Archdiocese of Chicago Considers Bond Sale

By Manya A. Brachear
Chicago Tribune
January 26, 2012

http://www.chicagotribune.com/news/local/ct-met-archdiocese-bonds-20120126,0,2046603.story

Seeking to replenish coffers that have covered the costs of construction, clergy misconduct and parish operations, the Archdiocese of Chicago is exploring a number of options to raise more money, including the sale of private bonds to investors.

Though no church official will confirm that the archdiocese plans to sell bonds, theMoody'srating service on Wednesday night gave the Archdiocese of Chicago its top rating for a proposed sale of $151.5 million, the typical precursor to issuing bonds.

But Moody'salso says a sale is not guaranteed, and church officials insist no decision has been made. If the archdiocese proceeds with a bond sale, it would be the first time since Cardinal George Mundelein sold bonds to finance a construction boom in the early 20th century.

Earlier this month, Cardinal Francis George announced that staff and advisory councils had begun to explore ways "to take advantage of historically low interest rates and the good creditworthiness of the Archdiocese of Chicago."

"In the last several years, there has been a greater and greater accumulation of debts that put tremendous strain on the archdiocesan bank," George said in an interview last month with the Tribune. "There's a conversation going on about whether or not the archdiocese should at this time do something. We're still talking about that. No final decision has been made."

Though the church's 2011 financial report is not expected to be released until March, the cost of sex abuse settlements since 2001 is estimated to have exceeded $120 million, said Kevin Marzalik, director of finance for the archdiocese.

Fulfilling a promise not to compensate victims of clergy sex abuse with ordinary parish collections, most of those costs have been covered by the sale of undeveloped property, insurance proceeds and other reserves.

But the economic downturn and sharp decline in real estate values have made finding alternative sources of funding a challenge for the church. A fundraising campaign would enable the archdiocese to refinance loans taken out to pay abuse claims and legal fees until real estate values rebound, Marzalik said.

"You use whatever vehicles you have in place to make the timing work out," he said. "It's not coming from the annual Catholic Appeal or the parish collections."

Contact: mbrachear@tribune.com