Monday, September 11, 2023

New Orleans archdiocese plans sales of vast real estate holdings to pay abuse claims

More than three years after filing for bankruptcy protection amid mounting claims of child sex abuse by local clergy, the Archdiocese of New Orleans is preparing to sell off seven properties — including the shuttered Sacred Heart of Jesus Church, the St. Jude Community Center and the Catholic Bookstore Uptown — as a way to generate cash that could be used to help settle those claims.

In court documents filed this week, the archdiocese is seeking court approval to hire commercial real estate broker The McEnery Company to market the properties. If sold for their proposed asking prices, the properties would generate nearly $10.4 million for the local Roman Catholic Church.

That’s likely a drop in the bucket relative to the cost of the bankruptcy process and the claims an estimated 500 or so abuse victims are seeking. Attorneys fees and other costs of the bankruptcy process have already totaled some $25 million, while the total amount of money victims are seeking has yet to be tabulated.

It’s also still unclear how many victims will be allowed to file claims because of a 2021 state law that has extended the window to allowing alleged victims of clergy sex abuse to file suit.

Until those questions are resolved, the Chapter 11 reorganization plan cannot be finalized. Selling off the properties, however, is a first step.

“The Archdiocese of New Orleans has stated since filing for Chapter 11 reorganization that we anticipated property sales would be part of the proceedings,” archdiocese spokesperson Sarah McDonald said in a prepared statement.

She declined to comment on how many more property sales might follow.

Priced to sell

Among the properties that will be listed for sale, pending court approval, are two buildings that house establishments currently in operation: the St. Jude Community Center, which provides charitable services to needy and unhoused people in the neighborhood; and the Catholic Bookstore, a volunteer-run nonprofit that sells Catholic books and gifts and has been a fixture in the local Catholic community for nearly 50 years.

The asking price for the community center is $1.95 million, and the asking price for the bookstore property $1 million.

McDonald said the owners of both organizations are aware of the plans to market their buildings for sale and that “no one is being evicted.”

She declined to comment on what will happen to the tenants when the properties come under new ownership.

Parke McEnery, who is marketing the properties, could not comment on the future of the bookstore.

With respect to St. Jude, he said he is already talking to interested buyers from other nonprofit organizations that have similar missions.

“From a mission-driven perspective, we have good opportunities to keep the use in the building the same” McEnery said.

The other properties set to go on the market are vacant or empty. Sacred Heart of Jesus Church on Canal Street has been closed since 2008. It will be listed for $2.275 million. The shuttered Bishop Perry Community Center on Dauphine Street in Bywater will be listed for $1.95 million.

Four vacant lots, including one next to the Catholic Bookstore and one next to the archbishop’s residence, will be listed for a total of $3.2 million.

The other two lots are on South Rampart Street adjacent to 1000 Howard Avenue, a former archdiocesan office building purchased in late 2022 by a short-term rental operator. The lots were under contract early this year to two separate buyers, but both deals fell through because of the high cost of construction and redevelopment, court records show.

All of the properties are priced to sell, according to McEnery, who said they’re all unique assets in good locations with a lot of potential.

“We know the market we’re in requires realistic pricing and we’re not interested in dreaming of 2021 or 2022 prices,” he said. “We’re coming to market with attractive prices and we have already gotten a good response.”

A hearing is set for Sept. 21 to approve the archdiocese’s request to begin marketing the properties. If approved, McEnery says they will be formally listed for sale by the end of September.

Working towards a plan?

The archdiocese has vast real estate holdings that have been valued at an estimated $77 million. 

But that estimate is based on historic market value, or the price the archdiocese paid for the property, and not its current market value. The value of real estate owned by individual churches and church-related entities isn’t included in that estimate.

The recent activity in the case comes as the archdiocese and its creditors, which include abuse victims, slowly work towards a reorganization plan.

Court documents filed recently suggest there has been some progress in recent weeks, noting that, “the debtor and (creditors committee) are exchanging draft provisions of a Chapter 11 plan, and are actively reviewing, revising, and discussing same.”

Before a plan can be finalized however, the court is seeking to create a process that will allow late claims to be filed under a 2021 state law, approved by the Louisiana Legislature in 2022, that allows abuse victims to file suit against their abuser or parish even if the alleged abuse happened decades ago.

A hearing is set for October to work out a plan acceptable to both sides that would allow late-filing abuse victims to seek claims.

A proposal currently under discussion would allow suits to be filed in state court but would pause them until after the bankruptcy reorganization plan has been filed.