Instant Replay In Indiana

Federal Court Strikes Down South Bend’s Latest Scheme To Subsidize Construction Of New Catholic School

Some government officials in South Bend, Ind., seem to be slow learners.

Rebuked by a federal court that struck down their plan to give a valuable parcel of land to a Roman Catholic high school, city officials went back to the drawing board and devised another scheme to transfer the property – only to see it struck down as well.

The latest twist in the South Bend saga occurred Oct. 19 when a federal court invalidated city officials’ plans to transfer public land to St. Joseph’s High School. The parochial school had intended to use the property to construct an athletic complex.

U.S. District Judge Robert L. Miller Jr. said the city’s proposal to sell the property, which formerly housed a Family Dollar store, for a minimum price of $345,000 still favored the religious school and violated the constitutional separation of church and state. The city paid $1.2 million for the property.

This was Miller’s second ruling on the matter. On Sept. 7, he struck down the city’s original plan, which called for the city to buy the property and deed it to the Catholic school for free. That deal was challenged in court by four taxpayers represented by Americans United, the Indiana branch of the American Civil Liberties Union and the national ACLU.

In the wake of Miller’s September ruling, city officials drafted a new strategy to have the land appraised twice and take bids for it, with the average of the appraisals being the minimum bid amount. The bidders, however, had to agree to use the land in a manner that comported with St. Joseph’s development plans, a restriction that all but guaranteed that the church school would end up with the land at a greatly reduced price.

To no one’s surprise, when the bids were opened Oct. 10, St. Joseph’s was the sole bidder, offering $350,000 – just $5,000 above the minimum.

Miller quickly saw through the scheme.

“A well-informed and reasonable nonadherent would see the proposed transfer as a direct endorsement of a particular religion over other religions and non-believers,” Miller ruled.

Miller noted that there may be circumstances where a city can transfer land to a religious body but South Bend’s new plan wasn’t one of them, given the strong evidence that the city intended for the property to end up under the control of one church and one church only.

Americans United hailed the ruling in Wirtz v. City of South Bend.

“The judge clearly saw that the city was attempting an end run around the court’s earlier decision,” said AU Legal Director Ayesha N. Khan. “The decision makes clear that the city cannot give preferential treatment to St. Joseph’s over other potential bidders.”

The scheme to turn the land over to St. Joseph’s was controversial from the start.

Many taxpayers in town were not happy with the arrangement, and some of them contacted Americans United. AU attorneys wrote several letters to council members noting the possibility of litigation but were unable to persuade them to nix the giveaway.

AU wasn’t bluffing. Acting on behalf of four local residents, the organization filed suit. (For more background on the case, see “Parochial Handout Halted,” October 2011 Church & State.)

“The city should stop trying to figure out a way to turn the property over to the religious school at a discount,” said American United Senior Litigation Counsel Alex J. Luchenitser. “The property should be put on the market and sold to the highest bidder through a truly neutral process that does not favor the religious school.”

What happens now? Oliver Davis, the Common Council’s vice president, who has been critical of the subsidy all along, said the city will retain ownership of the property while deciding what to do next.

St. Joseph’s, meanwhile, is moving ahead with construction. Ironically, school officials have told the city they expect to be able to raise the funds they need through private sources.