Archdiocese of New York Seeks $100 Million Mortgage for Sexual Abuse Fund

http://www.nytimes.com/2017/02/28/nyregion/archdiocese-sexual-abuse-fund-mortgage.html

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The Archdiocese of New York wants to take out a $100 million mortgage on one of its prized real estate possessions to fund a compensation program for victims of clergy sexual abuse.

The petition for a mortgage, which was filed in New York State Supreme Court on Monday, will be on the land the archdiocese owns underneath the luxury Lotte New York Palace Hotel and a semicircle of landmark 19th-century mansions known as the Villard Houses, on Madison Avenue between 50th and 51st Streets.

Directly across Madison Avenue from St. Patrick’s Cathedral, the land was acquired by the archdiocese in the decades after World War II. In the 1970s, the archdiocese entered into a 99-year ground lease with the developer Harry Helmsley that allowed him to build a 54-story hotel on the property and rent the underlying land for $1 million a year.

The hotel and leasehold were purchased in 1993 by the royal family of Brunei, then sold to a private equity fund, and then to the current owner, Lotte, in 2015. The archdiocese did not say how much rent it receives for the underlying land.

Last October, the archdiocese announced an independent reconciliation and compensation program for victims of sexual abuse by its clergy. The program grants monetary awards to victims who agree to take no further legal action against the archdiocese. Cardinal Timothy M. Dolan said in announcing the program that the archdiocese would borrow the money to pay for settlements.

The $100 million loan will be for one year, provided by JP Morgan Chase, according to court documents. Joseph Zwilling, a spokesman for the archdiocese, said that the church decided to take a short-term loan to cover the compensation awards, “since we do not know at this time what the final numbers will be.”

After the program has completed its work later this year, “we will work to obtain a long-term loan,” he said.

The program is operating in two phases. In the first phase, which ended in January, 144 people who had complained of abuse to the archdiocese submitted claims. Of those, 64 victims have received offers of a settlement, and 44 have accepted them. No one has rejected an offer, said Camille S. Biros, one of the administrators of the program.

The next phase, which begins on Wednesday, is for people making new allegations. So far, 26 people who say they have experienced abuse by an archdiocesan employee have registered to submit a claim, Ms. Biros said.

Most of the complaints weighed in the first phase were for abuse 20 to 30 years ago, but several were from the last 10 years, Ms. Biros said. The program is not revealing any information about the amounts awarded.

“We think the program is going very smoothly and has been extremely successful so far,” Ms. Biros said.