Catholic Charities sues St. Cloud Diocese over Children's Home property

Catholic Charities of St. Cloud filed a civil complaint Monday against the St. Cloud Diocese, which earlier this year announced it will file for bankruptcy protection.

The complaint asks the diocese to transfer ownership of the St. Cloud Children's Home and surrounding properties to the charity, arguing that the diocese agreed to the transfer nearly four years ago.

Catholic Charities said it invested a "substantial amount" of money in developing the children's home, and is seeking to protect its assets from bankruptcy proceedings.

"This is an unusual position we find ourselves in," said Steve Pareja, executive director of Catholic Charities, in a news release.

"While we work closely with the diocese, we are in fact a separately governed and separately run organization. Our separateness comes with obligations — legally and morally — to protect the financial health and sustainability of Catholic Charities and to be responsible stewards of those assets our donors have entrusted to us."

The legal filing, he said, "is a reflection of those responsibilities."

The diocese, which earlier this year announced it would seek bankruptcy protection following 74 claims of clergy sex abuse, declined to comment on the matter.

Catholic Charities of St. Cloud serves more than 54,000 people in 16 counties. Its services include housing, mental health services and assistance to children and families.

Its Children's Home consists of several cottages, classrooms, a chapel, an administrative building, a heating plant and grounds improvements including sidewalks, fences and paved parking.

At issue is what the charity says calls "a series of commitments" made by the diocese starting in 2014 to transfer ownership of the facility and property. Because of those assurances, the charity incurred "significant debt" to fund construction of a 16-unit residential treatment facility on site. That debt is secured by other Catholic Charity assets "that are otherwise unencumbered" and could be used to further the charity's mission, according to Pareja.

Catholic Charities stopped offering residential treatment at the facility in 2017 but continues to provide youth behavior health services on campus.

"When the diocese announced in February a possible bankruptcy filing, resolving this issue took on a new urgency so that an already-complex situation would not be further complicated by a bankruptcy proceeding," said Pareja.