Monkey breeding company's battle for bonds continues

The Georgia Supreme Court may have final say in a battle for $300 million of taxable revenue bonds by a monkey breeding company the initially supported but now opposes after residents complained about the bond use.

The final outcome could affect future bond issues, according to Steve Labovitz, partner in the Atlanta law office of Dentons US.

If the Georgia Supreme Court or a federal court overturns the Court of Appeals decision, then "a bond validation hearing will not necessarily be the end of a process," he said. "I assume that would do away with years of precedents."

A Georgia appeals court dismissed the state's case against the bond validation, saying the state could not appeal a favorable decision its "own procedure or conduct procured or aided in causing."

South Georgia District Attorney Joseph Mulholland told The Bond Buyer he plans to appeal the decision to the Georgia Supreme Court and to intervene in a federal case between the company and Decatur County-Bainbridge Industrial Development Authority addressing similar issues.

But the breeding company, Safer Human Medicine, told The Bond Buyer it "will continue defending its rights to ensure this project moves forward. Our goal is to advance this project in Bainbridge, [Georgia] provide good jobs, ensure high-quality operations, and support the American medical research community."

The court "confirmed that the economic development process we engaged with local authorities was executed correctly," SHM said.

After scouting for sites, SHM settled on Bainbridge in Decatur County in southwest Georgia. On Dec. 11, 2023, the Decatur County-Bainbridge Industrial Development Authority adopted a bond resolution to issue up to $300 million of taxable revenue bonds to allow SHM to acquire land and construct the 1.75 million square foot facility.

The local government agreed to give substantial breaks on ad valorem taxes while SHM promised payments in lieu of taxes.

Late in 2023, Mulholland asked the Georgia Superior Court to find the authority had properly authorized and adopted the bond resolution and bond documents and validate them, which it did on Jan. 2, 2024.

After the validation, public opposition developed and authorities offered their own concerns, including that the meeting at which the bonds were approved had not been properly advertised.

Mulholland filed a motion in Superior Court in January asking for a reconsideration of the approval in which he said he had "without knowledge of full terms and conditions of the bond validation" signed the validation. He said he learned the Bainbridge community hadn't given input on the bond. The authority and city officials had voted "illegally to approve the bond validation," he said.

Mulholland said some of the bond petition's statements are questionable and cited "irregularities" with the bond validation process and transparency.

On Jan. 31, Mulholland gave the Superior Court notice he was appealing the case to Georgia Court of Appeals, which froze the Superior Court case. The next step is Mulholland's expected appeal to the Georgia Supreme Court.

SHM filed a complaint in February in the U.S. District Court for the Middle District of Georgia against the Decatur County-Bainbridge Industrial Development Authority, which was to issue the bonds, for its alleged refusal to comply with its obligations.

The deadline for closing the bond was Feb. 29 and SHM got the federal court to postpone the deadline.

"Georgia law ... in upholding the determination of the validating court for all issues that are presented to the court is very strong given that the process's purpose is to create an unchallengeable determination," said Peter Floyd, partner in the Atlanta office of Alston & Bird. However, "legal and political maneuvers can be used to delay or as lawfare to protest a project whether or not those maneuvers are ultimately successful." Floyd did not comment specifically on this case.

Earle Taylor, partner in the Atlanta office of Nelson Mullins, said the Decatur County-Bainbridge Industrial Development Authority may not have to issue the bonds because the closing documents were not signed by their representative. Without the authority's approval of the documents, the bonds won't be issued, he said.

The Supreme Court may not accept the case since no constitutional issues appear to be raised, Taylor said.

But if the authority signed an inducement agreement with SHM, it may have included a promise to sign the closing documents, Taylor said. The inducement agreement may be the basis for the company's suit against the authority in federal court.

The local approval process probably "wasn't the most open," Joseph Krist, publisher of Muni Credit News, surmised, "They usually aren't."

He expects "a protracted fight between the company and the county. It highlights the dilemna facing so many rural communities where they feel the need to choose between tax revenues and/or jobs and quality of life."