Dennis Gillam, et al. v. Harding University, et al.

In 1988, Searcy, Arkansas, created the Public Educational and Residential Housing Facilities Board (board), a municipal entity authorized by state statute to issue bonds to finance projects that had a public purpose. The board offered tax-exempt bond financing to educational institutions regardless of the recipient’s religious or nonreligious affiliation. Harding University (the university) (defendant) was a private college in Searcy associated with the Churches of Christ and open to the public. The board issued bonds to finance the construction of buildings on the university’s campus. For each bond issued to the university, the board required that the university agree (1) to timely repay the bonds; (2) to operate and maintain the facilities being financed for four-year, degree-granting, postsecondary educational purposes; (3) that the facilities being financed would not be used for sectarian purposes; and (4) to maintain the university’s status as a § 501(c)(3) corporation. Dennis Gillam (plaintiff) and other residents of Searcy filed suit, alleging that issuing bonds to the university violated the Establishment Clause. Gillam conceded that the bonds expressed a facially secular purpose but argued that the bonds had the effect of advancing religion, in part because the university was the only recipient of bonds issued by the board. There was no evidence, however, that the board had denied funding to any nonreligious institution. The parties filed cross-motions for summary judgment.