Home City Staff Lakeland School-Funding Lawsuit: Appeal Denied, Chancery Court Friday 2.2.18

Lakeland School-Funding Lawsuit: Appeal Denied, Chancery Court Friday 2.2.18

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A request to file an interlocutory appeal with the State Appeals Court in Jackson, TN by the City of Lakeland has been denied by the higher court.

Link to the Appellate court site: http://www2.tncourts.gov/PublicCaseHistory/CaseDetails.aspx?id=72347&Number=True

The decision was made Monday (1.29.18) and signed by James M. Hiver, clerk of the Appellate Courts.  Copy of document:

Document from Appeals Court

In the December case of Cary and Lillie Melton ET AL versus the City of Lakeland, TN ET AL, the City is due back in Chancery Court at 9 a.m. Friday (2.2.18) for a motion hearing to answer discovery from the plaintiffs. Link to the docket:   https://chancerydata.shelbycountytn.gov/chweb/ck_public_qry_doct.cp_dktrpt_frames?backto=P&case_id=CH-17-1772&begin_date=&end_date=

From Robert L. J. Spence, Jr., lawyer for the plaintiff

“We are very pleased with the decision of the Tennessee Court of Appeals denying the City of Lakeland and the Industrial Development Board’s appeal.  The Court of Appeals’ ruling means that the proceedings in the Shelby County Chancery Court will continue.  We certainly believe that the Court of Appeals’ ruling is consistent with the spirit of the law, and supportive of the right of Lakeland citizens to vote on the issuance of the $60,000,000.00 bonds in a referendum election.  The premise of this litigation is to force the elected officials of the City of Lakeland and the IDB, who seek to saddle the citizens of Lakeland with the largest debt in their history, to provide them with the opportunity to vote.  It is clear the City of Lakeland is intent on denying its citizens a right to vote, and hopefully the Plaintiffs in this lawsuit have now made it abundantly clear to government officials that they will fight to exercise their right to vote.

“This Friday, the Chancery Court is likely to direct the City of Lakeland and the IDB to answer the Complaint and provide information and documents germane to the claims at issue.  In other words, as Al Green said, “Let’s get it on.”

City officials were unavailable for comment.

Background on the case

Two Lakeland residents filed suit Dec. 8, 2017 seeking to block the sale of bonds to finance a high school wing at Lakeland Middle Preparatory School.  It was in Shelby County Chancery Court against the City and the IDB (Industrial Development Board) and also asks the court to require a referendum before the issuance of any bonds for Lakeland schools.

The suit was filed by Cary and Lillie Melton on the following basis:  declaratory judgment and injunctive relief prohibiting the defendants from issuing bonds they say violate state law; requirement of a referendum to vote on spending money for a high school; and violation of the Tennessee Open Meetings Act.

The case, assigned to Chancellor Walter L. Evans, was first heard in his court Dec. 13, with Lakeland lawyers asking for a case dismissal.

A C Wharton, former Memphis mayor, argued the motion on behalf of Lakeland.

Mr.  Spence is representing the Meltons, who have been joined in the lawsuit by James D. Abbott, William T. Mallard, Brian Tipler, Deborah Tipler, Christopher J. Smith, Melissa K. Smith, Heather Long and James L. Murray Jr.

In addition to Mayor Wharton, other lawyers representing Lakeland include Van Turner, Shelby County Commissioner, along with Lakeland City Attorney Chris Patterson and lawyers from his firm, Wiseman Bray PLLC, and Al Bright and Jeff Smith with Waller Lansden, Dortch & Davis LLP who represent the IDB.  Also assisting are Karen Neal, bond counsel and Eric Plumley, Lakeland School Board attorney.

Bryan Meredith, a lawyer with the Spence law firm, also represents the plaintiffs.

Mr. Wharton asked Judge Evans Dec. 13 to dismiss the lawsuit saying the City’s action had not harmed the Meltons and would result in significant harm to Lakeland and its citizens.  However, in his ruling, the Judge explained he had not been able to digest the hundreds pages of documents that are part of the case. Thus the request for dismissal was denied.

An appeal was requested and the case was again in court Dec. 19.  Judge Evans denied the motion to dismiss.  Lakeland lawyers immediately asked permission to file an interlocutory appeal with the State Appeals Court in Jackson, TN.  An order was issued Dec. 27 by the Judge and the City requested an expedited hearing.

The request for the hearing with the State Appeals Court in Jackson was denied Monday (1.29.18)

Additional details

Three Boards within the City: BOC (Board of Commission), IDB and LSB (Lakeland School Board) each voted unanimously in December to approve a funding mechanism through the IDB to pay for school capital improvements including a high school wing at LMPS (Lakeland Middle Preparatory School).

Mrs. Melton as well as other Lakeland residents came before the three Boards last year, saying the City does not need a high school since Lakeland students are served at Arlington High School through an interlocal agreement.  Citizens also noted that the debt to be incurred for the building is too much for a city the size of Lakeland.

BOC officials said the effort to issue the bonds through the IDB was an effort to fund the high school wing without a tax increase and was prompted by 2017 federal tax reform legislation.

When the issue of funding a high school surfaced in the fall of 2017, it was related to changes in the proposed Trump tax law which took effect this calendar year.  That change prompted Lakeland officials to pursue lease revenue bonds through the Industrial Development Board (IDB0 instead of general obligation bonds. The Mayor and Commissioners expressed concerns in numerous December 2017 meetings over impending changes to the law as well as potential interest rate increases experts were predicting.

They said in public meetings that refinancing existing debt for LMPS construction and adding money to complete a high school wing could be done without a tax increase if it were accomplished by the end of 2017.  They said a delay would likely require a tax increase because of increased interest costs and construction fees.

LMPS opened in August 2017 for grades 5-8 and was funded through Capital Outlay Notes.  Lakeland Elementary School serves grades K-4.

City financial shape

Upon releasing information about the FY2017 audit this week (1.29.18), Jim Atkinson, city manager, said “I am pleased to report that the City is in outstanding financial shape, and that the City of Lakeland was issued an “unqualified” opinion on its financial statements. An “unqualified” opinion is the highest rating possible, and indicates that the auditor believes that the financial statements are fairly stated and that the underlying financial records and processes support the information reported in the financial statements.”

Link to the audit report:   http://lakelandtn.gov/DocumentCenter/View/6838