Historic Community House in Birmingham files for bankruptcy

The Community House Association, a Birmingham nonprofit caught in a legal dispute with the city it was created to benefit, has filed for bankruptcy protection, a move that could complicate what happens next to the organization — and the multimillion-dollar house it owns, but now wants to sell. "

This was a necessary next step in moving toward the sale of the building, which is imperative to address the cash flow challenges the organization will face after June 30," Jacob Taylor, The Community House board chairman, told the Free Press late Thursday, March 26, in a written statement.

He added that ongoing litigation "has prevented the timely sale of the building and has made bankruptcy necessary." The Jewish Federation of Detroit recently pulled out of a deal to buy the property. The Chapter 11 bankruptcy petition, filed Thursday in U.S. Bankruptcy Court in Detroit, however, will allow the nonprofit to continue operating while attempting to pay employees and creditors under a court-approved plan.

Why the Community House filed for bankruptcy Finding revenue to continue operations and paying off the millions in debt it took on in the last couple of years is not the nonprofit’s only challenge. Founded more than a century ago, the organization had touted for years that in the early 1920s, the community turned "a small frame structure" into an "extraordinary place where all would be welcome." Since 1990, the association said in its filing, it has operated a childcare center, which now serves 42 children but is licensed for 100.

In 2012, it added a full-service banquet facility. The nonprofit now employs 38 people, 24 full-time and 14 part-time. Lawsuit with Birmingham centers on deed restrictions A lawsuit brought by the City of Birmingham in Oakland County Circuit Court against the association, which the nonprofit implied forced it into bankruptcy, presents a crucial question that the court will have to answer: How do deed restrictions on the 38,500-square-foot limit the house’s ownership?

Depending on the restructuring and the court’s decision, restrictions also may present a challenge for the association’s biggest creditor: Rochester Hills-based Chief Financial Credit Union. In late 2024, the association took out a $900,000 term loan and two revolving lines of credit of $600,000 each. The debt was borrowed against the house, appraised in 2024 at about $7 million.

Operations were not sustainable, leaders said For many, controversy about The Community House — or Birmingham Community House to some — surfaced in early November, when the organization announced that it planned to sell the house and use the proceeds to start a community foundation. The news upset some Birmingham residents, who openly opposed the sale, and they began organizing meetings and making plans "to save The Community House." More: Group forms 'to save' the Community House in Birmingham Some residents have questioned whether there was mismanagement.

In addition, city officials, including Birmingham Mayor Clinton Baller, expressed concern and began meeting in sessions closed to the public. Later, residents and officials began asking questions about the historic house's deed restrictions. The sale limitations were put in place — written into the deed decades ago — presumably to ensure that the property, and the house, would always be used by the community.

The city sued the nonprofit in Oakland County Circuit Court to stop the sale. The case, according to the bankruptcy filing, is scheduled for trial in 2027. Financial pressures mounted in recent years Officials also began discussing the possibility of buying the property to use as a community center, and according to a Crain’s Detroit Business report, made an offer on the building, which was below the appraised value, earlier this year.

The Free Press left a message with Baller. On top of all of that, as the Free Press and other news outlets and community groups pressed the organization to detail why it was transforming into a foundation, the association’s leadership acknowledged the nonprofit’s revenue model — which relied on renting meeting space and banquet services at the house — was "not sustainable." In a previous interview, association executives also told the Free Press they were concerned that the ratio of income from what the Internal Revenue Service calls unrelated business income, like its banquet and rental services, was too high and could threaten the organization's tax-exempt status.

Declining revenue and rising debt For decades, The Community House has been a place to promote what a Michigan lifestyle magazine called "social, civic, and philanthropic life." Residents have told the Free Press they view it as a special place in the tony suburb where important moments — like birthdays, weddings and retirements — are celebrated. The association’s bankruptcy documents note that the association’s history dates to 1920, when the Rev. Charles McCurdy of St. James Episcopal Church set up a committee to reorganize the St. James Women’s Guild and draft bylaws for a new “community house” organization.

The group later incorporated, and in 1930, it opened the house to the public at 380 S. Bates. Over the years, residents have said, the house has been expanded and modified. The bankruptcy filing, however, suggests problems may have been even worse than previously disclosed, although it did not go into significant details of how it happened.

According to the documents, for "the past seven years," the association’s revenues have been falling while its expenses have risesn. To address this, the documents said, the association drew down its savings. Since November 2024, the court documents said the nonprofit has faced "significant cash-flow" issues.

That’s also when other records obtained by the Free Press show the association took out the loans.

In 2025, the petition said, 73% of the events and meetings were being booked by people and businesses from communities outside Birmingham, and only about a third of the philanthropic dollars coming in originated from Birmingham residents. What happens next for the Community House In addition to the house, the association listed at least $675,000 in assets, most of which were artwork appraised at $450,000. As for debts, Crain’s reported that in addition to the more than $2 million in credit union loans, the association also owes more than $1 million in unsecured credit.

Court documents show the underlying balance on one of the lines of credit — $600,000 — is due at the end of June, which, it now appears, is why the association announced last fall it wanted to sell the house. Contact Frank Witsil: 313-222-5022 or fwitsil@freepress.com