Holy War

In June 1995, the Reverend William Hanousek, pastor of Bethany Memorial Reformed Church, received a letter from his landlord. It told a story common enough during the great 1990′s building boom: A developer was buying the church, at the corner of 67th Street and First Avenue, for $7.4 million, and a 29-story apartment building would take its place. Rev. Hanousek and his “cancer ministry,” which provides cheap housing to outpatients from Memorial Sloan-Kettering Hospital, would have to go.

Like any tenant facing eviction, Rev. Hanousek wanted to fight. That’s where things got complicated. His landlord was the Collegiate Reformed Protestant Dutch Church–another church in his own denomination, and one that had supported Bethany for some 80 years.

What ensued would shake New York’s tiny and tight-knit Dutch Reformed community. Churches sued each other. Ministers turned against one another. The denomination’s highest decision-making body was forced to grapple with the question of how Collegiate balances ministry and business.

It’s a conflict familiar to churches around the city as neighborhoods gentrify and congregations wane. On Rivington Street, a gutted yeshiva will become hip apartments; on Hudson Street, Trinity Church hopes to build a skyscraper; on 43rd Street, luxury apartments are rising where a Catholic church’s homeless shelter once stood.

But this battle was worse than most. “There was a sense of great regret and grief,” said the Reverend Wesley Granberg-Michaelson, general secretary of the Reformed Churches in America, the highest official of the 200,000-member denomination.

Rev. Hanousek was a popular minister, lauded for his work with cancer patients. But Collegiate, a Calvinist congregation first convened in 1628 in a New Amsterdam mill, was “the fount of the whole denomination,” Rev. Granberg-Michaelson said. Made up of four member churches (Marble on 29th Street and Fifth Avenue, Middle on East Seventh Street, West End on West 77th Street and Fort Washington on West 181st Street), Collegiate was the denomination’s most famous church, home to the late Norman Vincent Peale.

It was rich, too. The church’s property in New York–including a swath of downtown land deeded to the church in the 1690′s and ground beneath Rockefeller Center–brought it millions in tax-free rental revenues, some of which went to Reformed colleges and charities. The Bethany sale was only one element in the church’s effort to become a player in the Manhattan real estate market. Since 1998, it’s made more than $35 million selling real estate, according to land records.

Rev. Hanousek proved more difficult to move. Citing a 1917 contract, he claimed Bethany had, in effect, a 99-year lease on the property. He sued, preventing Collegiate from closing its deal with the developer, Jack Parker. He launched a publicity campaign, claiming Collegiate’s deal threatened his cancer ministry with “eviction and extinction.” Collegiate leaders called him a “snake in the grass.”

The lawsuit dragged on for five years. Finally, on Feb. 8, Justice Charles E. Ramos of the New York State Supreme Court in Manhattan came down with a decision: Collegiate could sell the land.

But the struggle may not be over. Claiming that it’s no longer bound by its contract with Mr. Parker, the developer, Collegiate is now shopping the land to other developers and even talks of developing the property itself. Mr. Parker is threatening to sue. And Rev. Hanousek is considering an appeal and an effort to landmark the church.

“This whole issue has been going on for far too long,” said an exasperated Reverend Jon Norton, executive minister for the Regional Synod of New York, who sided against Rev. Hanousek.

Rev. Hanousek says he has no choice but to fight. Since the decision, Collegiate has offered to pay him $2 million to relocate Bethany, but he thinks that won’t go far in this real estate market. “In practice,” he said, “it means our death.”

Ironically, Bethany Church was born in a church’s death and a real estate deal. In 1917, the Madison Avenue Church, at 57th Street, faced dwindling membership and mounting bills and decided to disband. It gave its property to Collegiate to sell.

Madison’s minister wanted Collegiate to hold onto one asset–a little mission chapel on 67th Street, in the immigrant community surrounding the East Side’s stockyards and cigar factories. They drew up an agreement requiring Collegiate to spend, over the course of 99 years, $10,000 a year on Bethany’s upkeep.

The agreement was signed on April 4, 1917. For 78 years, no one gave it much thought.

Rev. Hanousek moved into the church’s upstairs apartment in 1977. A young liberal, he had left a congregation in Canarsie because he didn’t want to raise his three children in an anti-busing community. Round-faced and earnest, congregants called him “Pastor Bill.”

Like most mainline Protestant churches, Bethany’s congregation was shrinking. Rev. Hanousek struggled to inject it with life and relevance. The answer came with a knock on the door.

In July 1979, John and Phyllis Dykstra, of Grand Rapids, Mich., brought their son Tim, suffering from bone cancer, to Sloan-Kettering’s renowned cancer center. There was no place they could afford to stay. “Everyone we talked to in New York was money, money, money,” Ms. Dykstra said.

Desperate, she knocked at Bethany. A secretary told them the church had three beds in rooms upstairs. Over two years, through nine operations and the amputation of Tim’s leg, the Dykstras spent 379 nights there. Tim died in 1981.

“The congregation came to love that family, and we saw what we could be doing for others, so we started opening rooms,” Rev. Hanousek, 55, recalled recently. “People began to come and come and come.”

Sloan-Kettering referred families to Bethany. The church expanded its ministry to 20 beds in five rooms. Boarders were asked for a $10 daily contribution. Many stayed to pray.

“The congregation bought into this,” Rev. Hanousek said. “When you have people worshipping with you on Sunday who don’t have any hair, whose faces are deformed, and you begin to see them as human beings and see their needs–man, it’s not a tough decision.”

Somewhere, though, relations between Rev. Hanousek and Collegiate soured. Peale died in 1993, and a new minister, the Reverend Dr. Arthur Caliandro, took his place. Collegiate, which said it was spending hundreds of thousands of dollars a year on Bethany, pushed Rev. Hanousek to raise more money on his own. When he asked for a new pipe organ, Collegiate rejected him. “It [was] like any budget, where you come to a point … [that] you are strongly guided by how many dollars are in the bank, not by how many dreams are on the table,” Kenneth L. Shaffer, Collegiate’s business manager, said in a 1997 deposition.

Collegiate elders began to question whether they should be financing Bethany at all. Sometimes there were fewer than 20 churchgoers at Sunday services.

“We have nothing against the hospital mission,” Mr. Shaffer testified, but Bethany had ceased to be “meaningful to the people of that neighborhood.”

A reporter from Real Estate Weekly told Rev. Hanousek that Collegiate had a deal to sell the church. Soon after, the letter, signed by Mr. Shaffer, arrived. Collegiate announced it might use the proceeds to build its own new church on the Upper East Side.

“As good stewards, we wanted to unlock the money buried in the land,” said J. Thomas Liddle, chairman of the Collegiate Consistory, or board of trustees.

A former accountant, Mr. Liddle took over the consistory in 1992, creating a new title, “chairman,” for himself. (Before that, a minister had always headed the board.)

Insiders say Mr. Liddle conducts himself like the chief executive of a corporation–the oldest in the United States, the church claims, dating back to a 1696 charter from England’s King William III. Established in 1628 by a minister sent to New Amsterdam by the Dutch East India Company (Peter Minuit was a founding elder), the church has been in the real estate business almost as long. In 1695, a prosperous Dutch shoemaker, John Harpending, donated his pasture east of Broadway. Most of the church’s land holdings today are part of this “Shoemaker’s Land.”

Pieces of the church’s heritage lie beneath foundations all over Manhattan. In 1948, Collegiate sold its St. Nicholas Church, at Fifth Avenue and 48th Street, to build a Rockefeller Center skyscraper. St. Nicholas’ minister resigned in protest. The church kept ownership of the ground, leasing it to the developers–a common arrangement in real estate–and still collects $650,000 a year from the center’s owners.

In 1992, Collegiate’s annual report listed 18 properties, many of them turn-of-the-century buildings, most of them clustered around Fulton, William and John streets–the original pasture land. They ranged from the 12-story 45 John Street, where the church keeps its offices, to a dingy brick tenement at 7 Dutch Street, to the ground beneath three office buildings owned by big developers.

But the real estate slump of the early 1990′s hit Collegiate hard. In 1992, the church took in $7 million in rent from its properties but still lost $2.3 million, according to the annual report, a copy of which Rev. Hanousek provided to The Observer . That’s when Rev. Hanousek began to hear rumblings that Bethany, sitting on the valuable Upper East Side, could be sold.

Mr. Liddle later hired Casey Kemper, a former real estate broker, to replace Mr. Shaffer and put out the word that the church was looking to sell other properties.

“They’re sophisticated,” said developer Francis Greenburger, who converted a church-owned office building at 15 Dutch Street to apartments in 1997. (He subsequently bought the building for around $1.5 million.)

A 16-story office building at 29 John Street was the next to go, to a Hempstead developer for $7 million. By 2001, the church had sold all or part of its interests in eight of its 18 income-producing properties, property records show, for more than $35 million.

Where is the money going? Mr. Liddle wouldn’t say, citing the church’s privileged tax status.

“The economic benefits of our real estate holdings … all go to the mission of the four churches and the growth of the four churches,” Mr. Kemper elaborated, after much prodding. “That’s the only reason to be in this business.”

Rev. Hanousek’s lawsuit, however, stalled the Bethany sale. The 1917 agreement, it claimed, required Collegiate to support the cancer ministry until 2016. The pastor launched a petition drive and did interviews. He alerted TV reporters to a billboard on a church-owned building at 198 Broadway–a Newport cigarette ad. He rejected settlement offers.

He drove the Collegiate church fathers crazy. “I think he wants to be a martyr,” Rev. Caliandro told The New York Times . “At every turn he’s been a snake in the grass.”

“He speaks to us as [if] he is the church,” Mr. Shaffer testified.

In 1997, Collegiate cut off Bethany’s funding.

As word of the dispute rippled through the denomination, Rev. Hanousek picked up support. Many Reformed churches, especially those in New York, harbored resentment towards Collegiate, their rich and magisterial uncle.

Rev. Hanousek took his case to the ecclesiastical courts, claiming that the sale had not been authorized by a board of local church elders, as required by denominational rules. Collegiate countered that its 1696 royal charter superseded the rules. The New York State regional synod sided with Rev. Hanousek. “Their charter requires them to pay a peppercorn in rent to the crown on some properties,” scoffed the Reverend John Hinkamp, pastor of the Flatlands Reform Church in Brooklyn, who wrote the decision. “They were simply afraid that they were going to lose” a vote, he said.

In 1997, the dispute reached the denomination’s highest body, its national synod. Meeting at Hope College in Holland, Mich., delegates initially voted in favor of Rev. Hanousek. But Mr. Liddle asked the synod to reconsider, saying the decision would scuttle a settlement. On a second vote, the synod sided with Collegiate.

“I really felt we were railroaded,” Rev. Hanousek said. “And I think it was because the leadership of the denomination is afraid of offending Collegiate, because Collegiate has the big bucks.”

“I think that is uncalled for,” replied the Reverend Norton, the head of the New York synod. “The Collegiate Corporation is a wonderful church, maybe the most generous of the churches we serve.”

The settlement Mr. Liddle promised never materialized. Collegiate offered to move Bethany to a new church on 98th Street, a deal Mr. Liddle valued at more than $4 million. But Rev. Hanousek rejected the deal, saying the move would be too complicated, the new site too narrow and too far from Sloan-Kettering. He countered with his own offer: Another developer (whom he won’t identify) would pay $12 million for the property and give the church space within walking distance of the hospital. Mr. Liddle refused the deal, saying the price was too low and that he feared Mr. Parker would sue.

In May, the Dykstras drove out from Michigan for the trial, ready to testify. But Justice Ramos declined to hear them. “They said they didn’t want it to be a sympathy case,” Ms. Dykstra said.

On Feb. 8, Justice Ramos issued his decision. “Bethany Church was merely an incidental beneficiary” of the 1917 agreement between Collegiate and the Madison Avenue Church, he wrote. “Collegiate was given wide discretion in determining the manner in which it would continue the religious and other activities at the chapel.”

The way was cleared for the Bethany to be sold. But will it be? When asked, Mr. Liddle was suddenly vague. He said the church had exercised an escape clause in its contract with the developer, Mr. Parker, and was now “looking at all the options, including developing the piece of property.” One option is for Collegiate to use the site for its own church, a replacement for the long-dead St. Nicholas. But the church is still shopping the property around. Sloan-Kettering, which made an offer several years ago, is also rumored to be interested, though a hospital spokeswoman said there are now “no negotiations.”

“We have an open mind, and we don’t have an agreement with Jack Parker,” Mr. Liddle said. “It’s not clear to me what the outcome will be.”

Mr. Liddle’s open-mindedness surprised Robert Skolnick, executive vice president of the Jack Parker Corporation. “We are the developer,” he said. “We full well believe that the agreement we entered into with Collegiate is binding.” If the land is sold to someone else, he promised to “pursue every remedy available to us in the courts.”

So perhaps the legal system will prove Rev. Hanousek’s savior, after all. If Mr. Parker sues, Collegiate won’t be able to sell the property until the lawsuit is resolved. Asked how he felt about that possibility, Mr. Hanousek chuckled. “You reap what you sow.”