Fairbanks Catholic Diocese Sells Hot Springs As Part of Bankruptcy Plan

By Mary Beth Smetzer
Fairbanks News-Miner
March 6, 2010

FAIRBANKS — Unaatuq LLC, a consortium of Alaska Native and nonprofit entities from the Bering Straits region was the successful bidder at $1.9 million for Pilgrim Hot Springs at an auction Friday in U.S. Federal Bankruptcy Court in Anchorage.

The sale of the 320-acre property, owned by the Fairbanks Catholic Diocese, was one of the diocese’s final requirements to fulfill its court-approved Chapter 11 reorganization plan.

The diocese filed for bankruptcy two years ago after being overwhelmed with nearly 300 civil lawsuits claiming sexual abuse. A financial settlement providing $9.8 million in compensation to be divided among abuse victims was reached earlier this year.

All but $50,000 of the $1.9 million hot springs price tag will go to cover the remaining legal and administrative fees owed by the diocese. The remaining $50,000 will be added to the victims settlement fund.

Chena Power Group also offered a bid of $1.9 million, which was not accepted because it failed to comply with all of the financial bidding terms to close the sale.

Bernie Karl, representing Chena Power Group, asked the judge for a 90-day stay, saying it would be in the best interest of the church.

“We developed the only hot springs in the state. We would do that well and for the church. I promise you, I would give you a better bid than you have today and be it would be better for everyone involved.”

Judge Donald MacDonald turned down the 90-day stay request, saying it has taken years to get to this point, and approved the Unaatuq consortium’s bid. Unaataq is an Inupiaq word meaning hot springs.

The consortium is made up of the Bering Straits Native Corporation; Sitnasuak Native Corporation; Kawerak, Inc.; Norton Sound Economic Development Corporation; White Mountain Native Corporation; Teller Native Corporation; and Mary’s Igloo Native Corporation.

Pilgrim Hot Springs, 38 miles north of Nome, is located in a large area of lands owned by the Bering Straits and Mary’s Igloo Native corporations.

According to a Bering Straits press release, the hot springs has been visited for centuries for its curative and spiritual powers, and has “tremendous cultural and historical significance for the residents of the region, and many families trace their ancestry to relatives who were raised at the Catholic orphanage.”

The orphanage was closed in the early 1940s.

Bering Straits CEO Gail Schubert said, “It has great potential as a place of cultural renewal and healing, and agricultural and geothermal development.”

After Friday’s court session, attorneys were surprised to learn that a temporary stay for closing the sale of the hot springs that had been denied Thursday in the Superior Court in Nome was accepted at U.S. District Court in Anchorage after the bankruptcy court auction Friday.

Louie and Nancy Green of Nome, who have seasonally worked at the hot springs as caretakers for a former lessor since 1975, are seeking a quiet title for the property.

Kasey Nye, a Tucson attorney representing the diocese, said the diocese will have until Tuesday to file a response.

“I fully expect that once we file a response the stay will be lifted and the sale will go forward to the consortium,” Nye said.



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