go forward, it is important to remain anchored in our faith and
our mission as articulated in the Multiracial and Multicultural
Vision, passed on January 26, 2003 after two years of study and
discussion. Our task is one of faith, hope and hard work to serve our
present needs while also anticipating the needs of future generations
for a dynamic and diverse spiritual home and service community in the
heart of the city.

Question #1: What are we deciding on January 22?

At the Annual Meeting on January 22, FCC/UCC will vote on the motion
to enter into the first phase of a partnership with developers PN
Hoffman/Elinor Bacon to redevelop our site at 10th and G. The Site
Development Task Force is making this recommendation unanimously and
with enthusiasm.

A vote for the motion means that we will sign a Letter of Intent with
PN Hoffman/Bacon to plan for a mixed use, church/condominium/homeless
service project. The Letter will cover how we subdivide the parcel,
their agreement to build a new church, a layout of how we will work
together, the basic financial arrangements, and other issues. In 3-6
months, after a great deal of work by the developers and
decision-making on space needs and design considerations by First
Church, we will return to the church for approval of a final
agreement. The vote on January 22 commits us to go forward in good
faith to execute the partnership; however, the congregation will
approve any final contract.

A vote against the motion means that we will stop planning to
redevelop the site and begin planning for how to stay here.

Question #2: How did we decide on PN Hoffman/Elinor Bacon as the developer?

In October 2006, the Site Development Task Force issued a request for
proposal to seven developers. We received two proposals – one from
Archstone Smith proposing sale of the property and construction of
rental housing plus a new church and space for the meal programs; and
one from PN Hoffman/Elinor Bacon proposing construction of
condominiums plus a new church and space for the meal and social
service programs. The Hoffman proposal was by far superior to
Archstone Smith in terms of the church’s immediate and long-term
interests.

The Hoffman proposal meets a number of the criteria we established:
A distinct presence at the corner of 10th and G;
Minimal financial risk for the church;
Dignified space for our meal and social service programs;
Funds to the church to cover costs of moving, storage, interim
housing, a guaranteed minimum for an endowment, and costs of church
consultants throughout the project;
Green building design – the proposal calls for at least a Silver LEED rating;
Accommodation of all the spaces listed in the Draft Interim
Architectural Program; and
A partner that we feel understands our mission and needs.

PN Hoffman has an outstanding reputation locally. Monty Hoffman is
widely regarded as a man of integrity and ingenuity who is committed
to doing things well. Three references from current development
partners, including one who has worked with Hoffman for seven years,
highlighted several reasons they have chosen to work with him:

Willingness to go into parts of the city that others shy away from and
to see the long-term potential of these areas more quickly than
others;

Tremendous working knowledge of the DC government and of how to handle
zoning and other issues;

Thorough organization with great capacity for cost estimation,
construction, etc.; and
An understanding of the marketplace.

Further, PN Hoffman is a local firm that operates on a scale similar
to that of our project. This means that our project is likely to get
more attention than it might if undertaken by a large national
developer.

Question #3: What do we give up if we redevelop the site?

The proposal calls for FCC to sell the air rights over the ground but
retain fee simple ownership of the land. Because the condominiums are
in private ownership, we would be, in effect, selling all future
rights to redevelop the entire site. Any redevelopment of the church
in the future would be confined to the church envelope we negotiate at
this time. (See PN Hoffman/Bacon Section G: Proposed Financial
Structure with FCUCC handout.)

The Task Force had hoped to enter into an ownership structure wherein
the land would revert to the church in 99 years. However, as we
learned from our development consultant and from the market response
to our request for proposal, such an arrangement does not yield enough
benefit either to the church or to the developer to be viable.

Question #4: How much money does the church take out?

Four factors govern how much money the church will take out of the
deal: 1) gross building area; 2) proportion of net buildable floor
area (the ratio of the church’s square footage to the condos; 3) costs
to build the church; and 4) revenues from condo sales.

PN Hoffman uses a 4 step pricing process that they say has proven very
effective and efficient in estimating costs of construction: I.
Conceptual Pricing – based on the massing and gross square footage;
II. Definition of Parameters – types of finishes, size of columns,
types of window systems, amount of glass and glazing to solid areas,
exterior materials, etc.; III. Design Development Drawings – the road
map sent out to sub-contractors that serves as the basis for
discussion of systems that will work, pricing and consideration of
alternatives; and IV. Guaranteed Maximum Price Submission – based on
full specifications and approved drawings and including about 150-200
separate construction activities.

On the basis of I. Conceptual Pricing, PN Hoffman estimates that the
church could take out between $3 million and $13 million, depending on
size, inclusion of affordable housing, costs of construction, and
granting of variances. However, at this time there is no way of
knowing exactly what that figure will be since our consultants
estimated the construction costs for the church to be significantly
greater than did PN Hoffman. As we move forward during the coming
months to consider size and design, the church’s cash from
redevelopment will become clearer.

Question #5: What happens if we vote not to redevelop but to remain
in our current building?

If we do not proceed with redevelopment of the site, we will need to
address the very difficult and costly issues of how to make the church
accessible and functional for the future. In recommending
investigation of site development, the Facilities Commission presented
cost estimates to “stay in this building, borrow $1 million, and
re-configure portions of the building and garden to make them more
accessible.” Were the church to borrow $1 million over 30 years at 6
percent, the cost to service the debt would be $71,940 annually or
$5,995 monthly. This level of debt service is beyond our capacity to
repay.

Question #6: If we vote to go forward, what happens next?

If we vote to move forward, our true work begins: the entire church
will be involved in making key decisions in the months ahead.
Fortunately, as a result of study and testing of the marketplace, all
of us are better educated to take the next steps.

Achieving this vision will require a great deal of thought and involve
several commissions and Council. To name a few:

Finance and Facilities – Project needs for church endowment; estimate
costs to operate new church relative to present costs; estimate
potential revenue from office rental, conferences, weddings and other
events in the new church;

Social Action – Present pros and cons of having affordable housing on
site vs. funds to reinvest offsite, and recommend space needs for meal
and social service programs;

Site Development – Lay out options for size of new church/program
space; select who will design church space; guide the design and legal
processes, ensuring that the congregation is engaged and informed;
initiate outreach to the neighborhood including Secret Service, ANC,
library, etc.;

Care of the Parish – Plan ways to keep the parish community vibrant
and growing during the absence from the building; and

Council – Ensure ample opportunity for members of the congregation to
remain fully engaged going forward; ensure that the new building will
meet the needs of today as well as needs for the future; oversee legal
and financial terms of the real estate deal so that they are in the
best long-term interests of FCC; plan for a two-year absence from the
building; etc.

Schedule: PN Hoffman has laid out a very aggressive schedule that our
consultants do not believe is realistic, particularly in terms of the
time allowed for initial legal work and for project design. Hoffman
has indicated that they are willing to entertain a longer schedule to
suit our needs. The Task Force will work with Hoffman over the coming
months to frame a realistic schedule that ensures plenty of time to
plan for the period when we are out of the building while also moving
forward expeditiously with the task at hand.

Design: The Task Force will examine two alternative approaches to
selecting an architect to design the church space: 1) use Cunningham
and Quill, the overall project architect that specializes in
commercial design (but has done some handsome private homes) and has
had no experience in church/sacred space design; or 2) interview and
select another firm that has some experience in this area. We will
seek the architect’s help in examining various space scenarios.