Hail Mary? St. Matthews issuing $10 million in bonds for the Southern Baptist Theological Seminary, which isn't in St. Matthews
Well, that was before mega-corporations ran the local news.
Now, it’s more about cut and paste.
So when I noticed a Courier-Journal story this morning about the City of St. Matthews planning to issue $10 million in bonds for Southern Baptist Theological Seminary, I thought, “This makes no sense.”
According to CJ reporter Sheldon S. Shafer, St. Matthews’ City Council wants to float up to $10 million in tax-exempt bonds to help the seminary finance its 10-year master-expansion plan.The money would go to expand dorms, build a road and add classrooms, and the city wouldn’t be on the hook for money, just the school.
So far, so good.
Except for four teeny, weeny inconsequential complications barely worth mentioning:
1 – In 2012, no city takes lightly using its borrowing capacity. Moreover, placing $10 million in debt is not the easiest thing in the world because there is no auction-rate bond market at the moment, and institutional investors are growing increasingly gun-shy of buying municipal debt. Or at least hesitant to buy it for less than mad, crazy yields. And mad, crazy yields come with high degrees of risk.
2 – If the Southern Baptist Theological Seminary is on the hook for the money, why does it need St. Matthews guaranteeing the debt?
3 – Which leads to why, exactly, St. Matthews would do this, because the seminary is on Lexington Road on the way downtown, nowhere near St. Matthews, a little island of an independent city inside the Greater Louisville-Jefferson County MSA.
4 – And by the way, how can this be constitutional, city government issuing debt for construction projects at a private university? Which is what the seminary is.
I turned out to be on the same wavelength as CJ readers, who seem a lot more curious about this than the CJ reporter.
Here are some of the comments:
Harold Trainer · Top Commenter · University of Rhode IslandWhy would a public city sell bonds to support a religious institution? That puts taxpayers on the hook for what? What does the city gain and taxpayers gain and what are the metrics so the results can be measured and managed by the city? Why not help all the churches and religious?
In the article, I see mention that SBTS would be on the hook for the risk. Still, a government agency issuing bonds specifically for the aid of a religious institution? Even if there is no requirement that the institution be within the City of St Matthews (or especially if so), there is something peculiar and troubling about this.
Better yet, it’ll put taxpayers on the hook for an entity outside their borders that is 1) in an aging physical plant and 2) has had some significant budget difficulties in recent years. The ineffable Free Market is disinclined to lend funds at low interest under such circumstances, but evil, socialistical, tyrannical government is there as a backstop.
I bet the ACLU and a hierarchy of judges might have something to say about this plan. Though, some Cathy family money might be an appropriate contingency plan for ol’ Al. And, how geographically convenient — The two spewers can meet in Nashville where Richard Land can mediate the terms. I deserve a fee for this type of consultation. If only us lefties had it so simple!
Yeah, I know. Typically, though, you see some other major connection in those instances – contiguous property on a major thoroughfare, significant contributions to local civic festivals, etc. The only real connection I can see is that a few hundred students may live in some second and third tier rental property in St Matthews (particularly on the north side of Shelbyville Road). My cynical side can see how a few rumors could be spread threatening closure – landlords fearing the expense of upgrading their rental stock (or having to face the reality of dropping rental rates) would jump at the chance to apply pressure.
A St. Matthews city employee, who was incredibly nice and patient, referred Insider Louisville to Mayor Bernard Bowling, who won’t be available until tomorrow. Officials at the Southern Baptist Seminary didn’t return calls for comment.
In the comment posts, Stephen Emery is correct. The project does not have to be within the St. Matthews city limits for the city to issue bonds to raise money for the seminary projects.
So, how about constitutionality?
We turned to Professor Samuel A. Marcosson, professor of Law at the University of Louisville’s Louis D. Brandeis School of Law, who stated in an email that St. Matthews issuing bonds for a private religious institution likely is constitutional.
From Prof. Marcosson:
In 1973, the Supreme Court decided a case called Hunt v. McNair, upholding the application of a South Carolina statute under which bonds were issued to support a religious university (Baptist in that case, as well). The Court held that the statute did not specifically support religious schools, but all universities, and that the project involved was not itself used for religious purposes, so that the challenged bonds did not have the purpose or primary effect of advancing religion. Here, St. Matthews would argue that its bonding power is not used specifically to support religion or religious institutions, but that this is just one application, and that (at least as described in the CJ article) the projects involved are not themselves religious (an administrative building, a dorm, etc.). If this were a chapel, for example, or if there were a pattern of the city using its bonding authority to support churches, the case that it was unconstitutional would be very strong. One last thing: if someone could show that the city’s purpose was to support religion (i.e., if the decisionmaker(s) were motivated by religious or theological support for the Seminary), that would change my answer. But at least from what has been reported so far, that case hasn’t been made.
Our prediction: This proposal is going to get a lot of scrutiny simply because our guess is some actual resident of St. Matthews has a better idea for a $10 million infrastructure project that would benefit directly the city’s citizens.
Also, risking the city’s credit rating today could cause major problems tomorrow because let’s face it, the seminary is in marginal financial shape, with enrollment trending down for years.
Finally, this beau gest opens the door to every private school for a hundred miles coming to the city with its hand out.
But that’s just us.
St. Matthews City Council has scheduled a public hearing for Aug. 14 at 7 p.m. at the St. Matthews City Hall, 3940 Grandview Ave.