St. Michael Catholic Church
315 West Illinois Street
Wheaton, IL 601871 February 2003
Dear St. Michael Parishioners,
I am pleased to inform you that a settlement with the insurance company that insures all property in the Diocese of Joliet, Catholic Mutual of Omaha, NE, has been finalized for the loss of our church and its contents destroyed by fire on March 18, 2002. The amount for the church and its contents is $4,597,178.
Additionally, we also will receive $120,426 for damages to the rectory. We have already received a maximum benefit of $185,00 for business interruption and loss of income. This helps pay the rental of the office trailer and other expenses associated with moving the offices out of the rectory. Since the fire approximately 125 families have registered at other parishes resulting in a decline in our Sunday collections. We also received $5,913 to replace personal vestments and restore sacred vessels belonging to our priests. Including all these items, our total recovery is $4,908,517.
Immediately following the fire, I appointed a small committee to work with the insurance company in executing a fair and equitable settlement. Committee members were parishioner Bob Gilmartin, an attorney who specializes in property loss litigation and is a partner with Clausen Miller, P.C. in Chicago; parishioner Joe Keim, a land developer and builder; Michael Buchholz, a former parishioner who was the architect for the school renovation, boiler replacement, and air-conditioning project and thus was familiar with the church, rectory and school blueprints; Pat Komar, our parish business manager; and myself.
As you might expect for a claim of this magnitude, St. Michael and the insurance company went back and forth on a variety of issues and facts during the many months of negotiations. We had to supply a great deal of factual information to the carrier in order to substantiate our loss, such as square footage of the church and a detailed inventory of its contents. Pat Komar, members of the worship commission, and the parish office staff assumed the inventory responsibility. They did an exemplary job supporting our position. Additionally, Joe Keim and Michael Buchholz worked diligently to document our claim with regard to square footage of the former church, replacement construction costs, and many other items. Bob Gilmartin did an outstanding job in advocating our position and negotiating with the insurance company. The original settlement proposed by the insurance company was $3.1 million. Thanks to the diligent, persistent and methodical efforts of the committee, we reached a settlement that I believe truly reflects a fair and accurate settlement of our loss. We owe this committee a great deal of gratitude for their zealous efforts!
Our former church was insured for replacement cost. This means that we are entitled to recover an amount that would allow us to reconstruct the former church built in 1958, as it existed prior to the fire. The replacement cost analysis considered that the former church seated 800 people, was constructed primarily out of wood and brick and was configured in a simple A-frame.
While our settlement of over $4 million is a substantial amount of money, it will not be enough to build what is required today. Directives from Rome, the National Conference of Bishops, and the Diocese of Joliet that influence the design of churches constructed today are different from the directives when our former church was built in 1958. It is the directive of the Diocese that if all possible, churches built today in the Diocese seat at least 1,000 people. In addition, our former church did not have amenities such as bathrooms accessible to persons with disabilities, and other ADA standards now required. Moreover, our former church building did not have ancillary facilities such as parish offices or meeting rooms, nor did it have a meaningful narthex. Asbestos removal and the likely demolition of the old rectory and convent are also expenditures to prepare the site for construction. For these and other reasons, the cost to build our new house of worship will exceed, by a considerable margin our insurance settlement. Three new churches with ancillary facilities currently under construction in the Diocese range in cost from $7.5 million to $8.8 million.
The insurance company will deduct from the final payment $259,451 that was advanced to us for the cost to demolish what was left of the charred church building and clean-up of smoke and water damage to the school and rectory. The remaining net proceeds will be disbursed to us in two stages. The insurance company will pay a substantial portion of the settlement up-front with the remainder due when we sign the construction contract for the new church. The net proceeds will be deposited in our Building Fund account at the Diocese where they will earn interest at 5% per annum.
The Diocese of Joliet has guidelines for major construction projects. The Diocese has recently notified us that, due to a devaluation of its investment portfolio caused by the general stock market decline, it now requires 75% of the cost of construction to be in the bank before breaking ground. Previously the requirement was two-thirds.
In consultation with our architect Ruck Pate, in the next few months we will develop a realistic cost estimate and budget for our project. We intend to use a capital campaign to raise several million dollars to finance the difference between our insurance recovery and the cost of our new church and ancillary facilities. I thank you for the support you have already given, and we are counting on your continued support!
Sincerely in Christ,
Rev. Don E. McLaughlin, Pastor