In June 2011, the City of South Bend’s Common Council approved a plan to purchase a piece of land for $1.2 million and to donate that land to St. Joseph’s High School, a Catholic school. The land was next to land on which the School was building a new school complex. St. Joseph’s wanted to build athletic facilities, including a football stadium, on the land.
The land transfer was not approved pursuant to any neutral economic development program applying nondiscriminatory and secular criteria. Rather, the City’s mayor spearheaded the transfer. And the transfer would not have been accompanied by any restrictions against use of the land for religious purposes. Indeed, St. Joseph’s held prayer at all of its athletic events, so the land would have been used to support religious activity. The City claimed that the transfer would be legal primarily because St. Joseph’s agreed that, for the first ten years after it acquired the property, the school would allow certain public groups to use the athletic complex when the school was not using it. The school reserved the rights to limit who could use the property and to charge for such use, however.
In August 2011, Americans United, together with the ACLU, filed a lawsuit in federal district court challenging the proposed transaction on behalf of four local taxpayers. In September 2011, the court issued a permanent injunction prohibiting the City from transferring the land to the religious school. The court explained that the proposed transfer would have communicated a message that the City endorses religion.
Shortly after the injunction was entered, the City asked the court to modify or dissolve the injunction. The City had come up with a new plan under which it would have taken bids for the property, with a minimum bid price equal to the average of two independent property appraisals. The City’s bidding criteria, however, favored bidders who intended to use the property to “promote . . . construction of Saint Joseph’s High School and related athletic facilities.” As a result, St. Joseph’s was the only bidder.
We opposed the City’s request to modify or dissolve the injunction because St. Joseph’s bid of $350,000 was only $5,000 more than the minimum bid and $850,000 less than the $1.2 million that the City had paid to purchase the property. In October 2011, the court agreed with us and left the injunction in place.
The City subsequently came up with a third proposal to dispose of the property, which we did not oppose. Under this plan, the property was put up for bid at a public auction with a minimum bid price of $545,000. Any organization was eligible to submit a bid, and there were no bidding criteria that favored the religious school. At the auction, the religious school was the only bidder, for the minimum price of $545,000. As a result of the lawsuit, the City and its taxpayers thus received $545,000 more for the property than they would have otherwise, and $200,000 more than the property’s appraised value.
Even though the property had been sold, in December 2011 the City filed an appeal of the district court’s rulings. The Seventh Circuit dismissed the appeal for lack of jurisdiction in February 2012.