State Treasurer Young Boozer on Monday asked Montgomery County Circuit Judge James Anderson to dismiss Birmingham-Southern College’s lawsuit seeking a court order for a $30 million loan from the state.

Birmingham-Southern applied for the loan from the Alabama Distressed Institutions of Higher Education Revolving Loan Program, which the Legislature created this year in response to a request for funds from Birmingham-Southern. The legislation put the state treasurer in charge of the loan program.

Boozer denied Birmingham-Southern’s loan application on Oct. 13. Birmingham-Southern officials have said the college will likely close without the loan and filed the lawsuit asking the court to order Boozer to approve it.

In Monday’s motion, written by lawyers with Attorney General Steve Marshall’s office, Boozer disputed Birmingham-Southern’s claims that it met the requirements to qualify for the loan and that he had acted in “bad faith, arbitrarily, and capriciously,” in denying the loan request.

Aside from those points, Boozer said the court has no authority to order him to grant the loan. Boozer noted that the Legislature gave the state treasurer the discretion to award or deny a loan based on the treasurer’s analysis of an applicant’s qualifications and ability to repay it.

“Plaintiff seeks to have this Court restrain an elected constitutional officer from exercising discretion explicitly granted him by law,” the state attorneys wrote in Boozer’s motion. “It cannot. Though the Legislature heard Plaintiff’s pleas for help, it did not respond by writing a check, or by directing anyone else to do so. Instead, it created a program to be set up and administered by the State Treasurer.”

The state’s lawyers touched on a point raised by Judge Anderson during a hearing last week. Anderson noted that the legislation appeared to leave it to the discretion of the state treasurer to approve a loan for a college that met the requirements, noting the use of the word “may” instead of “shall.”

“The law does not say that the Treasurer ‘shall’ provide a loan to an applicant that meets the requirements,” the state’s lawyers wrote. “Rather, it says that ‘[t]he State Treasurer may, in his or her judgment, award a loan to any eligible institution that meets the requirements provided in this section.’”

Anderson has scheduled a hearing in the case for 1:30 p.m. on Wednesday.

In its lawsuit, lawyers for Birmingham-Southern accused Boozer of undermining the intent of the Legislature. The college maintains that it provided more than adequate collateral to qualify for the loan.

Birmingham-Southern President Daniel B. Coleman, in a statement issued last week, said the college engaged in good faith negotiations over several months.

“Unfortunately, our good faith has been betrayed,” Coleman said. “After several additional attempts over the last two weeks and up through (Oct. 19) to get Treasurer Boozer to execute the will of the Alabama Legislature, we have no other choice but to seek remedy from the court.”

Coleman said the college was moving forward with normal operations, including recruitment efforts for fall 2024.

“As the passage of the enabling legislation – and the overwhelming and heroic support that helped get it passed — proved, BSC has done and continue to do too many good things for our community and state to fold our tent.”

In its lawsuit, Birmingham-Southern asked the court to order Boozer to disburse $16 million from its loan request this academic year, including $8.8 million in November and $7.2 million in February.

The college has said it needs the public funds as a bridge while it raises money from private sources.

Boozer, in his Oct. 13 letter to Birmingham-Southern denying the loan request, wrote:

“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. Additionally, the institution’s financial restructuring plan does not adequately provide for repayment of the loan.”

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