Buffalo Diocese seeks updated value of 37 properties as it looks to settle abuse claims

Buffalo News [Buffalo NY]

June 5, 2023

By Jay Tokasz

More than three dozen Buffalo Diocese properties could soon be appraised for current values that ultimately may factor heavily into a settlement with sexual abuse claimants in the diocese’s Chapter 11 bankruptcy case.

Lawyers for the diocese are asking a federal judge to approve a request to hire KLW Appraisal Group to come up with valuations for 37 properties spread across six counties.

The properties vary from 15 acres of vacant land in the Town of Hamburg near the Erie County Fairgrounds to a historically significant four-story office building in the heart of Buffalo’s medical corridor. They also include six school buildings, two retirement homes for priests, St. Joseph Cathedral, and the former Christ the King Seminary in Aurora.

They were estimated collectively to be worth $16 million in 2020 when the diocese first sought Chapter 11 bankruptcy protection in response to more than 200 Child Victims Act lawsuits alleging clergy and other diocese employees sexually abused children decades ago, according to a disclosure statement at the time. But the court papers also indicated that most of the properties had not undergone a recent appraisal.

Bishop Michael W. Fisher said the diocese was “actively engaged in good faith negotiations” with sex abuse survivors and insurance carriers to settle the case.

Values of diocese properties have been a source of contention from nearly the start of the bankruptcy. Lawyers for the sex abuse claimants objected to a diocese effort in 2020 to sell Archbishop Walsh High School in Olean for $150,000 to the school foundation. Claimants argued that the price was too low and amounted to an inside deal that didn’t reflect the true value of the property.

The diocese later tried to sell the school property through a proposed bid process, but a federal judge ruled that the auction as set up by the diocese would have discouraged competition and he disallowed it.

The property has yet to be sold, but the uncertainty of the situation caused Archbishop Walsh officials to look elsewhere for a school building for the 2023-24 academic year. Walsh Academy and Southern Tier Catholic School will relocate to a former parochial school building at St. John the Evangelist Church on North Union Street in Olean, school officials announced in March.

The diocese also scuttled a potential $5.3 million deal in 2020 to sell Christ the King Seminary to Masonic Care Community. Diocese officials at the time said they pulled the property off the market because of the demands of the Chapter 11 process when it comes to such sales. The seminary campus, which includes six dormitories, a library, gym, auditorium, chapel, rec center, dining hall, classrooms, and administrative offices, was assessed at $9.9 million according to Erie County property tax records.

Diocese Chief Operating Officer Richard Suchan said in court papers that hiring KLW Appraisal was necessary to get a current value for the properties.

“The appraisals will provide the Diocese and parties in interest with important information regarding the value of the properties and may serve as the basis for the expert testimony concerning the value of the properties in connection with proceedings in this Chapter 11 case,” Suchan said.

The diocese would pay up to $33,300 for restricted reports containing minimal information for all 37 properties and up to $77,850 for litigation reports on the properties, according to a proposed contract.

Chief Judge Carl L. Bucki of the U.S. Bankruptcy Court in the Western District of New York is scheduled to hear arguments Monday on the diocese’s plan.

In addition to the Archbishop Walsh campus, the diocese owns the buildings and grounds of Cardinal O’Hara High School in the Town of Tonawanda, St. Mary’s High School in Lancaster, Bishop Timon-St. Jude High School in Buffalo, Notre Dame High School in Batavia, and DeSales Catholic in Lockport.

Five years later, despite promises to do right by abuse victims, the diocese has not paid a penny in damages to an estimated 900 people who filed claims alleging they were sexually abused by priests or other diocese employees.

Other diocese properties include:

• The chancery and central offices at 785 Main St., the former Courier-Express newspaper building

• Various parking lots in Buffalo and Lackawanna

• A Newman Center on Skinnerville Road in Amherst, near the University at Buffalo

• An Amherst condominium

• Nine acres on East River Road on Grand Island

The diocese does not own the buildings and grounds of most of its 160 current parishes, which are separately incorporated and hold title to their own properties. However, recent court papers indicated that the diocese is the owner of seven church buildings in a handful of rural towns and villages in Allegany and Cattaraugus counties.

Properties can be sold in bankruptcy to generate funds that help settle creditors’ claims. Settlement talks also may allow debtors to hold onto a property, while obtaining a loan against the value that can then be used toward the settlement.

In some past diocese bankruptcies, other Catholic entities also were allowed to purchase properties to keep as they were, with the proceeds of the sales going into a settlement fund.

The diocese began mediated settlement discussions Feb. 21 with abuse claimants, insurance companies, and other Catholic entities, including parishes and schools. Because the sessions are confidential, it’s unclear how close or far apart the sides are on a potential agreement that would compensate abuse victims while allowing the diocese to end the lawsuits, continue as a viable organization and protect parishes from financial peril.