A circuit court judge has issued a preliminary injunction blocking further debt issuance and halting construction of a controversial new Pre-K through 12th grade school in the Oldham-Ramona-Rutland (ORR) School District, following a legal challenge by residents.

After four failed bond referendums, district officials pursued a different strategy last year—a capital outlay opt-out vote that passed with a narrow 52% majority. Unlike bond measures that require a 60% supermajority, this approach allowed the district to sidestep the higher threshold and finance the project over 21 years. However, the method—and its lack of transparency—sparked strong opposition.

In a letter to voters before the election, Superintendent Don Hoeke stated that if the opt-out passed, the district would pursue bonds or issue $14.5 million in capital outlay certificates. However, the ballot itself did not mention the 21-year debt plan, prompting critics to argue that the public wasn’t fully informed.

Soon after the board approved $14.7 million in certificates, a group of residents filed suit, alleging the district misled voters and violated state law. The judge agreed that the plaintiffs met all four requirements for injunctive relief: likelihood of success on the merits, risk of irreparable harm, minimal risk of harm to the district, and public interest.

On the legal merits, Judge Kent Shelton emphasized that even if the school board technically complied with the law, its approach violated the statute’s spirit.

“The legislative intent behind the capital outlay certificate statute was to permit school boards to incur modest amounts of debt without triggering the more rigorous procedural requirements associated with general obligation bonds,” Shelton ruled. “The intent was not to create a method for incurring substantial debt without voter approval.”

He also criticized the omission of the debt’s full financial impact from the ballot language:

“Leaving the 21-year duration on the excess tax levy off the ballot failed to reflect the full financial scope of the board’s resolution.”

While the ruling may lead to construction delays and contractual penalties for the school board, the judge said those consequences stemmed from decisions made “in the face of legal uncertainty and under the threat of litigation.”

By contrast, Shelton said the taxpayers face “long-term financial exposure,” and their interests must take precedence.

“The balance is in favor of them, not the school district,” he wrote.

In addition to halting the school’s construction and financing, the judge hinted that the board’s actions may have run afoul of other state laws governing open meetings and public procurement.

The court has yet to schedule a full hearing on the case’s merits, but until then, all further progress on the project is paused. Meanwhile, debates over the possible dissolution of the ORR School District continue, further complicating the district’s future.

Originally reported by Jackson Dirks in SDPB.