Land sales to fund diocese settlement

The Arizona Republic/June 7, 2003
By Nena Baker

The Diocese of Phoenix is relying on vacant land holdings, one of its few sources of quick cash, to cover the costs of a priest sexual misconduct settlement with the Maricopa County Attorney's Office.

Monsignor Richard Moyer, appointed this week as the "moderator of the Curia,"or chief of staff, said the diocese is selling two parcels intended for use as new parish sites. The parcels are no longer needed because as the number of clergy has dwindled, the diocese is building fewer, but bigger, churches.

The sales are scheduled to be complete within 90 days.

"That land has appreciated significantly," Moyer said, adding that the parcels "have more than doubled in the differential between the purchase price and the sale price."

Moyer, who as moderator of the Curia will be responsible for enforcing the church's sexual misconduct policy under the agreement with the County Attorney's Office, declined to specify the locations, which will become matters of public record once the sales are complete.

The diocese listed assets of $79.3 million on its fiscal 2002 balance sheet, on file with the Arizona Corporation Commission. Of that, $4.3 million was in a bank investment account.

Land holdings accounted for assets of $15 million, including $14 million worth of land earmarked for future parishes.

The majority of the diocese's other assets are deposits from individual parishes, are pledged for specific purposes or are tied up in buildings and equipment, according to the balance sheet.

The document also shows that the diocese:

• Owns its vacant land free and clear.
• Acts as a bank by holding parish deposits.
• Does not hold title to its 89 parish properties.

Moyer said he considers the diocese's financial condition "good to excellent."

The diocese made a $400,000 payment to the County Attorney's Office last week: $300,000 for the Maricopa County Victim Compensation Fund and $100,000 to reimburse the county for the cost of its criminal investigation, which resulted in indictments against five priests and one former priest.

The agreement, which allowed Bishop Thomas O'Brien to avoid possible criminal indictment for obstruction of justice, requires the diocese to make future payments to the Victim Fund totaling $300,000. In addition, the diocese must make payments of up to $50,000 to any victim of sexual abuse who requests counseling or treatment. Other dioceses have covered the cost of treatment for victims through insurance payments.

Diocese officials said settlement money is not being taken from collection plates or debited from contributions to the Charity and Development Appeal. This year's charity and development drive has raised more than $9.5 million, about $200,000 less than anticipated, to fund social service organizations, Moyer said.

O'Brien created a separate corporate entity to safeguard the charity fund, said Kim Sue Lia Perkes, a diocese spokeswoman.

The diocese recently notified an estimated seven social service agencies that it was suspending their funding for the next fiscal year because of a shortage of funds.

"These are outside agencies that have other sources of funding,"Moyer said. "I don't want to name them because I'm not sure they would want to be named.

"If times are better next year, this decision will be revisited."

The diocese has paid nearly $2 million to settle 12 to 15 sexual abuse complaints over the past 20 years. O'Brien has stated the civil settlement money came from insurance carriers and chancery assessments, which are levies on the diocese's 89 parishes based on a percentage of each of their annual incomes.

Around the country, other dioceses have been much harder hit financially than Phoenix by sex abuse scandals:

• Boston has paid nearly $40 million and still is facing 500 lawsuits, which could cost $100 million to settle. It has sold some property and is considering bankruptcy.
• Chicago has paid nearly $17 million, largely from the sale of undeveloped property.
• Tucson has paid an estimated $15 million to settle 11 civil cases and faces several new lawsuits. It relied on contributions from parishes, individuals and other dioceses; the use of parish deposits with the diocese and other reserves.

The settlements have hit the Tucson Diocese hard. If the diocese was to liquidate all assets at their book values and pay off its debts to all its creditors, it would experience a shortfall of $7.1 million, according to its most recent financial statement.

Plaintiffs lawyers said the agreement signed by O'Brien opens the door to new civil cases against the diocese, which currently is the defendant in two lawsuits related to sexual misconduct.