A deadlocked vote Tuesday retained Columbia County’s only charter college from securing a $13 million bond challenge that would conserve the faculty from individual bankruptcy.
The Faculty for Arts Infused Studying asked for that the Improvement Authority of Columbia County concern tax-exempt income refunding bonds as a means of acquiring out the preliminary financial loan that very first funded the school’s opening in 2017.
Federal tax law requires the Columbia County Board of Commissioners to approve the bonds, mentioned Columbia County Lawyer Chris Driver.
Refunding bonds are issued to change or refinance fantastic debt. With desire premiums as significant as 12.5% on SAIL’s loan, “at some point the school would run out of cash,” said Abigail Caffee, who chairs the school’s governing board.
The bonds would allow for SAIL to place $8.5 million again into the university “and again into instruction,” she mentioned. “So we are inquiring your approval on this tax-exempt purchase so that we can go ahead and get out a deal that would have normally bankrupted us.”
The 2-2 vote by the commissioners fell quick of satisfying the phrases of Area 147(f) of the Inner Profits Code, which needs the county to publicly grant “host approval” of private activity bonds – even nevertheless the county would bear no financial obligation for them.
“Federal tax regulation needs county’s acceptance. It does not have an affect on it based mostly on the county’s economic backing. This is not dependent on the taxpayers of the county,” mentioned Chris Driver, Columbia County’s attorney. “The bonds are entirely compensated back again underneath (SAIL’s) backing – it is their credit score, it is their security of the residence that backs the bonds. There’s no obligation on the county. There is no obligation on the Development Authority. There’s no obligation to the taxpayers of Columbia County.”
Some commissioners remained skeptical.
“This is the 1st time we have been requested for this and this is the to start with time we are pursuing doing it, but this could be opening a can of worms for any and each firm out there.” District 3 Commissioner Gary Richardson stated. After approving the first this kind of bond concern, “it sure gets to be a great deal less complicated. And then we’re in the place to decide on and choose who we’re heading to assist and who we’re not going to aid.”
District 1 Commissioner Connie Melear, who introduced the motion Tuesday to deny acceptance, claimed it would be “a minor tricky to demonstrate to our constituents as to how in the globe it is probable that our signatures are necessary on a little something if we really don’t have any obligation or any liability.”
Generally, a county assumes bond debt by guaranteeing its reimbursement, backed by its ad valorem taxing ability. In this scenario, the county is assuming no debt.
“I’m not from the university. I think it’s a fantastic school,” she explained. “I’m just not ready to defend signing for a tax exemption that I do not realize wholly and are not able to articulate why it’s a great notion.”
Driver claimed delaying the vote would need the county to convene another hearing below the Tax Equity and Fiscal Accountability Act – an IRS-needed general public inquiry of a nonprofit that ideas to issue tax-exempt financial debt.
Driver recommended that the county could shift the motion to the next conference or table the motion. If commissioners vote on the motion, they could return the product to a long term agenda if the board wished to adjust its thoughts, he explained.
The vote to deny proceeded 2-2, simply because District 2 Commissioner Don Skinner was absent and a motion can go only by a very clear majority.