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Holy land: real estate delivers a bountiful offering for the Roman Catholic church in Arkansas.

HOLY LAND Real Estate Delivers A Bountiful Offering For The Roman Catholic Church In Arkansas

Like many early arrivals in Arkansas, Catholic missionaries had few good things to say about the critter-infested swamps and jungles of the territory. The hardships of frontier living prompted them to dub the wilderness "a suburb of Hell."

However, the same land that seemed so unforgiving and daunting became a treasure trove under the resourceful leadership of the state's first two bishops: Andrew Byrne and Edward Fitzgerald.

They were able to parlay cash donations from the faithful in Europe into real estate buys that multiplied the original offering into thousands of dollars of profit. That money was used as the financial foundation for Diocese of Little Rock, which encompasses all of Arkansas.

The land holdings once covered thousands of acres in the state, including sizable chunks of downtown Little Rock. By and large, the diocese has converted its secular property into legal tender to fund its ecclesiastical activities over the years.

"The reputation of the Catholic Church is we're rich-rich, but that's not really the case," says Bishop Andrew McDonald.

Income derived from Arkansas real estate investments totaled $449,357 for the fiscal year ending June 30, 1990. That translated into 16 percent of the operating budget for the diocese.

"From my viewpoint, we'd like to make that more," remarks Dickson Flake of Barnes Quinn Flake & Anderson Inc. in Little Rock. "We want to make the most out of the church's assets."

Flake has served as the real estate adviser for the diocese since 1969 and oversees an ever-shrinking portfolio that totals less than 150 acres in Pulaski County.

"Pulaski County is the dominant location of ownership for non-church use [properties], and these most always are donations," states Flake.

Myths & Management

The Catholic Church has a reputation of being real-estate rich, with members donating lots of land as the primary source of the wealth. However, that's a stereo-typical inaccuracy in Arkansas. In fact, the church doesn't blindly accept the donation of real estate.

"Some people are surprised when we don't accept property," remarks McDonald.

The decision to accept or reject such gifts is analyzed with the same economic logic employed by any businessman. Non-church-related property is scrutinized and evaluated carefully.

"The majority are liabilities rather than assets," Flake says of the proposed donations.

The diocese won't take over an undeveloped retirement lot with no improvements in the boondocks of north Arkansas just to provide a tax write-off for the donor. If variables like property tax, insurance coverage and special improvement assessments weigh too heavily, the diocese will pass.

Contrary to popular opinion, the diocese does pay property taxes, income taxes, etc. on all properties not used for religious purposes.

"The misconception is very pervasive," Flake agrees. "The bishops I've worked with over the years are very persistent that all of those properties be put onto the tax rolls."

For purposes of conducting business, the bishop of the Little Rock Diocese is considered a corporation sole.

"I wish it were spelled s-o-u-l," quips Bishop Andrew McDonald.

All land owned by the diocese is held in the name of the bishop, and ownership is passed to each succeeding bishop who has total say-so on how it is used. At his discretion, the bishop may hold council with the priests' senate, which serves as a sounding board on all church matters.

"He views himself as a trustee and is very cautious of any risk," says Flake in observing McDonald's style. "He thinks it's an obligation of stewardship to maximize the value of the property in order to carry out the mission of the church without any increased burden on the diocese."

The diocesan HQ was once located on Center Street in downtown Little Rock. These days, the bishop tends to business in the old St. John's Seminary complex in the Heights, but the spiritual center of the diocese is St. Andrew's Cathedral in downtown Little Rock.

Proceeds from the land sales and income-producing properties are used to promote the work of the church, which manifests itself in different forms, including education and charity.

Blessings And Brouhahas

Fifty years ago, the diocese did accept the offer of a tract of land. The property covered 80 acres of woods along Rock Creek out in the county back then.

"Most properties that come to them are properties that haven't reached maturity for development, and there's always a lag period for any number of years," Flake notes.

Today, that property - at the intersection of Chenal Parkway and West Markham - is among the most expensive around inside the Little Rock city limits. Yes, the Lord works in strange and mysterious ways.

The diocese now owns 48.5 acres split 28.5/20 between commercial and residential zoning. Parts of the land will be sold while other acreage is retained and leased as a long-term investment.

Ten acres were sold to the Presbytery of Arkansas for $200,000 (about 46 cents per SF) in 1984. Seventeen acres along Rock Creek were given to the city as green space, and the balance was used in the right-of-way for Chenal Parkway.

The remaining acreage in west Little Rock stands to be a big winner for the diocese. Whether it is sold or leased, it will likely meet the smiling approval of the faithful. That wasn't the case when McDonald okayed the partial development of land on the western edge of the old St. John's Seminary.

The decision raised a hue and cry from residents in the adjoining neighborhood as well as church members who opposed the idea. The initial plan called for a cluster housing type of residential development but was changed to a more traditional scheme.

That stands in contrast to zero controversy when McDonald sold 3.98 acres on the northwest corner of St. John's 10 years ago. There was little reaction when Norman Holcomb bought the property for $100,000 (nearly 58 cents per SF) and developed 11 residential lots in the subdivision named St. John's Wood.

"Obviously, we're not in the real estate business per se," McDonald says. "We really don't buy land for speculation or as an investment."

Historical Footnotes

There was a time back in the 1800s when real estate speculation was avidly practiced by the diocese. Bishops Byrne and Fitzgerald actively solicited funds from organizations like the Society For The Propagation Of The Faith in Paris, France.

Fitzgerald was especially proficient in raising money from abroad to invest in real estate. Both men lived frugally but were canny real estate investors who employed their skills at multiplying the money sent to them.

"This is how the Little Rock Diocese raised money because it had none," reports Dr. James Woods, assistant professor of history at Georgia Southern University.

Woods is working on a written history of the Catholicism in Arkansas on behalf of the Little Rock Diocese. The book, which is scheduled for publication in 1993 in time for the diocese's sesquicentennial, will be entitled A People Set Apart: The History Of The Catholic Church In Arkansas.

"Fitzgerald always had a lot of money, and he was always good about hiding it," Woods reveals. "When the main abbey at Subiaco [Logan County] burned down at the turn of the century, he wrote out a check for $10,000. That was a lot of money for those days."

In one 12-year stretch between 1867 and 1878, Fitzgerald bought 37 lots and 9 blocks of properties, mostly in downtown Little Rock, with a few buys in Argenta (North Little Rock). He also acquired 200 acres in the Little Rock area.

For Smith is touted as the biggest real estate home run for the Little Rock Diocese. At one time, the church held title to one square mile of land adjoining the city to the south. The land became part of the city with one venue once known as Catholic Avenue. The Fitzgerald addition still remains.

Those once-extensive holdings are now only a thing of the past. The money created by the land became the diocese treasury and formed the financial cornerstone of the Catholic Church in Arkansas.

That real estate legacy lives on.

PHOTO : The Diocese of Little Rock conducts business from the old St. John's Seminary complex in the Heights, but St. Andrew's Cathedral at Seventh and Louisiana in downtown Little Rock is considered the spiritual headquarters.

PHOTO : Bishop Andrew McDonald, who has led the diocese since 1972, presides over both secular and ecclesiastical matters. Like the four predecessors before him, all church business in Arkansas is done in his name.

PHOTO : REAL ESTATE CONSULTANT: Dickson Flake oversees an ever-shrinking portfolio for the Little Rock Diocese.

PHOTO : Bishop Andrew Byrne (1843-62)

PHOTO : Bishop Albert Lewis Fletcher (1950's)

PHOTO : Bishop Edward Fitzgerald (1867-1907)
COPYRIGHT 1990 Journal Publishing, Inc.
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Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Author:Waldon, George
Publication:Arkansas Business
Date:Nov 5, 1990
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