Spokane diocese building sold to raise money to pay creditors

SPOKANE, Wash. — The company that owns The Spokesman-Review newspaper was the successful bidder Wednesday on the headquarters of the Roman Catholic Diocese of Spokane.

Centennial Properties Inc., a wholly owned real-estate subsidiary of Cowles Co., agreed to pay $2.05 million for the three-story building next to the newspaper's parking garage and production plant.

The building, known as the Chancery or Catholic Pastoral Center, houses offices of Bishop William Skylstad. It was sold to help raise money to pay bankruptcy creditors, mainly victims of clergy sex abuse.

The sale is conditional upon approval by the U.S. Bankruptcy Court.

Cowles Chief Financial Officer and Treasurer Steve Rector said a clause in the bid allows the diocese to remain in the building for six more months.

After that, the company likely will negotiate with diocesan officials on a longer-term lease, Rector said.

"We really have no immediate plans for the building, other than to sit down with the folks at the diocese and find out what their needs are and try to accommodate them," he said. "We don't have any desire to kick them out after six months. We are more interested in trying to meet their needs."

Centennial was one of three bidders on the 28,968-square-foot property, which originally was listed at $1.5 million.

Proceeds from the sale will go to a fund to pay claims of people sexually abused by priests or other clergy. About 150 people have filed such claims against the diocese.

The diocese issued a release quoting Skylstad as saying the sales of the building and a vacant property in the Spokane Valley are "one more step toward healing and reconciliation in the Catholic community."

The Pastoral Center is among $11 million in assets the diocese claimed when it filed for Chapter 11 bankruptcy protection in December 2004, citing more than $81 million in claims, mostly by abuse victims.

The bankruptcy proceeding is in mediation.

U.S. Bankruptcy Court Judge Patricia C. Williams said she wants to approve a reorganization plan that includes payments to victims by early January.

Spokane is one of three U.S. Catholic dioceses that have filed for bankruptcy protection because of the abuse crisis. The other two were in Portland and Tucson, Ariz.

Skylstad has said the diocese can raise between $30 million and $35 million from insurance settlements and sales of property, including the diocesan business office.

A federal judge ruled in June that $80 million in churches, schools and other properties in the Eastern Washington diocese cannot be sold by the bishop to satisfy creditors.

Lawyers representing the abuse victims said they would consider suing individual parishes. The 90,000-member diocese has 82 parishes in 13 Eastern Washington counties.

The three-story Pastoral Center on West Riverside Avenue was built in 1924 for Western Union Life, an insurance company, and housed a succession of insurance businesses until it was purchased by the diocese for $300,000 in 1966.

Also sold for $128,000 in Wednesday's telephone auction was a 2.65-acre property in the Spokane Valley, the diocese said.