California Statewide Communities Development Authority v. All Persons Interested

In April 2005 the Christian Legal Society’s Center for Law & Religious Freedom filed a “friend of the court” brief in the Supreme Court of California in California Statewide Communities Development Authority v. All Persons Interested .  The brief argues that California should not use a church-state provision in its constitution to discriminate against intentionally religious schools by denying them the benefits of tax-exempt bond financing.

Azusa Pacific University, California Baptist University, and the Oaks Christian School, three religious schools, applied with California Statewide Communities Development Authority (CSCDA) in 2002 for tax-exempt bond financing.  CSCDA is a state agency that offers tax-exempt bond financing to institutions, including private schools, for the development of projects intended to benefit the public.  CSCDA acts as a “conduit” through which schools may borrow money from private investors at a lower interest rate because the lender's earnings are tax-free.  CSCDA charges borrowers a fee for its services, and state funds are not lent to the borrowers.

CSCDA asked a state trial court to review the proposed transactions with the three schools and to deem them constitutionally permissible.  The trial court held that the California Constitution forbids CSCDA from giving these three educational institutions the same access to conduit financing available to other schools.  CSCDA appealed, and the California Court of Appeal agreed with the lower court that the California Constitution required discrimination against the schools on the ground that they were “pervasively sectarian.”  The California Supreme Court accepted CSCDA’s request to review that decision.

The Center filed the brief on behalf of the Christian Legal Society and the Council for Christian Colleges & Universities, an international higher education association of intentionally Christian colleges and universities.  The Alliance Defense Fund provided funding for the Center’s work on this case.

Documents & Links:

CLS Amicus Brief

Press Release, April 5, 2005

Related Cases:

Steele v. Industrial Development Board

Annapolis Area Christian School/Maryland Health and Higher Educational Facilities Authority