news-record.com

 GREENSBORO — First Lutheran will break ground on classrooms and a new worship center two seasons later than planned. But after getting caught in the auction-rate securities crisis, the good news is that the project is moving forward at all.

The church’s $500,000  investment in the auction-rate securities market through UBS, a Swiss bank, is being refunded by the company under the terms of an agreement with several states’ attorney general offices and securities divisions.

“The fact that we know we can access it means we can go forward with the architect to finalize the plans,” said Andrew Chamberlin, a lawyer and the immediate past council president for the 1,000-member church. “Even though the groundbreaking is going to be significantly delayed, it allows us to start the process.”

First Lutheran just needed to stash its money until it was ready to break ground this fall on its $3.5 million building project.

A broker suggested parking the money in auction-rate securities, bonds with long maturity dates. They were popular with investors who wanted to take little risk but get better short-term interest rates than bank deposits would provide.

Under the auction system, run largely by large Wall Street investment houses and banks, these bonds are bought and sold at interest rates that periodically reset, sometimes weekly. Investors could also easily cash them in and take their money elsewhere.

Since the collapse of the system this year, securities investigators have been looking into charges that investment houses and banks had propped up the market only to dump the securities on unsuspecting investors such as First Lutheran.

“We don’t have all the details yet, and we don’t know exactly when we’ll get our money back or if we get our interest back, but it’s our understanding we’ll get the principal back,” Chamberlin said . “We’ll be thrilled with that.”

David Massey, North Carolina’s deputy securities administrator , urged caution and said he has not seen any final drafts of settlements. Customers can request refunds beginning Oct. 31.

“It’s time for tempered excitement,” Massey said. “There’s going to be some resolution, but it’s premature to be assuming that there’s a truck that’s going to be pulling up full of cash.”

Church members first learned of the imminent settlement while feeding the homeless and hungry at Greensboro Urban Ministry Friday morning.

“We were just thankful,” said Tom Wood, a member of the church who was there, “that it appears that there’s a break that might be going our way.”

Contact Nancy H. McLaughlin at 373-7049 or nancy.mclaughlin@news-record.com