More than two years after filing for Chapter 11 bankruptcy protection in the face of mounting lawsuits related to child sexual abuse, the Archdiocese of New Orleans is starting to raise cash by selling some of its large real estate holdings.
Lawyers for the local Roman Catholic Church will ask a judge this week to allow two separate property transfers to move forward. One is the sale of a former 12-story office building at 1000 Howard Ave. to a Lafayette-based investor. The other is the sale of a parking lot on Loyola Avenue behind the Howard Avenue building.
Together, the deals would generate nearly $10 million for the local church, and follow property sales totaling about $1.9 million earlier in the bankruptcy process.
It is unclear how far the millions raised by the property sales will go toward resolving the 450 abuse claims levied against priests and other clergy who served in the archdiocese. And it’s also not known what other financial steps Archbishop Gregory Aymond and his advisers will take to pay off what is expected to be a multimillion-dollar settlement with abuse victims.
That’s partly because the case is still unfolding slowly in U.S. Bankruptcy Court, where some of the proceedings are being kept out of the public eye.
When the New Orleans Catholic Church joined two dozen other U.S. archdioceses in filing for bankruptcy protection in May 2020, it listed $243 million in assets and $139 million in liabilities.
At the time, Aymond said the church, which serves 500,000 Catholics in 112 parishes, had to seek Chapter 11 protection because of the rising costs of abuse settlements and the fallout from the pandemic.
Financial records previously valued archdiocese-owned buildings and land at about $70 million. But that estimate is likely significantly lower than what the properties would fetch on the market because it is based on the prices the archdiocese paid for the properties.
It also does not include the value of real estate owned by individual churches and church-related entities. The church has not publicly listed the estimated market value of its more than 200 pieces of property owned in the archdiocese.
The archdiocese declined to comment on the property sales or the bankruptcy proceedings more generally.
Still, attorneys involved in the case view the pending sale of two downtown properties as a step forward in the bankruptcy case, but not an indication that a settlement with survivors is imminent.
“We’re glad they’re doing that and they’ve consulted with us, but that doesn’t mean there’s been a settlement or that we’re moving toward a settlement,” said Jim Stang, an attorney at Los Angeles-based Pachulski Stang Ziehl & Jones, representing the committee for unsecured creditors in the case.
Bankruptcy cases usually move slowly. A case like that of the archdiocese, which is wrapped in allegations of child sexual abuse at the hands of priests, is no exception.
Dozens of lawyers have argued over the past two years whether the case should be dismissed because the archdiocese is not insolvent. They also questioned how much information should be protected from the public.
There are other complications as well.
For example, the FBI is investigating allegations that the former pastor of the St. Peter Claver Catholic Church in Treme, who was removed from his post in 2021 after being accused of raping a child years earlier, may have misappropriated nearly $400,000 in parish funds.
The archdiocese confirmed last week it was cooperating with the FBI in its investigation of the case, which came to light in an audit the church has fought to keep private.
Archdiocese officials said the incident was unrelated to the larger financial issues in the bankruptcy and that the alleged financial improprieties at St. Peter Claver is an isolated incident.
The FBI is also investigating allegations dating back decades that clergy may have taken children to other states to molest them, possibly in violation of federal anti-sex-trafficking laws, The Associated Press reported. The church denied knowledge of that investigation.
Amid the federal investigations, lawyers in the bankruptcy case are trying to come up with a settlement plan to compensate the hundreds of sex-abuse survivors who have filed claims against the church.
Selling property is a way to begin liquidating assets and raising funds for those settlements. To date, the church has completed the sale of only one large parcel, the former St. Elizabeth Ann Seton School Kenner, which a developer acquired at auction for nearly $1.9 million.
The sale of the Howard Avenue properties is significantly larger and is a relatively easy way for the church to generate cash because it is excess property, according to Stang.
“It’s a building they felt they no longer needed and given its condition, maintenance costs and the damage it suffered in hurricanes, it was excessive,” Stang said. “They need to raise cash and that was something they don’t seem to need anymore.”
The bankruptcy will allow the archdiocese to consolidate all of its historic abuse claims and try to move beyond them financially. But the process itself is expensive, noted Jason Berry, an author who has written extensively on the Catholic Church, the abuse crisis and church finances.
“The church is paying heavily to lawyers and cutting off the funds available to survivors, many of whom need the money to rebuild broken lives,” Berry said.
While the pending sales may not signal a settlement in the bankruptcy case, the deals are significant for what they mean for the potential redevelopment of Howard Avenue.
Lafayette-based Triple or Nothing, LLC, signed a purchase agreement with the archdiocese earlier this year for $8.3 million to acquire the Howard Avenue mid-century modern office building, which includes an attached parking garage and a parking lot.
Court records show that the group agreed to complete the sale by Dec. 30 and that a due diligence period expired on Nov. 7, meaning, with the court’s blessing, the sale deal will go ahead.
Triple or Nothing, LLC is registered to Samer Mohd, a Lafayette investor who owns several businesses in Lafayette and several local investment properties in Mid-City and near Tulane Avenue.
Commercial real estate broker Parker McEnery, whose firm is representing the archdiocese in the liquidation of its real estate assets, would not discuss details of Mohd’s plans for the building site. But he said the investor plans to redevelop the site into a hospitality concept that will be new to the market.
“It would be a lot for the Howard Avenue corridor,” McEnery said. “This is a major redevelopment project.”
The other transaction before the court is the sale of a parking lot located directly behind the Howard Avenue building. Local real estate development firm Mk RED signed a purchase agreement to acquire the lot for $1.68 million, court records show.
Mk RED declined to comment on the pending sale or the firm’s plans for the property. But the firm’s portfolio includes several multifamily developments in Mid-City, as well as redevelopments of older homes and buildings.