Banking Fallout from School Bond Mess
Local business leaders back away from an informal agreement to cover school district debt as the legal validity of the warrants is questioned.
Since the school board called a special election for June 30th to validate $63,729 of illegal warrants, it has confessed that the warrants outstanding are invalid. Consequently, some prominent business men who agreed to take specified amounts of these warrants at par have 'cold feet.' One has already refused to put up the cash. The First National Bank, which led the list with a $3,000 subscription, cast doubt upon their legality when it brought suit against the county to prevent the collection of taxes on its stock, including the five-mill school tax which it declares null and void. Since the bank has attacked the validity of its own school warrants, it is not surprising that other citizens are now inclined to repudiate the agreement as having been secured by misrepresentation of the facts.
“It is a good deal to expect of individual citizens that they shall put up from $1,000 to $5,000 in cold cash for the construction of the building, relying upon the people at some time in the future to ratify and validate the illegal acts of the school board.”
This reflects the volatile relationship between private capital and public municipal infrastructure. When banks lose confidence in local government entities, the entire project of civic building can collapse overnight.
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