Charles Street African Methodist Episcopal Church, a historic and influential Roxbury congregation, has agreed to sell the community center, once at the heart of its plans to grow and rejuvenate the neighborhood, in order to pay its creditors and emerge from bankruptcy.
In court papers filed Tuesday, the church said it would sell the partially built community center, a parking lot, and nearby storefronts, and would relinquish another property in Milton. The church owes nearly $5 million to OneUnited Bank of Boston and other creditors.
Charles Street already has an offer from Action for Boston Community Development Inc., a local nonprofit, to buy the community center for $2 million. ABCD wants to use the property for additional space for its teen and adult education programs.
Ross Martin, the church’s attorney, said the church could get other higher offers during an auction. A bankruptcy court judge, however, would need to approve the proposal.
Charles Street AME, founded in 1818 by freed slaves, filed for bankruptcy two years ago after OneUnited began foreclosure proceedings. The once cooperative relationship between the church and the bank, a black-owned financial institution, has turned acrimonious in recent years, exacerbated by the recent banking crisis.
The recession squeezed the church’s ability to repay its loan while banking regulators increased scrutiny of OneUnited’s spending and the performance of its loan portfolio.
Charles Street AME had been reluctant to give up the Roxbury Renaissance Center project, which was financed with a $3.3 million construction loan from OneUnited. But last year, a bankruptcy judge rejected the church’s initial plan to pay back its creditors over time and keep the community center.
The Rev. Gregory Groover said his congregation held several meetings last year to discuss the potential sale of the community center. The church feels that is the best option to help it recover financially, he said.
“Sometimes you have to go one step backward to go two steps forward,” Groover said. “We don’t see our plan and our dream ending because of the loss of properties. Our ministry goes beyond any building.”
The sale of the properties would pay back only a portion of the money owed by the church. OneUnited would take a loss of as much as $900,000 under the church’s plan, said Martin, the church’s lawyer.
In a prepared statement, OneUnited said this proposed sale fell short of meeting the church’s obligations and that the First Episcopal District of AME Church, which guaranteed the loan, should pay the rest of the debt if Charles Street can’t afford to. The First Episcopal District governs AME churches in the Northeast.
“The bank believes that the proposed sale of certain assets does not maximize value to creditors,” OneUnited said in a statement.
“The bank would prefer not to litigate matters with the church, but given the church’s inability to meet its financial obligations and its parent’s refusal to honor its commitment, the bank is left with little choice.”Deirdre Fernandes can be reached at deirdre.fernandes
@globe.com. Follow her on Twitter @fernandesglobe.