For Gallup Diocese, It’s All about Land

By Elizabeth Hardin-Burrola
Gallup Independent
April 18, 2015

http://gallupindependent.com/

Each day thousands of motorists on Interstate Highway 40 drive by the busy McDonald’s just off the interstate exit in Winslow, Ariz. Many stop by for a quick bite to eat but few likely know the property McDonald’s sits on is owned by a corporation in bankruptcy.

No, it’s not the McDonald’s corporation.

The Winslow property is owned by the Diocese of Gallup, now mired in bankruptcy court for 17 months, and it is just one of more than 270 parcels of land located on more than 190 properties in Arizona and New Mexico that the Gallup Diocese owns. That list includes a shopping center in Gallup, a large ranch in Northern Arizona, more than 60 subdivision lots outside of Grants, N.M., as well as houses, mobile home lots, vacant land and commercial property. And, of course, some church properties with actual churches on them.

But will the Diocese of Gallup part with any of these non-religious commercial, ranch or residential properties to help fund a plan of reorganization and fund settlements with the clergy sex abuse survivors who filed claims against the diocese in U.S. Bankruptcy Court?

Susan Boswell, the lead bankruptcy attorney for the Gallup Diocese, did not respond to questions submitted to her about the diocese’s plans for its extensive property holdings. James Stang, the counsel for the Unsecured Creditors Committee, which represents the interests of clergy sex abuse claimants, also did not respond to a request for comment.

Courthouse notices

Under Chapter 11, Bishop James S. Wall promised the Gallup Diocese “will have the opportunity to present a plan of reorganization that provides for a fair and equitable way to compensate all those who suffered sexual abuse as children” by church workers in the diocese. He also promised to be “open and transparent” throughout the bankruptcy process and keep Catholics “informed as the process continues.” Early into the bankruptcy case, Boswell had indicated the Gallup Diocese would be appraising some property, particularly property not tied to the diocese’s religious mission.

But between the bishop’s Chapter 11 announcement in the fall of 2013 and the bankruptcy filing more than two months later, Boswell’s Quarles & Brady law firm filed notices in the county recorders’ offices in each Arizona and New Mexico county where the Gallup Diocese holds property titles. In Arizona that includes Apache, Coconino and Navajo counties. In New Mexico, that includes Catron, Cibola, Luna, McKinley, Rio Arriba, Sandoval, San Juan, Socorro and Taos counties.

Citing the authority of Roman Catholic Church canon law in documents filed in secular courthouses, Quarles & Brady claimed much of the property the Gallup Diocese holds title to really belongs to local parishes and not the diocese. According to the notices, the diocese “holds and at all times has held only bare legal title as trustee” for the local parish — “notwithstanding the manner in which title” is held.

One of those properties in Arizona is the parcel of land in Winslow where the McDonald’s is located.

Relying on the real estate mantra of “location, location, location,” the Winslow property should be a gold mine. It’s within yards of Winslow’s central interstate highway exit, a thriving Safeway shopping center is across the street, and an always busy Wal-Mart is located on the opposite side of the highway.

However, it appears chancery officials in Gallup — not parish officials in Winslow — have made a number of poor business decisions through the years. According to a lease agreement signed in the 1980s, the late Bishop Jerome J. Hastrich signed an agreement with G.B. Investment Co., which owns the Bashas’ supermarket chain, allowing the company to lease the property for more than 50 years — until 2042. Then Hastrich and G.B. Investment Co. leased part of the property to the Kmart Corp., which later filed for bankruptcy. The Kmart building now sits empty on the south side of the property, and the McDonald’s is the only viable business on the large commercial lot.

Contrary to the Quales & Brady courthouse notice, documents filed with Navajo County indicate that Gallup’s Roman Catholic bishops, who supposedly only hold “bare legal title,” have made all the decisions and signed all the documents pertaining to the Winslow property.

Ranch and shopping center

The G-Bar Ranch, also known as the Barth Ranch, located outside of St. Johns, Ariz., is another church property diocesan attorneys have claimed the diocese is holding in trust for the Catholic church in St. Johns. Apache County records list the property owners, under the mailing address of the Gallup chancery, as the Roman Catholic Church Diocese of Gallup and Priests Retirement Fund.

Boswell did not respond to questions about whether church officials have considered trying to sell the sprawling ranch to the nearby Navajo Nation, the Pueblo of Zuni, or the Salt River Project’s Coronado Generating Station. In addition, Boswell did not provide answers about who benefits from the ranch’s revenue, which reportedly includes gravel mining and grazing fees.

Boswell also did not respond to questions about how much revenue, generated from a downtown Gallup shopping center, is divided between the Diocese of Gallup and the Sacred Heart Cathedral. The property, located on West Aztec Avenue between Fourth and Fifth Streets, features a Lowe’s grocery and liquor store, a Subway sandwich shop and several other businesses. If sold, the commercial property would presumably generate a considerable sum of money to help fund the diocese’s plan of reorganization.

The property does, however, have an historic connection to the Sacred Heart Cathedral as it was the building site of the previous cathedral.

Appraisal request

Inexplicably, according to the court record, the only property the Diocese of Gallup has asked for court approval to appraise is property that is closely tied to the diocese’s religious mission.

In January, diocesan attorneys asked to appraise three landmark church properties in Gallup – the bishop’s chancery office, the Sacred Heart Retreat Center, and Sacred Heart School, formerly known as Gallup Catholic School. It also asked to appraise property in Thoreau, some of which St. Bonaventure Indian School and Mission claims does not belong to the diocese. Bankruptcy Judge David T. Thuma approved those appraisals.

Based on what has happened in other church bankruptcies, two of the Gallup Diocese’s nonprofit organizations, the Southwest Indian Foundation and the Catholic Peoples Foundation, are likely to “purchase” the Gallup property to help the diocese fund its reorganization. The conflict over the Thoreau property could possibly end up in litigation.

A status hearing in the bankruptcy case will be held at 10:30 a.m., Monday, at the U.S. Courthouse in Albuquerque. One of the subjects scheduled to be discussed will be the valuation and sales of property.