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Salvation Army is a residential real estate powerhouse

The charity, known for its image of sacrifice, owns houses in Los Angeles and Orange counties worth about $52 million. The homes are provided to officers rent-free in lieu of higher pay, it says.

March 13, 2010|By Stuart Pfeifer

The Salvation Army bought two of the Rancho Palos Verdes homes in 2007 for $940,000 each. The two houses are within a few blocks of neighboring San Pedro, where similar properties sell for considerably less.

When two of the Santa Monica homes became worn by age, the Salvation Army paid to bulldoze them and rebuild from scratch. One project on Pearl Street cost more than $500,000 to rebuild in 2004. That decision made better business sense than selling and buying a different home, Leslie said.

Gunilla Windon, a real estate agent on the Palos Verdes Peninsula, said she was surprised several years ago when she discovered that the Salvation Army was the owner of a property a client was buying. She later learned about the charity's vast holdings in Southern California.

"I just have a problem with them standing out there with their kettles at Christmastime and people putting their hard-earned money in there when they own millions and millions and millions of dollars of real estate," said Windon, who has not donated to the charity since learning about its real estate holdings. "It just doesn't look right. I don't like it."

Itinerant existence

Salvation Army officers are ordained Christian ministers who provide faith-based public service throughout the world. In the U.S., officers transfer about once every four years; with each new assignment comes a different furnished house. When they retire, officers are given one-time "housing allowances" to use as down payments on homes.

Graciani, 47, a cancer survivor who beams when he talks about the people who have turned their lives around at his Santa Monica treatment center, said the Salvation Army saved his life when he was an adolescent.

A self-described "delinquent" as a teen in San Francisco, Graciani sought refuge at a Salvation Army youth center, where he played arcade games and shot pool instead of running with gang members. He spent so much time at the center that he eventually nabbed a job cleaning up the place.

Graciani worked as a counselor at the youth center, then went to a Salvation Army officer college to be trained as a minister. He graduated and worked assignments in Modesto, Monterey, Anaheim and Missoula, Mont., before the organization assigned him to Santa Monica supervising its adult rehabilitation center on 11th Street.

"There's nothing like getting a guy who has lost all hope and in six months seeing the transformation, seeing in him the hope again. There's no greater pay," Graciani said. "What's it worth when a man comes to you and says, 'Thanks for giving me my son back'?"

The majority of the Salvation Army's residential real estate in Southern California is in middle-class communities, records show. There are 24 houses in San Pedro, 10 in Torrance, four in Glendale and three in Long Beach.

Factoring in the market value of the free housing -- and free cars they are issued -- officers' total compensation packages amount to about $60,000 per couple, Salvation Army officials said.

"Nobody is becoming a millionaire," said William Harfoot, a colonel who oversees the organization's operations in 13 Western states. He and his wife live in a Salvation Army property in Long Beach.

Fiscal advantage

If the charity sold the property it has acquired through the years, the money would have to be used to pay higher wages to its officers to rent their own places, Harfoot said.

"It would put a stress on our operating budget," he said. "We think financially this has worked to our advantage."

From a business perspective, the housing arrangement makes sense and does not appear to be excessive compensation, said Al Osborne, senior associate dean and management professor at the UCLA Anderson School of Management.

"They have made calculations that to keep people focused on their mission, given the low wages they pay, to provide in-kind benefits of housing. I can't quarrel with it," Osborne said. "It's no different from a synagogue or church or corporation that maintains housing for its key people."

Graciani said he and his family can manage with a $2,100 monthly allowance, using the money to pay for food, clothing, medical appointments and an occasional movie. He likes the house in Santa Monica, but he understands that a new assignment and a new house are probably in his family's future.

"I didn't join the Salvation Army so I could live in a Salvation Army house," he said. "If my motivation was a nice house, I'd get a job that would pay for a nice house."

Times researcher Scott Wilson contributed to this report.

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