GRANITE FALLS -- As contractors work to complete the final leg of more than $10 million in improvements before the start of school, litigation over how the Yellow Medicine East School District is financing nearly one-third of the project is headed to trial.
District Judge Randall Slieter issued an order this week that will put the matter to trial at a date yet to be set.
The judge ruled that the district had acted within the law in how it financed $7,220,276 of the $10,068,977 in health and safety improvements. He found that improvements related to the ventilation systems in the district's elementary and high school buildings in Granite Falls were properly funded.
However, the judge also ruled that the court lacks the evidence needed to determine whether the remaining $2,848,701 in work was properly funded by health and safety revenues. In a memorandum with the order, the judge stated that more evidence is needed to determine if the new hot water pipes, sprinkler systems, and recommissioning and modifications to the gymnasium, locker rooms and weight room are properly funded.
Contractors for the project completed much of the work in the elementary building last summer, and are completing the work in the high school building this summer.
The lawsuit was brought by two school district taxpayers, Patrick McCoy and Scott Winton. They challenged the district's plans in 2010 to finance the project without conducting a referendum. They contested the district's ability to award $8.7 million worth of work under the state's alternative facilities authority as a health and safety project.
The district argued there was a need to address health concerns related to the heating and ventilation systems.
The district also pointed out that it was eligible for federal Qualified Zone Academy Bonds -- a low-cost financing tool for school building renovation -- that would save millions in interest costs, and that a competitive construction market would bring favorable bids.
The taxpayers' attorney, Kevin Stroup of Stoneberg, Giles and Stroup in Marshall, said the lawsuit was filed before financing for the project was awarded. He said he was surprised that the bonds were issued when the district and the parties providing the financing were aware of the legal challenge.
The district was "highly aggressive'' in advancing the project despite the challenge, and now could find itself with a significant problem if the judge finds in favor of the plaintiff's challenge, Stroup said.
He said other districts in the state have also discussed construction projects with intentions of using the health and safety statute to obtain financing without holding a referendum, but districts have put those plans on hold pending the outcome of this case.
The two sides will hold a conference on July 7 to schedule a trial date and the collection of evidence to present at it.
The school district's attorney, Eric Quiring with Ratwik, Roszak and Maloney in Minneapolis, was not available for comment.