Another Judicial Slapdown
This week we have some good news and some bad news. Let’s leave the good for the end, since it’s nice to go out on a more positive note. The bad news is that, once again, one of our District Court judges has tried to flatten a citizen attempt to hold our local government accountable.
Here’s the story: Three citizens brought a lawsuit against NIC and the NIC Foundation, saying that the school’s efforts to get the old DeArmond Mill site by conjuring up a twisted, complicated procedure through the NIC Foundation is illegal. They say it circumvents the rights of citizens to vote on big decisions that will raise taxes.
In response, NIC and the Foundation filed a legal motion for Summary Judgement, which means they asked the judge to rule that the citizens’ lawsuit had NO merit and should not go to a full trial.
Last week, Judge John Mitchell slapped down the citizens’ lawsuit by ruling in NIC’s favor on the Summary Judgement request.
The Idaho Constitution says, in Article 8, section 3, that NIC shall not incur ANY indebtedness or liability, in ANY manner or for ANY purpose beyond one year’s lawfully appropriated funds, UNLESS it gets approval of 2/3 of the voters or a judge declares the expenditure both ordinary and necessary.
In other words, NIC can’t go into any debt beyond what can be paid for in one year, unless they ask the voters or get a judge to say it’s not an unusual expense.
Buying the 17 acre mill site might be a good expansion plan but that’s not the question in this lawsuit. No one is trying to stop the Education Corridor idea with this action. What they are trying to do is demand their rights to vote on this decision that will cost us all.
I asked NIC Trustee Mic Armon, in a face-to-face conversation well over a year ago, why they didn’t just put this land purchase to the voters? He replied, “Because we’ve been told it wouldn’t pass.” They must have also figured they couldn’t convince a judge that the $10 million dollar purchase was both ordinary and necessary.
So, instead, they came up with a convoluted scheme where the college took the Foregone Taxes that increased taxes on everyone in the county, and gave that money to the NIC Foundation, which is a private group so they are not required to give any information to the public. The Foundation then used the money as a down payment on a loan for the land, so they will be buying the land with the college’s money. The college will “lease” the land from the Foundation during the four year term of the loan.
The lease agreement between the college and the Foundation says that, as a condition of the lease, the college AGREES to accept title to the Mill site upon retirement of the loan. How many lease agreements have you seen that REQUIRE the leasee to take ownership of the item at the end of the lease? Wouldn’t that be more accurately called an installment PURCHASE?
The Idaho Supreme Court has ruled many times that these “lease” schemes that are really purchases, are illegal, and the citizens’ lawsuit included several examples of relevant, past cases in Idaho law.
It’s much more complicated than that though. The loan is from Mt. West Bank, where many of the bank’s Board members are also members of the NIC Foundation, and Mt. West is making $440,000 TAX FREE interest income on this loan.
The tax free income is important because it’s allowed under an IRS 63-20 rule that pertains only to PURCHASE agreements with Public entities. Hmmm…
So, is it an actual lease or is it really an installment purchase? Let’s follow the money: The college gave the Foundation $4 Million dollars to use as the down payment on the “lease”. (That’s a very big down payment!) The college will then be making “lease” payments to the Foundation every year for four years. These payments equate to a lease price of $17,000 per acre of land, per month. Read that again: $17,000/acre/month to “lease” bare land, next to the sewage plant.
Is it just me, or does something about this whole deal smell remarkably foul?
Don’t forget that judges are political officials; they are elected positions. In this matter, Judge Mitchell has been thrown a political hot potato, so to speak. On one side the judge has all the NIC Board, as well as the mega power players on the NIC Foundation. You should read the list, it’s a veritable Who’s Who of our community’s heavy hitters. Click here to see the connections.
On the other side stand three regular citizens, looking for accountability. They are simply asking that the law be followed. Their lawsuit does not demand any money. It asks only that the acquisition of the Mill site be put to a vote of the people. Period.
Ok, so here are the two bits of GOOD news: First, this NIC lawsuit is not dead, as you might have thought from the Press’ article about a week ago. Summary Judgement does not kill the deal. The citizens now have an attorney who has filed a Motion to Reconsider. This gives Judge Mitchell the chance to think again and do the right thing by letting this important case go to a full trial of its merits. It would also allow more documents and information to be viewed, evaluated and included in final arguments.
The second piece of good news has to do with the Election Challenge lawsuit to review last November’s local election. For those of you who have not yet heard, Judge Simpson reduced the required Bond from $40,000 down to $5,000. That’s better, but it still is significant money that must be paid by this Thursday. Citizen Jim Brannon and Attorney Starr Kelso have done a great job in courageously standing up for the rights of the voters. They are filing several motions in order to get the case to a full trial and allow all pertinent information to be considered. (Starr’s email: starr.kelso@verizon.net)
This GOOD news is coming to us courtesy of real people, here in our town, who are willing to stand up for the rights of all citizens, voters and taxpayers. They might get slapped by local officials or ridiculed on the blogs or in the papers, but they are courageous, concerned patriots who are willing to take the backlash and keep moving forward. For this they have my sincere admiration and deep gratitude.
Thanks for explaining this Mary – in real people words. Once and awhile I will go to ISTARS to glean off of the entries to see if I can get the gist of what’s going on. However, that is not always accurate and at times very vague at who is doing what to whom. For instance the other day, I called Judge Mitchell’s clerk to let her know that I thought there might be an incorrect entry citing Mike Kennedy and a motion to compel that was part of the North Idaho College lawsuit which was misleading. I checked again yesterday and it was fixed. These two cases are not only confusing the public, they are confusing the judiciary staff.
In regards to judges playing politics because they have a case that includes heavy hitters or power players is just no excuse in my book for a judge to lean toward the most popular desired outcome due to powerful local influence and financial status’. If that is how they judge, then they must be bought in MHO. No mercy here. Judge Mitchell and Judge Simpson need to cut to the chase, save everybody money, and do the right thing and it’s pretty darn obvious what that is – the right to a well administered election process and the right to vote on big ticket items/acquistions that are paid through taxpayer money. Telling the public we don’t have that right is nothing short of real nazi tactics.
Comment by Stebbijo — April 7, 2010 @ 1:47 pm
Mary,
That was an excellent summary of our action. I do want to clarify one point: Judge Mitchell’s ruling in the defendants’ favor on the motion for summary judgment was not the same as a judge’s ruling that the expenditure was “ordinary and necessary.” The “ordinary and necessary” determination would have been made in a judicial confirmation hearing after an independent examination of all the facts by the judge.
As you very correctly pointed out, our issue is on an interpretation of the Idaho Constitution, Article 8, Section 3. It has nothing whatsoever to do with the wisdom of NIC purchasing that land. The law and the Constitution allows the NIC Board of Trustees to make bad business deals as long as they adhere to the principles of law in making the bad deals. We are not asking the judge to determine the quality of the action, only its legality as determined by the principles of law. We have asked Judge Mitchell to reconsider his earlier decision, and we have every confidence he will.
Comment by Bill — April 7, 2010 @ 7:41 pm