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	Bankruptcy Judge Lets Catholic Churches Continue Construction By Scott Marshall North County Times May 10, 2007 http://www.nctimes.com/articles/2007/05/11/news/sandiego/9_01_205_10_07.txt San Diego — The judge overseeing the bankruptcy of the Catholic Diocese in San Diego on Thursday authorized 10 parishes, including two in North County, to spend a total of more than $14 million on construction projects with money from parish accounts and loans from the diocese to the parishes. The two North County parishes, St. Margaret's in Oceanside and St. Mark's in San Marcos, also are among four churches that U.S. Bankruptcy Judge Louise DeCarl Adler said she wants to use to start to resolve a key issue in the bankruptcy case: which assets belong to individual parishes and which belong to the diocese. Adler instructed James Stang, the attorney for a committee of creditors who have a claim to money from the diocese, including victims of alleged childhood sexual abuse at the hands of priests, to file an action in the bankruptcy court "to find out whose property this is." Irwin Zalkin, an attorney for several alleged abuse victims, said in a telephone interview that a decision on ownership of the assets is "critical." "It's a must," Zalkin said. "I'm pleased to see she recognizes you can't avoid this." The diocese filed for bankruptcy Feb. 27, bringing a halt to sexual abuse litigation on the eve of the first trial of an abuse case in San Diego. The diocese has offered to pay $95 million to settle the more than 140 sexual abuse claims filed against it, but attorneys for those who have sued in connection with alleged abuse by priests have said a fair settlement would be closer to $200 million. The diocese, which covers San Diego and Imperial counties, has 98 churches, runs nearly 50 schools and has almost 1 million parishioners. Adler suspended funding for parish construction projects at a hearing April 18, an attorney for the parishes, Victor Vilaplana, wrote in court documents. Attorneys for the diocese and the Organization of Parishes, which formed to represent the interests of individual parishes during the diocese's bankruptcy, asked Adler in court documents to allow construction spending on various projects to resume, a request the judge considered at a hearing Thursday. Vilaplana said projects at four parishes essentially are complete, but money still was owed for the work that was done. Building at six parishes, including the two North County churches, still is under way, Vilaplana said in court. The construction of a 24,000-square-foot, two-story education center at St. Mark's parish in San Marcos is more than half complete, and the parish is expected to need about $2.5 million to finish it, Vilaplana wrote in court documents. The St. Margaret's church construction of an 18,319-square-foot sanctuary with 1,133 seats is "nearly complete," but more than $3.7 million is needed to finish the work, Vilaplana wrote. Vilaplana wrote that the halt to construction that occurred with Adler's order last month had caused damages to the parishes, including problems collecting revenue, complying with local ordinances and resolving potential safety hazards. Stang told Adler at a hearing Thursday that the construction should not be allowed to proceed because taking cash and putting it into the proposed buildings, in most cases, will cause the diocese's assets to lose value. Only work needed to assure the safety of children should be allowed, Stang said. "These are specialized buildings," Stang said. "They are being built in close proximity to, if not attached to, existing special-use buildings. This is about what the property is going to be worth." Vilaplana and the diocese's attorney, Gerald Kennedy, argued, however, that the projects should be allowed to move forward, perhaps as quickly as today, "What we want to do is be able to commence construction immediately on these projects," Vilaplana said. "There are holes in the ground next to schools. There are parishes that are inaccessible to the disabled." Vilaplana also said that parishes would have to spend $7 million to protect the properties involved even if Adler did not allow construction to occur, a factor that Adler cited in her decision to allow the building projects to resume. Stang also argued that the diocese should not be allowed to lend money to the parishes until the loan terms are determined. Adler scheduled a hearing May 24 to decide what the loan terms should be, unless attorneys on both sides can agree to them before then. Near the conclusion of the hearing Thursday, Adler stated she wanted to move forward in trying to decide what assets belong to the diocese and what belongs to the parishes. The judge directed the attorneys to research rulings in several prior cases and designated All Hallows church, St. Margaret's, St. John of the Cross church, and St. Mark's as the first parishes for which she would address the issue. "This issue has got to get resolved," the judge said. Zalkin said he believes the judge will use whatever she decides regarding the four parishes as a "template" for decisions regarding the other parishes within the San Diego diocese. — Contact staff writer Scott Marshall at (760) 631-6623 or smarshall@nctimes.com.
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