State Treasurer Young Boozer told Birmingham-Southern College President Daniel Coleman in a letter that the college did not meet the minimum requirements for receiving a loan from a new program the Legislature established to keep the 167-year-old private institution from closing.

Birmingham-Southern has disputed that and filed a lawsuit accusing Boozer of undermining the Legislature’s intentions. The college has asked the court to order Boozer to disburse $16 million of its $30 million request this academic year.

At a hearing Thursday, a lawyer for the attorney general’s office who is representing Boozer told Montgomery County Circuit Judge James Anderson that the state would file a motion to dismiss the case, claiming that Boozer has sovereign immunity.

Birmingham-Southern has stressed the urgency of the need for the loan. Lawyers for the college told the court in the lawsuit that it would likely close after this semester if it does not receive the loan. Birmingham-Southern, which has 731 full-time students, 284 employees and about 17,000 alumni, said it needs the public funds as a bridge while it raises money from private sources.

Boozer’s letter denying the loan is dated Oct. 13 but Birmingham-Southern officials say they did not receive it until five days later. It was post-marked Oct. 16 and sent via regular mail.

“In response to the loan application submitted under the Alabama Distressed Institution of Higher Education Loan Program, this is to advise you that Birmingham-Southern College does not meet the minimum statutory qualifications for receiving credit from the program,” Boozer wrote. “The loan request is denied.”

“After a thorough review of the application and all supporting documents, it has been determined that Birmingham-Southern College cannot provide the State a first security interest in its collateral assets,” Boozer wrote. “Additionally, the institution’s financial restructuring plan does not adequately provide for repayment of the loan.”

In its lawsuit, Birmingham-Southern asserts that it has pledged more than sufficient collateral to qualify for the loan.

“The Treasurer’s unlawful actions are arbitrary and capricious, in bad faith, beyond his authority, or in a mistaken interpretation of law,” the college asserts. “They are contrary to the plain language of the statute and violate the entire purpose the Legislature showed in creating the program.”

The Legislature passed the bill creating the Alabama Distressed Institutions of Higher Education Revolving Loan Program in May and Gov. Kay Ivey signed it into law in June.

Anderson has scheduled another hearing in the case for Wednesday.

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