Detroit — Part of the financial problems of the Archdiocese of Detroit stem from overdue and uncollectible loans to its Loan Deposit Program, Archbishop Allen Vigneron disclosed earlier this week.
The Loan Deposit Program, known as the LDP, is a cooperative savings, investment, and lending program into which Catholic parishes, schools and other institutions make deposits and apply for loans.
In a letter to the faithful of the archdiocese, Archbishop Vigneron disclosed that the LDP has approximately $201 million in deposits, primarily from parishes. It also has $196 million in loans to parishes, schools and other organizations.
“Unfortunately,” the archbishop writes, “about 40 percent of these outstanding loans are unlikely to be paid in full.”
Archbishop Vigneron assured the faithful that the LDP has been thoroughly scrutinized — a process that among other reforms has led to a lowering of interest rates on savings, as commercial banks routinely do in tough economic climates.
Some nonperforming parish loans are being restructured to make it easier for the parishes to continue payments.
In all, parishes have 87 loans from the LDP as well as a dozen Catholic schools and several other entities, according to a series of questions and answers accompanying Archbishop Vigneron’s letter on the archdiocese website. About 40 percent of LDP loans aren’t being paid off on time, the document says. Some parishes are unable to pay off loans for maintenance or expansion projects due to loss of parishioners or collections.
In addition to parish and school loans, Sacred Heart Major Seminary, The Michigan Catholic newspaper and the Central Service operations of the Archdiocese of Detroit combine for $37 million in outstanding LDP loans. The Pope John Paul II Cultural Center Foundation and the Pontiac Area Vision 2000 Schools bond project have $63 million in either LDP loans or other loans that are backed up by LDP assets.
Archbishop Vigneron already has led the archdiocese in beginning to address these financial situations, beginning with a wide scale downsizing of Central Service operations in 2009.
The Archdiocese of Detroit is figuring the loans that will not be paid, or will not be paid in full, might cost $78 million — an amount for which it has already designated reserved funds .
Although parishes and schools may withdraw their deposited money for approved purposes, the LDP is not presently making loans.
Over the past year, the Archdiocese has taken several steps to stabilize the LDP. The goal of these efforts is to ensure its long-term stability.