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A pastor’s dream, a Roxbury church in crisis

Proud Roxbury church, buried deep in debt, leans on the courts and faith to survive

Pat Greenhouse/Globe Staff

Betty Williams (top left), the Rev. Gracie Redfearn, and Barbara Ravenell prayed at Charles Street AME Church.

The women joined hands with a pastor and began to pray until their voices rang out. “United we stand, divided we fall,’’ they said. “We’re here today!’’

They were not even members of the church where they had come to pray. But word was everywhere that the historic Charles Street African Methodist Episcopal Church was in trouble. They came to plead for its salvation.

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That day in March, lawyers had filed bankruptcy papers for one of Boston’s oldest and most influential African-American churches after a storm of financial trouble that has shocked and angered many in the pews and in the community it serves.

Work on the church’s Renaissance Center was halted amid financial woes.

ARAM BOGHOSIAN FOR THE BOSTON GLOBE

Work on the church’s Renaissance Center was halted amid financial woes.

The church, though battered, is expected to survive with the help of protection from bankruptcy court. But church leaders are facing questions about how an institution with roots in the antislavery movement and a rock of stability in Boston’s black community for nearly 200 years wound up so deeply in crisis.

“How did we get here? That question has been asked many times,’’ said Curtis Wells, a longtime church member who regularly advises the pastor. “We’ve been in conversations about the finances of the church for a while now.’’

At the heart of the trouble is the Rev. Gregory Groover’s vision of an ambitious $4 million Roxbury community center, a focal point of rejuvenation in Grove Hall, a neighborhood that badly needed it.

He had imagined a sparkling facility that would be an extension of the church’s mission - where couples could celebrate their marriages in a ballroom, young people could study and record music, and fledgling businesses could get a start. To realize his dream, Groover’s church borrowed heavily, counting on future fundraising proceeds and fees the center would charge for wedding receptions and meeting space to repay loans.

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In the end, those plans were overtaken by unexpected construction delays, a catastrophic economic collapse and a lender that turned out to have serious problems of its own.

Many blame that lender, the prominent black-owned OneUnited Bank in Boston, for the church’s financial mess. The bank had eagerly sought the church’s business, they say. But later, under financial duress and scrutiny from regulators, it backed away from the relationship, demanding full payment when the loan came due - rather than permitting refinancing - and moving to foreclose.

Others in the church, though, wonder whether Groover and Charles Street AME had been reckless in their zeal for the community center plan - borrowing more than the church could realistically afford and taking on project that neither Groover nor those advising him were qualified to run.

“There is a heavy sense of responsibility that I shoulder for where things went sour,’’ said Groover. “For all the miscalculation, for the wrong steps, I take the blame, and I take the full responsibility. Every day I toss and turn, feeling like I let my congregation down.’’

Charles Street AME - founded in 1818 by freed slaves and revered by generations of blacks in Boston, both for its deep historical roots and its work on behalf of the poor and in promoting educational opportunities - has long prided itself on its financial stability.

The congregation has made a point of giving to the church, particularly in times of need. On the wall in the church’s foyer are two framed fading sheets of paper listing the names of 120 African-Americans who had paid off the church’s mortgage 69 years ago. At the top of each sheet of paper, in bold block letters, are the words: “Debt Free in 1943.’’

Groover was a young minister from a small congregation in Freeport, N.Y., on Long Island when he was appointed to the Charles Street AME pulpit in June 1994.

The church was relatively prosperous at the time. It owned an old parsonage around the corner from the church that was turned into administrative offices and another house in Milton the church had bought for a previous pastor.

In 1999, Charles Street AME took a small leap, borrowing to purchase the old Sky Cap lounge, a former Jewish meeting hall that had later become a function hall and weekend nightclub for African-Americans who had begun to settle near Warren Street.

Groover saw promise in the old building, both for the church and to help improve the neighborhood. About the same time, the church acquired retail space with paying tenants located between the church and the Sky Cap building, with hopes of one day converting the space for church purposes.

Taking out loans to make the purchases, the church had about $1.1 million in debt by 2001. It comfortably managed the payments and soon began slowly raising money with plans to renovate the Sky Cap building and convert it to the Roxbury Renaissance Center of Groover’s vision.

Five years later, in the fall of 2006, along came what seemed like a lucky break. OneUnited Bank’s president, Kevin Cohee, eager to make a mark in Grove Hall, approached Charles Street with an offer to help build the center, church officials say. OneUnited was willing to finance a $3.7 million construction loan, and also wanted to take over the church’s existing $1.1 million debt. Cohee wanted the deal badly enough to waive an $800,000 down payment, according to court documents.

The deal was struck and celebrated as a union of two black institutions, working together to transform a neighborhood. The following year, OneUnited would open a new bank branch near the church and stage an exuberant press conference with the mayor and hold a party at the church.

Groover and the center’s project manager had a plan to tackle the growing debt. He launched a “vision to victory’’ campaign to raise $2 million. The church would also target large donors outside the church who support the church’s mission and legacy.

But the Renaissance Center project soon went off-track. Builders discovered contaminated soil on the site, putting off construction for more than a year. By the time work on the building finally got underway late in 2007, one of the loans - structured as a balloon whose principle would come due all at once, in June 2008 - was fast coming due.

The balloon loan had enabled the church to get a low interest rate, and church leaders had counted on simply getting a new loan, if necessary, when the big payment came due. Through 2009, the church asked for, and received, five extensions on the loan as it tried to complete construction.

But in that time, Wall Street had imploded, a financial calamity that would gut $50 million from OneUnited’s investments in the troubled mortgage giants Fannie Mae and Freddie Mac. The bank sought help from the US Treasury and would later receive a $12 million federal bailout. The bank also came under pressure from regulators for poor loan management and excessive executive pay.

So when the church went back for a sixth extension, with the project nearly finished, the bank turned it down and refused to refinance. It also halted payments to the builder, Thomas Construction Co., a black-owned firm in Roxbury, that is owed $629,000.

Meanwhile, Charles Street’s liabilities were rapidly piling up. Fees for the loan extensions and penalties for late loan payments added up to hundreds of thousands of dollars. And to replace the church’s old and badly leaking roof, it borrowed another $450,000 from Tremont Credit Union.

The relationship between the bank and church became increasingly bitter, and in the summer of 2010, Groover asked a group of investors to try and renegotiate the loan. A proposal to pay it off for about 30 cents on the dollar was quickly rejected, and the bank sued for full payment.

The Rev. Gregory Groover had big dreams for the congregation.

Brian Snyder/Reuters

The Rev. Gregory Groover had big dreams for the congregation.

The church counter-sued, alleging the bank had made the loan “without adhering to prudent lending standards - for the ultimate purpose of gaining publicity and notoriety, and expanding its business in the church’s neighborhood.’’

The bank would later say that charge was unfair and that it met several times with church officials to work out problems. The bank’s lawyer said during bankruptcy proceedings last month that 1/8 felt “blind-sided’’ and “taken aback’’ by the church’s low offer and that the bank had been more than fair to the church.

Bank officials declined to speak for this article, and issued a statement saying the bank is “flexible in our efforts to assist borrowers in a manner consistent with the safe and sound banking practices.’’

As the ugly court battle generated publicity about a project whose future suddenly was in doubt, church donors held back, wary of the litigation and hurt by the limping economy. Groover’s “vision to victory’’ campaign withered.

“It cut church giving and dried up charitable donations,’’ said Fred Dashiell, a real estate lawyer and church member.

The bank moved to foreclose and auction the church - news that Groover learned on Valentine’s Day from a panicked church member who had seen a notice online.

“I cried and I prayed,’’ Groover said. “I don’t think I slept that night. I don’t think I’ve slept well since then.’’

“I was shocked to see it in the paper,’’ said Christina Banion, a chaplain at Brigham and Women’s Hospital and a Charles Street church member. “It’s sad that this was the pastor’s vision. When you are connected to someone who had a dream that seems to falter, it hurts.’’

Church members joined prayer lines, vowing to find a way to pay off the debt and keep their building.

Now, as the church struggles forward, some community leaders say frustration has mounted within the church that Groover bit off more than he could chew and that too few challenged him on the huge debt.

“There is now a widespread perception that Rev. Groover, though completely well-intentioned, was beyond his competence to effectively manage this project,’’ said a community leader who speaks regularly with church members and asked not to be identified for fear of alienating church leaders.

Church member Wells said that even before the church embarked on the project voices of caution in the congregation went unheeded.

“There were people saying ‘We can’t do this. We can’t afford this,’ ’’ Wells said. “But they were crying in the wilderness.’’

They had faith in their pastor, he and others said, and faith in the venerable church’s ability to pull through.

“We were Charles Street. One thing Charles Street has is a robust membership, and it has created new ministries and found ways to finance those ministries,’’ said Willie Jones, another longtime church member.

Now, the Renaissance Center sits behind a construction fence, idle and unfinished. The church, according to its lawyer, reports having $15,000 in cash.

Meghan Irons can be reached at mirons@globe.com. Follow her on Twitter @meghanirons. Beth Healy can be reached at bhealy@globe.com. Follow her on twitter@healybeth.

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