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	Bankruptcy Won't Touch Most Assets, Diocese Says Properties total $46.1M; bulk of wealth in parishes By Stephanie Innes Arizona Daily Star July 11, 2004 http://www.dailystar.com/dailystar/relatedarticles/29618.php The Roman Catholic Diocese of Tucson owns $46.1 million worth of property in nine Arizona counties - the bulk of that wealth coming from parishes, which the diocese predicts will not be affected by a possible bankruptcy. Diocese officials defer to Roman Catholic Church canon law when they maintain that the diocese's 75 parishes are not diocese property, even though that's how they are listed on public tax rolls. The diocese also maintains its fund-raising foundation, which has nearly $7 million in net assets, isn't part of the diocese's overall worth, and notes that some diocese assets are gifts with restricted uses. The diocese's financial report shows a long-term debt of $4.7 million and a deficit of $7 million - a "negative net worth" as its budget director has said. As the diocese contemplates declaring bankruptcy while facing 16 pending lawsuits alleging sexual abuse of minors by priests, the Arizona Daily Star tabulated diocesan real-estate holdings by obtaining property records from all of the nine Arizona counties where it ministers. The Star included parishes in its count of overall diocese holdings because the diocese is listed as the owner of its parishes in public records. Star research shows that while the diocese administration may be asset-poor, its parishes are not in the same dire straits. The diocese anticipates $19 million in annual parish plate collections, and took in a record $3.3 million from its annual Catholic Appeal. It has a fund-raising foundation with net assets of $6.8 million. And it owns 335 parcels of predominantly tax-exempt property with a total full cash value of $46.1 million. The assessed full cash value is often but not always lower than a property's market value. A decision over exactly what is part of the diocese's assets may ultimately rest with a federal bankruptcy court - that will be the case for the Archdiocese of Portland, which last week became the first diocese in the United States to file for Chapter 11 reorganization. Portland Archdiocese spokesman Bud Bunce said last week that bankruptcy was a "last resort" measure that its archbishop reluctantly took because of litigation costs associated with sexual abuse cases, including one plaintiff who asked for $130 million. Settlements, more litigation Whether the Diocese of Tucson follows Portland's lead is still in question. Bishop Gerald F. Kicanas says that because additional lawsuits over sexual abuse of minors by clergy are likely to be filed against the diocese, the local church's financial future is not encouraging. He says that while the sexual-abuse victims suffered is outrageous and debilitating, the crisis has opened the church to future lawsuits and it's impossible to predict how many. "The reality is that settlements have led to more litigation," Kicanas said. "Money is a very powerful motivator. That's a factor." Kicanas, a Chicago native who took over as bishop in March 2003, says the Diocese of Tucson has few resources, which is true when one looks only at the financial statements for the diocese's administrative offices. But parishes - the bulk of the diocese's land wealth - are not included in the statements released to parishioners each year. Nor is the Catholic Foundation for the Diocese of Tucson - a fund-raising arm of the diocese, Diocese of Tucson Catholic Cemeteries, or Catholic Community Services for Southern Arizona. The Star analysis, while including parishes, did not include properties owned by the Catholic Foundation, the Diocese of Tucson Catholic Cemeteries or Catholic Community Services for Southern Arizona, since all three are separately incorporated entities that all file annual reports with the Arizona Corporation Commission. The analysis also did not include any Catholic schools within the diocese that are independently operated, such as St. Augustine Catholic High School. That school opened last year and recently purchased the diocese's old East Side Regina Cleri Center for $3 million - money the diocese says was needed to pay plaintiffs from the 2002 settlement. The assets of the Catholic Foundation, the cemeteries and Catholic Community Services, as reported to the state are: $5 million in current and fixed assets for Tucson Catholic Cemeteries for the fiscal year ending June 30, 2003; $13 million in net assets for Catholic Community Services; and the Catholic Foundation's $6.8 million in net assets from the fiscal year ending June 30, 2002 - the last available report. The Catholic Foundation is separately incorporated, though in its most recent public annual report Kicanas was listed as chairman of its board of directors. Lawyer doubts filing will fly "I don't think they are poor enough to declare bankruptcy," said Lynne M. Cadigan, who is representing plaintiffs in a majority of the pending lawsuits. "Based on a variety of factors, I believe that the courts will find the Catholic Foundation is part of the diocese. It appears it is simply an extension of the diocese and the bishop has more than enough money in there to settle every single case." Diocese officials note that the Tucson diocese does not have the wealth of other dioceses like the Archdiocese of Boston. Boston avoided declaring bankruptcy over crippling costs associated with sexual abuse of minors by its priests in part by selling most of its headquarters, including the former archbishop's residence, to Boston College for $107.4 million. By comparison, when the Tucson Diocese sold its headquarters to the Catholic Foundation, the price was $1.65 million. And while Boston is closing nearly one-fifth of its parishes because of declining attendance and financial woes, Tucson expects its parishes to continue operating, no matter what happens with the lawsuits. "By canon law, the bishop, and therefore the diocese, does not own these properties," the Rev. Van Wagner, vicar general for the local diocese, said Friday, referring to the parish real estate. "The parish owns the property. The properties are held in trust for each of the parishes listed and for the parishioners of those parishes. This relationship of trust between the diocese and its parishes is as old as the diocese itself - 107 years. Each of these properties represents the faith and generosity of generations of Catholics." Plaintiff lawyers say state law, not canon law, determines who owns property. Earlier debt brought oversight Kicanas sent a letter to the diocese's 350,000 parishioners last month saying that filing for Chapter 11 bankruptcy appears to be the best option for the local church, which felt financial strain from a $14 million settlement in 2002 with 10 men who said they were abused by four members of the local clergy during the 1960s, '70s and '80s. The 2002 settlement came on the heels of another period of financial distress. In 1988, the diocese's debt soared to $23 million due in large part to the failure of a television station it established in hopes of offering family-oriented programming. In 1989, after the sale of the station, a financial oversight committee set up by the Vatican began monitoring the diocese's budget. The oversight committee, led by Cardinal Roger Mahony of the Archdiocese of Los Angeles, disbanded in November 2000, saying the Tucson Diocese's financial status was "quite sound and positive." At that time, the local diocese had a remaining debt of $3.2 million, and its financial future looked good. But that all changed in 2002 when the crisis over clergy sexual abuse erupted in Boston and across the country, including in Tucson. "With the television station we knew the extent of that. We knew what we had to get out of, so we could beg, borrow and steal and find a way to pay this indebtedness," Kicanas said. "Here we don't know the extent of the indebtedness." Values may be understated Cadigan believes the Arizona Daily Star's research on diocese property holdings is a gross understatement of the local church's true wealth because it used assessor's values, which do not typically reflect a property's market value. Indeed, the full cash value often appears low. St. Patrick's Church in Bisbee, for example, is a recently restored historic property with stained-glass windows that draw visitors from around the world. The windows alone cost $20,000 a year to insure. But the full cash value of St. Patrick's, listed by the Cochise County Assessor's Office, is $48,613. The last time the county had it appraised was 1977, Cochise County records show. But diocesan spokesman Fred Allison said St. Pat's is also an example of a parish that may be owned by the diocese on the tax rolls, but in reality belongs to a community and cannot be labeled with a dollar amount. The church is on land that was donated by a miner, was built by Irish and Welsh miners - both Catholic and non-Catholic - and when the church was recently renovated at a cost of nearly $750,000, some finances came in from the state, but most came from Bisbee residents of all faiths who dug into their own pockets to restore what's become a beloved city landmark. Kicanas said he's hopeful churches like St. Patrick's will feel no sting from any future financial payouts, or from Chapter 11 if the diocese decides to declare bankruptcy. "You hope in the midst of this mess that something good will happen, that victims will be able to be compensated and that the mission of the church will be able to continue." * County values * The value of property owned by the Roman Catholic Diocese of Tucson, broken down by county is: * Pima County: $29.9 million * Pinal County: $7.1 million * Cochise County: $2.7 million * Yuma County: $2.35 million * Santa Cruz County: $1.3 million * Graham County: $1.2 million * Gila County: $843,843 * Greenlee County: $525,880 * La Paz County: $224,499 List of property values Database searches of property turned up 335 land parcels worth $46.1 million in nine counties listed as belonging to the Roman Catholic Diocese of Tucson - 14 in Gila County, 67 in Cochise County, 17 in Greenlee County, 36 in Pinal County, 22 in Yuma County, nine in Graham County, 25 in Santa Cruz County, one in La Paz County and 144 in Pima County. Properties listed as belonging to Catholic Community Services of Southern Arizona, the Catholic Foundation for the Diocese of Tucson and the Diocese of Tucson Catholic Cemeteries are not included in the property totals because all three are considered separately incorporated private entities that file their own annual reports with the Arizona Corporation Commission. The most valuable properties owned by the Roman Catholic Diocese of Tucson outside Pima County are listed below. Monetary amounts listed are the property's full cash value, which is the land's full cash assessed value plus the value of improvements: * St. George Catholic Church, Apache Junction: $1.6 million * St. Helen Parish, Eloy: $878,833 * St. Rose of Lima Parish, Safford: $814,996 * Assumption of the Blessed Virgin Mary Catholic Church, Florence: $757,510 * St. Francis of Assisi Parish, Yuma: $647,125 * Sacred Heart Parish, Nogales: $543,039 * Our Lady of the Mountains Catholic Church and School, Tombstone: $478,560 * St. John Neumann Parish, Yuma: $458,705 * St. Jude Thaddeus Parish, San Luis: $446,327 * St. James Parish, Coolidge: $431,310 * St. Anthony of Padua Parish, Casa Grande: $419,311 * Most valuable real estate owned by the diocese in Pima County: * Our Mother of Sorrows Catholic Church, 1800 S. Kolb Road: $3.97 million * St. Pius X Catholic Church, 1800 N. Camino Pio Decimo: $3.05 million * St. Ambrose Catholic Church and School, 300 S. Tucson Blvd.: $2.7million * St. Joseph Catholic Church and School, 215 S. Craycroft Road: $2.45 million * St. Cyril of Alexandria Catholic Church, 4725 E. Pima St.: $2.24 million * St Elizabeth Ann Seton Catholic Church, 8650 N. Shannon Road: $1.5 million * St. Augustine Cathedral - church, campus and parking lot, 192 S. Stone Ave.: $1.37 million * Most Holy Trinity Catholic Church, 1300 N. Greasewood Road: $709,700 * Casa de San Jose, 415 S. Sixth Ave.: $702,600 * St. Frances Cabrini Catholic Church, 3201 E. Presidio Road: $624,790 * Our Lady of La Vang Catholic Church, 800 S. Tucson Blvd. : $525,370 * Mission San Xavier del Bac, 1950 W. San Xavier Road: $484,700 Sources: Assessors offices in Pima, Gila, Cochise, Greenlee, Pinal, Yuma, Santa Cruz and Graham counties. La Paz county data was obtained from Nationwide Environmental Title Research, LLC. Contact reporter Stephanie Innes at 573-4134 or sinnes@azstarnet.com.
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