A federal judge blocked the second deal in two months between South Bend and St. Joseph's High School. The judge ruled the open bidding process conducted by South Bend still appeared to endorse the Catholic faith.
In June, the South Bend Common Council voted to purchase a Family Dollar store and the land it was on for $1.2 million, and then sold it to St. Joseph's for $1.
Some residents, supported by Americans United for Separation of Church and State and the American Civil Liberties Union, sued South Bend in federal court.
On September 7th, Judge Robert Miller ruled the deal was unconstitutional because it appeared to support the Church.
South Bend then decided to sell the land to any bidder that will "promote an economic development project consisting of the construction of Saint Joseph's High School and related athletic facilities...” The average of two appraisals found the property was worth about $345,000, which became the minimum amount a party could purchase the land.
When bidding closed on October 10th St. Joseph's was the only bidder with a $350,000 bid.
Americans United filed a brief opposing the transaction and on Wednesday, Judge Miller upheld his September ruling, which said the deal appeared to show favoritism to the Catholic faith.
"I think this was a little bit courageous on their part to try to turn around and redo the sale so quickly and so transparently in a way that wasn't around the court's ruling," said Ayesha Khan, Legal Director for Americans United. "I think the city needs to go back to the drawing table and figure out what it wants to do. I suspect it will want to unload the property in some way and may try to do so."
Miller also took issue with the city's requirement the potential buyer must support the new school.
"In other words, the reasonable, well-informed observer would see a City having acquired the parcel to transfer it to a particular Catholic school to promote that Catholic school's athletic fields, a City having tried to transfer the parcel to that Catholic school to promote that Catholic school's athletic fields, and a City now willing to sell the property to anyone who will promote that Catholic school's athletic field, and a City proposing to do so for a price that could be less than a third of what the City paid for the parcel (though for approximately the now-empty parcels fair market value)," wrote Miller.
The ruling means South Bend will remain the owner of the property until another deal is worked out.
"I don't know which way the city attorneys will go. I’m hoping that some resolution can come of this matter. It’d be wonderful if we have someone that can come up with the $1.2 million and purchase everything whether it’s a private donor or someone else and so that way it can all be resolved," said Common Council Vice President Oliver Davis, who voted against the deal.
Construction is already underway on the new high school and Davis does not expect the judge's ruling to slow the building.
"It was said to us in the discussions we had that St. Joe would be able to raise the funds and so therefore my understanding is that they are going to move forward and they should be on target with their project," said Davis.
Americans United predicts the city and residents who began the lawsuit will have to come up with a compromise to complete the sale, which may include St. Joseph's paying $1.2 million for the property.