7 minute read | May.13.2026
Across the country, a quiet revolution is underway in unexpected places: church parking lots. From Los Angeles to Detroit, religious institutions of every denomination are sitting on some of the most underutilized land in America — and forward-thinking developers, policymakers and legal advisors are beginning to unlock its potential.
This is not a story about any one faith tradition. It is a nondenominational reality that’s reshaping how we think about land use, mission, community investment and the future of affordable housing finance.
For decades, American congregations built sanctuaries and parking lots to accommodate hundreds of weekly worshippers. Today, many of those lots sit largely empty. Attendance has declined steadily across denominations, a trend accelerated by the pandemic and driven by long-term demographic and cultural shifts. The result is a landscape of land-rich, cash-constrained religious institutions struggling to sustain their ministries while the communities around them face worsening housing shortages.
The scale of the opportunity is significant. Faith-based organizations, collectively, are estimated to own as much as 20% of privately owned land in the United States. A 2020 report by the Terner Center for Housing Innovation at UC Berkeley identified approximately 12,000 acres of religious institution-owned land in just five California counties with meaningful potential for affordable housing development. Nationally, the numbers are far greater and largely untapped.
The natural question, as one Los Angeles pastor and developer put it: What do we do with excess property that's not being used?
Several mission-driven organizations have emerged to help religious institutions answer that question. One example in Southern California is Logos Faith Development, a Los Angeles-based developer whose stated mission is to make communities “more abundant, vibrant, sustainable, and equitable by transforming underutilized church land into dignified housing.” Through a nonprofit-partner development structure, Logos works with faith-based landowners to create property tax-exempt developments that generate long-term ground lease income for churches while producing affordable units for the communities they serve. Their current pipeline spans more than 2,000 units across over 50 sites, representing more than 30 faith-based organizational partners.
Another example is Bridge Meadows, an Oregon nonprofit developer, owner and operator of intergenerational affordable housing communities combining families that have been impacted by the foster care system and seniors with affordable housing and support services. Bridge Meadows’ second community in Beaverton, Oregon, now a thriving intergenerational community for seniors, parents and children, was previously an empty, unused excess parking lot for the Beaverton Christian Church. The support and flexibility of the Church in the sale of the land to Bridge Meadows was central to the success of the project, including the public funding and approvals required for the project to proceed. Bridge Meadows has also pursued the long-term ground lease structure on another project to be located on unused church land to reduce up-front land costs and, at the same time, provide a long-term revenue stream to the church, complementing the mission and ministry of both organizations.
For institutions not yet ready for full-scale development, platforms like Church Space help churches activate what they already have, renting underused fellowship halls, commercial kitchens and event spaces to generate near-term revenue while longer-term plans are structured. Providing an important bridge, churches learning to think of their real estate as a living community asset to be used in furtherance of their mission and ministry, rather than a static cost center.
Both models point to an underlying truth; Religious institutions across every denomination — Baptist, Episcopal, Catholic, AME, Jewish, Muslim — are grappling with the same structural challenges. The land is there. The need is there. What has been missing is the legal, financial and development architecture to bring them together.
At Orrick, we are increasingly being asked about the financing structures that make these projects viable — specifically, how to structure affordable and senior housing development on religious institution land on a tax-exempt basis using the qualified 501(c)(3) bond framework.
The core concept is straightforward. Because religious institutions already hold 501(c)(3) status under the Internal Revenue Code, they can leverage that status to access below-market capital for affordable housing and senior housing development. because interest paid to bondholders on qualified 501(c)(3) bonds is exempt from federal, and almost always state, income tax. In practice, this translates to financing costs that can be 30 to 35 percent lower than conventional loans, which is often the difference between a project that pencils and one that does not.
Under Section 145 of the Code, qualified 501(c)(3) bonds may be issued for capital projects, including housing construction and rehabilitation, that further the organization’s exempt purposes. The 501(c)(3) conduit borrower must hold a valid IRS determination letter and maintain its exempt status for the life of the bonds. For affordable and senior housing developers, the relevant purpose is typically charitable: specifically, the “relief of the poor and distressed.” Faith-based organizations often have “religious” purposes which are technically different from charitable purposes. Establishing the identity and charitable purpose of a suitable 501(c)(3) borrower, whether a church or other religious organization or an outside third-party, is one of the first and most important steps in setting up a 501(c)(3) bond issue.
Structuring these transactions requires careful attention to additional key issues.
Navigating these rules while still creating a workable development and operational structure is where experienced bond counsel is essential.
Worth noting, projects financed with qualified 501(c)(3) bonds are not eligible for the federal Low-Income Housing Tax Credit program, so additional public and/or philanthropic funding sources are likely to be needed, in addition to the bonds, to finance the project.
Legislative tailwinds are growing. California’s Senate Bill 4, signed by Governor Newsom and dubbed “Yes in God’s Backyard, “opened more than 170,000 acres of faith-owned land statewide to affordable housing development, bypassing the historically burdensome rezoning and discretionary approval process. The movement is not limited to California. Across the Pacific Northwest — in Oregon, Washington and beyond faith communities are similarly converting underutilized church land into affordable and senior housing, reflecting a nationwide reckoning with both declining congregation sizes and the urgent need for housing. Other states are watching closely and similar frameworks are being explored nationally.
For religious institutions sitting on surplus land, the path forward requires coordination across real estate, tax, and public finance. At Orrick, our public finance, and real estate practice teams are actively advising on these transactions. We help structure financings that honor each institution’s mission and tax-exempt status while delivering the below-market capital that makes affordable and senior housing development genuinely feasible. The pews may be quieter, but the land is ready to serve.
If you have questions about how the revised guidance affects your institution’s affordable housing development strategy, or want to discuss structuring or financing options, please contact one of the authors or a member of Orrick’s public finance team.