San Diego Court Mandates $42 Million Set Aside for School Project in Local Voter-Approved Bond Measures
January 28, 2015
San Diego, CA.
On January 22, 2014, the San Diego County Superior Court enjoined Grossmont Union High School District (“Grossmont District”) from spending $42 million of its $417 million voter-approved school bond authorization. The plaintiffs represent the community of Alpine, where a new high school is among the ballot-designated projects for bond funding. They filed the lawsuit after the Grossmont District failed to fund or build the high school while improperly diverting bond proceeds to projects not authorized by the voters, as the plaintiffs contend.
The Hon. Joel Pressman ruled that the Alpine Union School District and the Alpine Taxpayers for Bond Accountability as plaintiffs in the case are likely to prevail in their claims as they seek to enforce commitments the Grossmont District made to voters in the bond ballot measures.
The Grossmont District contended that it was not wasting bond funds and argued that the injunction would “shut down” its entire bond program. But in its ruling, the Court “determined that setting aside some of the proceeds for the development of the high school is appropriate” and ordered the Grossmont District “to set aside $14 million immediately and set aside $28 million [more] by January 15, 2016.” Attached is the Court’s final ruling and order.
In evidence before the Court was the Grossmont District’s “NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT” as posted on EMMA® in June 2014. The Notice lists eleven Grossmont Union general obligation bond issues from 2004 through 2013. Though each official statement represented that the Grossmont District did not fail to comply with its continuing disclosure undertakings for its general obligation bonds, the evidence before the Court did not show any notice or information regarding any filing under the SEC’s Municipalities Continuing Disclosure Cooperation Initiative by the Grossmont District or its bond underwriters.
Representing the plaintiffs in the case is the law firm of Procopio, Cory, Hargreaves & Savitch, LLP. Representing the defendants Grossmont Union High School District and its superintendent is the law firm of Orrick, Herrington & Sutcliffe, LLP.
On January 22, 2014, the San Diego County Superior Court enjoined Grossmont Union High School District (“Grossmont District”) from spending $42 million of its $417 million voter-approved school bond authorization. The plaintiffs represent the community of Alpine, where a new high school is among the ballot-designated projects for bond funding. They filed the lawsuit after the Grossmont District failed to fund or build the high school while improperly diverting bond proceeds to projects not authorized by the voters, as the plaintiffs contend.
The Hon. Joel Pressman ruled that the Alpine Union School District and the Alpine Taxpayers for Bond Accountability as plaintiffs in the case are likely to prevail in their claims as they seek to enforce commitments the Grossmont District made to voters in the bond ballot measures.
The Grossmont District contended that it was not wasting bond funds and argued that the injunction would “shut down” its entire bond program. But in its ruling, the Court “determined that setting aside some of the proceeds for the development of the high school is appropriate” and ordered the Grossmont District “to set aside $14 million immediately and set aside $28 million [more] by January 15, 2016.” Attached is the Court’s final ruling and order.
In evidence before the Court was the Grossmont District’s “NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT” as posted on EMMA® in June 2014. The Notice lists eleven Grossmont Union general obligation bond issues from 2004 through 2013. Though each official statement represented that the Grossmont District did not fail to comply with its continuing disclosure undertakings for its general obligation bonds, the evidence before the Court did not show any notice or information regarding any filing under the SEC’s Municipalities Continuing Disclosure Cooperation Initiative by the Grossmont District or its bond underwriters.
Representing the plaintiffs in the case is the law firm of Procopio, Cory, Hargreaves & Savitch, LLP. Representing the defendants Grossmont Union High School District and its superintendent is the law firm of Orrick, Herrington & Sutcliffe, LLP.