A prominent black church’s assets may be auctioned off to pay a debt owed to a local developer.

Sheriff’s officers took inventory of the Community Baptist Church of Love’s assets last week in anticipation of a sheriff’s sale, said Bill Maer, spokesman for the Passaic County Sheriff’s Department. Maer said the church’s assets could be liquidated to pay a debt of $102,816.33 owed to Bergenfield-based developer BJM Construction.

Three federal tax liens against the church, which was incorporated in 1958 and still operating, show that it also owes more than $380,000 to the Internal Revenue Service for payroll taxes for employees of its non-profit school, which had not been paid over nine years.

The church’s pastor, the Rev. Frederick H. LaGarde Jr., refused comment on the church’s financial troubles, saying only that he believed the developer’s action was an “underhanded attempt to collect money from the church.”

Maer said there was no timeline for when the church’s assets would be offered for sale at auction, but that officers were waiting for additional court orders from a judge.

On March 22, a lawyer acting on behalf of the church wrote a letter to a lawyer representing Brian McCarthy, the principal of BJM Construction, explaining that while the church intends to pay the developer, it could not afford to settle the debt until it resolved its matters with the Internal Revenue Service.

“The church’s survival is first dependent on the resolution of that penalty,” wrote Barry Cohen, the lawyer for Community Baptist.

Cohen said in a phone interview last week that problems with the IRS stem from not paying employee payroll taxes for the K-8 Dr. Frederick H. LaGarde Sr. Academy, which the church operates. Federal documents show that from 1997 to 2006 the church failed to pay $387,408 in employee payroll taxes.

Peggy Riley, an IRS spokeswoman, would not comment on this case. But she said the agency imposes liens when a taxpayer fails to make payments after three notices, and the IRS auctions the property if no payment is received.

The school is named for the former pastor who played a prominent role in the city’s religious life, as well as the Civil Rights movement. The senior LaGarde was a friend of the Rev. Martin Luther King Jr., joining him in Alabama during the Montgomery bus boycott in the 1950s and serving with him in the Southern Christian Leadership Conference. In 1999, LaGarde named his son Frederick Jr. to be his successor in leading the church. He died in 2001.

Alan Siegel, a Chatham-based lawyer, said McCarthy has waited many years to collect the debt.

In 1999, McCarthy signed a contract with the church to build six two-family homes on tax-delinquent vacant lots on Lucille Place in Passaic that the church had purchased from the city for $1, assuming a $50,000 tax debt.

Community Baptist set up a non-profit Community Housing Development Organization to get U.S. Department of Housing and Urban Development funding through the HOME program, in which community groups use federal money to join with private developers to build affordable housing. The City Council authorized $360,000 in federal funds for the church’s project.

Upon closing, the development agreement stipulated the builder would receive all proceeds from sales of the units. By the closing on the third house, McCarthy still had received no payment from the church for any of the construction, he said.

Meanwhile, the city was unhappy with the way the church was operating the CHDO. A city monitor’s report from a 2003 visit to the church’s office found that the church’s CHDO had had no audit since 1998, kept no accounting records, nor did they keep records about how they paid their consultants. The report noted that the board members were “reluctant to answer questions and clarify the documentation they provided.”

The city of Passaic eventually backed out of the project, upon finding that Linton Gaines, a board member for the church’s non-profit CHDO, was also the broker handling the sales of the affordable housing units, said Community Development Director Ronald Van Rensalier.

“There was a lot of mismanagement there, and it didn’t pass the smell test,” he recalled.

The city ended up paying the non-profit $180,000 for the three houses that were built.

McCarthy twice granted the church 12-month interest-only mortgages: the church paid only the interest on the $147,000 it owed, expecting to repay the entire amount after a year. He said the church conducted fund-raisers to pay off the interest, but fell far short, he said. After the second extension, he filed the lawsuit. He’s uncertain how much the church repaid of what it owes him.

It’s also unclear what happened to the money the church received from the sales and from HOME funds.

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