IN THE CIRCUIT COURT OF MONTGOMERY COUNTY, ALABAMA

BIRMINGHAM-SOUTHERN COLLEGE, )
)
)
Plaintiff,
)
v. )
) CIVIL ACTION NO.: ________________
YOUNG BOOZER, in his capacity as )
Treasurer of the State of Alabama, )
)
Defendant. )
)

VERIFIED COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

AND PETITON FOR WRIT OF MANDAMUS

This Verified Complaint for Declaratory and Injunctive Relief and Petition for Writ of

Mandamus is filed by Plaintiff Birmingham-Southern College against Defendant Young Boozer,

in his capacity as Treasurer of the State of Alabama. This complaint seeks emergency relief

because without such relief it is likely that the College will be forced close.

I. Introduction

Young Boozer, the Treasurer of Alabama, lobbied the Legislature to try and kill its

proposed Alabama Distressed Institutions of Higher Education Revolving Loan Program, which

allocated $30 million in loan funds for financially distressed Alabama higher ed institutions. The

Legislature disagreed with the Treasurer and created this program to save Birmingham-Southern

College, but the Treasurer has unlawfully exercised a veto by delay of a law the Legislature passed

and the Governor signed. Rather than fulfill his duty, the Treasurer has undermined the Legislature.

Even though he knew the College was in dire need of a loan from the program to stay open

during the current academic year, the Treasurer unnecessarily delayed accepting loan applications

for months. The Treasurer also unlawfully delayed approving the College’s loan application, even

though the College provided a first position on collateral valued at up to 400% of its requested
loan draw of $16 million for this academic year. The Treasurer has made inconsistent and

contradictory demands on the College regarding what he considers adequate collateral throughout

the process, and he has indicated that no institution that qualifies for a loan under the law is worthy

to obtain such a loan, making the law meaningless. Today, a letter arrived from the Treasurer

denying the College’s loan application. The letter was dated Friday, October 13, 2023, but the

Treasurer never communicated his denial to the College.

The Treasurer has acted in bad faith, beyond his authority, and/or under a mistaken

interpretation of law. To the extent he had any discretion, the Treasurer abused his discretion and

acted arbitrarily and capriciously. The College needs immediate relief and, as shown in other

pleadings, requests expedited discovery and an expedited final hearing on the merits by October

27, 2023. Without such relief, the College likely will close because of the Treasurer’s unlawful

actions.

II. Parties, Jurisdiction, and Venue

1. Plaintiff Birmingham-Southern College is a residential, baccalaureate liberal arts

institution located at 900 Arkadelphia Road, Birmingham, Alabama. The College also offers select

graduate and professional programs.

2. The College came to exist through a merger of two educational institutions founded

by Alabama Methodists: Southern University, founded in Greensboro, Alabama, in 1856, with

Birmingham College, opened in 1898 in Birmingham, Alabama. These two institutions were

consolidated on May 30, 1918, under the name of Birmingham-Southern College.

3. The College has 731 full-time students (439 of whom are Alabama residents), 284

employees, and nearly 17,000 living alumni all over the world—more than half of whom still

reside in Alabama. Alumni of the College have gone on to become leaders in public service,

medicine, law, and business; they have become educators and clergy; and they have lived, worked,

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and built families and communities. The lessons learned at the College prepared them for lives of

significance through intellectual and personal development, and by challenging them to engage

their community and the greater world, examine diverse perspectives, and live with integrity.

4. During the 2022 fiscal year, the College had a $97,265,564 economic impact on the

State of Alabama and the College caused the payment of $13.8 million in state and local taxes.

5. The Alabama Legislature was informed in late 2022 that the College was

experiencing financial hardship. “In a letter to members of the Jefferson County Delegation of the

Alabama Legislature, Sen. Jabo Waggoner and Rep. Jim Carns wrote: ‘Birmingham-Southern has

been operating in financial distress for over a decade. Without support, it will not be able to

continue to operate after May 2023.’” Roy S. Johnson, “Birmingham-Southern College in

‘financial distress,’ in danger of closing in 2023, lawmakers say; school responds”, available at

https://www.al.com/news/birmingham/2022/12/birmingham-southern-college-in-financial-

distress-in-danger-of-closing-in-2023-lawmakers-say.html (Dec. 19, 2022) (last visited Oct. 9,

2023). Admittedly, the College’s future looked dire.

6. In April 2023, however, the College’s Board of Trustees voted to remain open. The

College had secured nearly $46 million in pledges from private donors toward a goal of $200

million in funding for a Foundation from which the College could fund its future operations.

Further, administrators of the College who sought bridge funding from public sources had received

promising information from members of the Alabama Legislature who would draft and pass S.B.

278, the Alabama Distressed Institutions of Higher Education Revolving Loan Program which

would provide the bridge funding the College needed.

7. Defendant Young Boozer, the Treasurer of the State of Alabama, is more than 19

years of age. The Treasurer is being sued only in his official capacity.

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 8. This Court has jurisdiction based on Ala. Code section 6-6-220 through 6-6-323.

The Alabama Declaratory Judgment Act is remedial in nature, and “its purpose is to settle and to

afford relief from uncertainty and insecurity with respects to rights, status, and other legal relations

and is to be liberally construed and administered.” Ala. Code § 6-6-221.

9. This Court also has jurisdiction under Ala. Const. § 142(b), because it has

“authority to issue such writs as may be necessary or appropriate to effectuate its powers, and shall

have such other powers as may be provided by law” and a verified petition for writ of mandamus

is a proper procedural vehicle to require action of state officials. See Ala. Code § 6-6-640.

10. Venue is proper in Montgomery County, because “where an officer of the state is a

defendant, as in this case, or where an agency of the state is a defendant, venue is proper only in

Montgomery County, absent specific statutory authority to the contrary or waiver of objection to

venue.” Ex Parte Neely, 653 So. 2d 945, 946 (Ala. 1995).

III. Alabama Distressed Institutions of Higher Education Revolving Loan Program

11. On June 16, 2023, Gov. Kay Ivey signed into law the Distressed Institutions of

Higher Education Revolving Loan Program. Ala. Acts 2023-560. This program, which set aside

$30 million to be loaned to public and private colleges or universities in Alabama, went into effect

immediately upon her signature. The legislation creating the program and appropriating the funds

for the program are attached to this complaint as Exhibits A and B.

12. Under this program, “any public or private college or university in Alabama” that

meets the following five criteria is eligible for a loan from the program: (1) more than 50 years of

operations in Alabama; (2) the institution has “a significant impact on the community in which it

is located”; (3) the institution is “experiencing financial hardship which could lead to closure of

the institution”; (4) the institution’s “governing body has adopted a resolution authorizing the

application for a loan from this program to maintain operations as it replenishes its endowment

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through private gifts”; and (5) the institution has “assets sufficient to pledge as collateral.” Sec.

2(a)(1)-(5).

13. The program was “created in the State Treasury to receive appropriations from the

Legislature for the funding of loans and to be administered by the State Treasurer.” Sec. 4.

14. The Legislature fully appropriated the funds to carry out the program and made it

self-sustaining: “Proceeds from loan repayments shall be deposited into this fund and may be used

in the same manner as any other funds provided for this program” and the appropriated funds “shall

not revert but shall remain in the fund and are reappropriated for the purposes authorized by this

section.” Sec. 4; Ala. Acts #2023-378 (“To the Treasurer for the Distressed Higher Education

Schools loan program . . . $30,000,000.”).

15. The program is administered by Boozer as Treasurer of the State of Alabama. Sec.

1. The Treasurer’s office was required to prescribe forms for application to the program. Sec. 2(b).

16. The Treasurer is authorized to set the terms and conditions of repayment of any

loan made under the program. Sec. 2(d). Among the terms and conditions allowed are “the amount

of private funds committed prior to loan funds being drawn; the timing and amounts of

disbursements; and the terms of repayment.” Sec. 2(d). Loans made under the program must be

secured by a first priority security interest in the collateral assets pledged as security for the amount

of the loan. Sec. 2(d).

17. The Treasurer is further required to “review all applications for loans” from the

program. Sec. 2(c).

18. What the Treasurer is not authorized to do, however, is veto this program by acting

arbitrarily and capriciously and failing to enact it timely and fulfill the direction of the Legislature.

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IV. Factual Allegations

19. As shown above, the College’s dire prospects during 2022 prompted the Legislature

to create the program. The College is qualified for a loan from the program and has done everything

required by the statute to have its application accepted, and its loan proceeds disbursed. Yet, the

Treasurer has refused to act on the College’s application and has stated he plans to deny it.

20. As shown below, however, the reason for this inaction was not because of any

thoughtful investigation or reasonable exercise of discretion, but rather because the Treasurer acted

arbitrarily, in bad faith, beyond his authority, and/or under a mistaken interpretation of law.

21. To the extent the Treasurer had any discretion at all, he has abused his discretion

and has acted arbitrarily and capriciously by refusing to approve the College’s loan application

and taking the steps necessary to make the loan.

A. The College faced dire financial circumstances.

22. In 2022, the College found itself in a financial crisis that was years in the making:

Some of the college’s financial failings were undoubtedly the result of the recession
itself driving down the value of its investments. Regardless, the college’s tax forms
and disclosures to bond markets show the bottom-line effects.

In [four fiscal years from 2007 to 2010], the college went from having more than
$113 million in its endowment to $54 million.

The meager endowment has been the center of the college’s problems, Coleman
says, and the college’s public disclosures, in tax records and filings with bond
markets, appear to support that. Most institutions draw 5 percent a year from their
endowments—a rate that allows market gains to keep pace over time, he says.

The college began drawing a lot more than that. Now it has little left to draw.

BSC was eating its seed corn.

Kyle Whitmire, “After 20 years of decline, BSC struggles to find a way forward,” available at

https://www.al.com/news/2023/01/whitmire-looking-for-a-way-forward-bscs-time-is-running-

out.html (Jan. 25, 2023) (last visited Oct. 9, 2023) (“Whitmire, Way Forward”).

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 23. The College made strides to reduce its overhead and increase private donations.

24. As a vehicle for investing private donations, “the college created a new foundation

with strict rules for how much of its funds could be used any given year. The school would raise

$200 million and only be able to withdraw 5 percent each year, with restrictions in place to prevent

any more than that.” Id. The College also would not actually accept those donor-pledged funds

“until it had $100 million in pledges” to ensure that donors could confidently give, knowing the

College’s future was secure. Id.

25. After the College’s financial difficulties became public, enrollment suffered

through transfers and reduced applications for admission, which cost the College $6.25 million in

expected revenue during the current 2023-’24 academic year.

26. The financial management issues the College faced under previous administrations,

when combined with old wounds from the financial crisis and new wounds from the COVID-19

pandemic were too much for the College to overcome. To buy enough time to recover to the point

of self-sufficiency, the College needed public aid.

B. The College is important to the State of Alabama and its community.

27. To bridge the gap between the present and the three-year plan to return the College

to self-sufficiency by rebuilding its endowment, the leadership of the College sought public

support. During 2022, the State of Alabama Education Trust Fund budget had a “more than $2

billion in surplus on top of a record $8 billion education budget.” Whitmire, Way Forward.

28. The College commissioned an economic study of its impact on the State of

Alabama and Jefferson County. That study is attached as Exhibit C to this complaint.

29. That study confirmed what many have long known: The impact of the College was

not just evident in the hearts, minds, and lives of its students, alumni, and employees—it was easy

to quantify in the pocketbooks and bank accounts of everyday Alabamians and the state itself.

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 30. During the 2022 fiscal year, the College had an overall economic impact on the

State of Alabama of $97,265,564 and it was responsible for approximately $13.8 million in state

and local taxes.

31. The expenditures of the College’s students had a direct economic impact of

$12,334,680 in the State of Alabama. The economist determined that “it is most likely that many

local students would have enrolled in other programs” outside the state “if BSC did not exist in

Birmingham. In this case, the existence of BSC prevents these expenditures from leaking out” of

Alabama. Exh. C at 7.

32. The study determined the College and its students spent $52,896,959 in the State

of Alabama in 2022.

33. The study also found that the College accounts for 1,481 direct and indirect jobs in

the State. The College helps create “approximately thirty-two jobs for every $1 million in direct

spending.” Exh. C at 9.

34. The study concluded the College’s working-age alumni were “responsible for a

value-added social benefit of approximately $211.5 million in 2022” to the state. Exh. C at 10.

35. The College’s 192-acre campus is adjacent to the historic neighborhoods of

Smithfield, Graymont, College Hills, and Bush Hills. Recently, the City of Birmingham announced

it would spur $282.9 million in investment into these neighborhoods, where the College is an

anchor tenant, in part funded by a $50 million HUD grant.

36. Because the Legislature saw the economic and social importance of the College, in

a bright spot of bipartisan work, members of both parties came together to create a positive solution

to the immediate financial distress of the College and allow it a runway to return to self-sufficiency.

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 C. The College worked with the State of Alabama to arrange bridge funding.

37. Initial meetings between administrators of the College and the Treasurer occurred

in late July 2022 and August 2022. The Treasurer conveyed the message that “the state had more

excess funds than it has ever had” and said he “did not know how the state could spend all of the

money” it had.

38. In September 2022, administrators of the College shared with the Treasurer the

College’s application submitted to the state for a 1.45% share of the $2 billion in federal funds

provided to the state under the American Rescue Plan.

39. Also during September 2022, administrators of the College applied to receive a

portion of the $20 million in excess funds held in the Governor’s Emergency Education Relief

(GEER) account.

40. In late November 2022, the Alabama Department of Education notified the College

that it would receive nothing from the final disbursement of GEER funds.

41. The College then shifted to other avenues to obtain $30 million in state funding to

bridge the time between the 2022-’23 academic year and the 2025-’26 academic year. The College

sought $12.5 million of ARPA funds from the Governor and a one-time appropriation of $17.5

million from the record-setting surplus Education Trust Fund budget (less than 1% of the surplus

amounts held in the Education Trust Fund).

42. Those requests were also denied. Having been denied multiple times by the

executive branch, the College then turned fully to the Legislature.

43. During a February 2023 meeting with the Treasurer, he again confirmed that the

state’s coffers were flush with surplus cash, and that the Legislature would be the best avenue for

the College’s bridge funding request.

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 44. On the morning of April 5, 2023, Sen. Jabo Waggoner called the president of the

College to relay a conversation he had at breakfast with a member of Senate leadership about

support for the college. This senator knew the College had a board meeting that day to vote on

whether or not the leadership of the College would vote to close it and wind down its operations

rather than returning for the 2023-’24 academic year. The senator expressly told Sen. Waggoner

to tell the president of the College to vote to keep it open. Based on this information and similar

expressions of support from other Legislators throughout the day, the leadership of the College

voted to stay open for the 2023-’24 academic year.

45. On May 4, 2023, the Alabama Senate unanimously passed S.B. 278.

46. On May 14, 2023, in anticipation of their timely compliance with the program as

passed in the Senate, the College’s administrators provided the Treasurer a set of documents

concerning an existing loan to the College from ServisFirst Bank.

47. During the waning days of the legislative session, however, the Treasurer actively

lobbied against the creation of the program, even though it received unanimous support in the

Senate.

48. Just before the vote on the legislation creating the program, the Treasurer spoke to

a joint meeting of the House Republican and House Democratic Caucuses and told them the

College was a terrible credit risk.

49. Members of the Alabama House of Representatives disagreed with the Treasurer’s

assessment and passed S.B. 278 with an overwhelming majority on May 25, 2023. The votes were

66 in favor, 27 opposed, with 8 non-votes and 4 absences.

50. On May 30 and 31, 2023 administrators from the College again communicated with

the Treasurer concerning S.B. 278.

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 51. The Treasurer demanded that ServisFirst Bank subordinate its first position security

interest on all assets owned by the College. The president of the College indicated he would be

willing to set up a meeting for the Treasurer, the president, and the leadership of ServisFirst Bank

to work through the Treasurer’s concerns.

52. The Treasurer requested the College provide fifteen pieces of information, which

the College provided on or about June 2, 2023. Most of the information the Treasurer received

then ultimately ended up in the College’s formal application months later:

1. 3 years of enrollment history,

2. 3 years of tuition,
3. 3 years of donors,
4. Top 20 donors,
5. 3 years of financials,
6. 2023 internal financials,
7. 3 years of budgets,
8. Current liquidity,
9. Endowment history,
10. Update 4 year projection,
11. Updated description of the College’s debt and debt service tables,
12. 1 page addendum regarding the College’s real estate appraisal,
13. Accreditation review,
14. Rating Agency Report, and
15. Quarterly performance going forward.

This information is attached to this complaint as Exhibit D.

53. On June 1, 2023, with less than a week left in the legislative session, Gov. Ivey

returned S.B. 278 unsigned with three amendments added the requirements for applicants to the

program, including submission of financial restructuring plans. On information and belief, these

amendments were created at the Treasurer’s behest.

54. The Legislature approved the legislation creating the program with Governor’s

amendments, and then adjourned sine die on June 6, 2023.

55. The Governor signed the legislation creating the program on June 16, 2023.

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 56. Upon its passage, the College and its constituents believed the Treasurer would

operate in good faith to fulfill his duties under the legislation to ensure the application process was

created timely, applications were processed fairly, and loan proceeds were disbursed promptly.

D. The Treasurer uses the College as a hostage to gain leverage over ServisFirst Bank.

57. ServisFirst Bank is the lead lender among a group of lenders with $16.5 million in

existing loans to the College secured by substantially all physical assets of the College.

58. On the last day of the legislative session, the Treasurer met with the president of

the College on campus for approximately one hour. The Treasurer never discussed the expected

terms of the loan, despite the urgency of the matter, which was known to him and other members

of state government. Rather, the Treasurer focused on the collateral the College would pledge as

security for the loan, including subordinating the first position of ServisFirst Bank in the College’s

physical assets which secured the loan described in the preceding paragraph.

59. Throughout this process, the Treasurer has been focused on placing ServisFirst

Bank at a disadvantage to settle a grudge against that bank, rather than implementing the clear will

of the Legislature to save the College through the program.

60. During meetings with the College’s administration, the Treasurer volunteered that

he did not like executives at ServisFirst Bank.

61. The Treasurer inquired about particular bond and loan transactions between

ServisFirst Bank and the College, but did not inquire about the College’s bond and loan

transactions with any other banks.

62. The Treasurer insisted ServisFirst Bank subordinate its interest on all collateral of

the College despite the loan-to-value ratio of the collateral the College had offered to pledge to

secure the state’s loan being more than sufficient. The Treasurer’s requirement was contrary to the

12
language of the statute, which only requires that any loan made under the program “be secured by

a first perfected security interest in all collateral assets.” Sec. 2(d) (emphasis added).

63. The Treasurer also baselessly demanded ServisFirst Bank change certain terms on

existing loans between the bank and the College.

64. As an experienced finance professional, the Treasurer knew or should have known

that ServisFirst Bank would either stick to its terms (costing the College its ability to obtain loan

proceeds from the state and continue operations) or ServisFirst Bank would change certain terms

and become subordinate to the state’s interest on all the College’s physical assets, which would

allow the Treasurer to exert some degree of control over the bank with which he had bad blood.

65. And, as shown below, the Treasurer has repeatedly said the College should get its

loans from ServisFirst Bank and not from the state through the program.

E. The Treasurer used confidential information about the College to try and starve it of
operating cash flow through an unlawful veto by delay.

66. On or about June 30, 2023 the Treasurer received a cash flow statement of the

College with projections through May 2024. This document showed the financial position of the

College, its available resources, and its burn rate of existing funds for the 2023-’24 academic year.

67. From then on, the Treasurer acted arbitrarily and in bad faith to try and weaken the

College. In effect, he has exercised a veto of the program he opposed since it was presented to the

Legislature—an act far beyond any discretion or investigatory power granted to his office under

the plain language of the statute.

68. Shortly after receiving the College’s cash flow statement, during a July 11, 2023

phone call, the Treasurer informed the president of the College that he would request an opinion

of the Attorney General concerning the constitutionality of the program.

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 69. The media covered that opinion request after it occurred. ABC 33/40, “State

treasurer seeks legal opinion on constitutionality of distressed universities loan program,” at

https://abc3340.com/news/local/alabama-state-treasurers-office-update-on-distressed-

institutions-of-higher-education-revolving-loan-program-attorney-general-birmingham-

souuthern-college (Aug. 18, 2023) (last visited Oct. 10, 2023).

70. the Treasurer stated to the media that his office had “been developing the

application and procedures to administer this Program. In addition, we have sought an Opinion of

the Attorney General on the constitutionality of such a loan program. Once we have received the

Opinion, we plan to proceed as expeditiously as we can, taking into account the findings of the

Attorney General’s Opinion.” Id.

71. Before he sought the opinion, the Treasurer knew the Attorney General’s Office

presumes all statutes passed by the Legislature are constitutional and that the Attorney General is

charged with defending all laws passed by the Legislature, rather than questioning their

constitutionality.

72. The Treasurer represented to the president of the College during the July 11, 2023

phone call that the opinion request would be resolved in a matter of days.

73. This representation is contrary to both the known common practices of state

government and to publicly-available information concerning the turnaround time of the Opinions

Division. It is well-known that “[t]he current average turnaround time is 97 days from the date the

opinion request is received to publication.” Ryan W. Shaw, “A Reintroduction to the Alabama

Attorney General’s Opinions Division,” 84 Ala. Law. 205, 206 (July 2023).

74. On information and belief, this representation also was contrary to the facts the

Treasurer subjectively knew.

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 75. Unsurprisingly, as the Treasurer knew or should have known before his opinion

request, the Attorney General’s Office did not call into question the constitutionality of the

program. Unfortunately for the College, the Treasurer used the delay between early July and

August 18, 2023 to prevent the commencement of the application process to the program.

76. The Treasurer delayed setting up an application process for weeks, despite his oath

to “faithfully and honestly discharge the duties of” implementing the program and his subjective

knowledge that time was of the essence to the College based on both publicly-known facts and his

possession of the College’s cash flow statements. Ala. Const. § 279; Ala. Code § 36-17-3(16).

F. The Treasurer arbitrarily moves the goalposts for the College to receive a loan.

77. As stated above, the Treasurer has possessed materially all the factual information

backing up the College’s loan application since approximately June 2, 2023.

78. On June 20, 2023, the College provided the Treasurer with a thorough restructuring

plan for repayment of loan proceeds from the program. The president of the College emailed this

plan to the Treasurer himself, and volunteered to answer any questions or address any concerns.

79. In this document, the Treasurer learned that the College was actively trying to

renegotiate its bank debt, and that any dispute between ServisFirst Bank and the College could

result in the College terminating operations:

The 1996 Series bonds and the 2002 Series bonds have liens on tuition and room
revenues. They [do not] have liens on actual hard assets. The 2017 Bond
(ServisFirst Bank + 2 other banks) and the Term Loan (ServisFirst Bank + 2 other
banks) have a senior lien on most of the assets on the campus. In a meeting with
the CEO of ServisFirst Bank and the loan officer who covers Birmingham-
Southern[,] ServisFirst Bank has declined to waive their first lien status even if that
means, in doing so, [it would bankrupt] the college. Moreover, ServisFirst Bank
does not believe it could convince the other two banks in this exposure to [] give
up their position.

80. After fully disclosing all of the material risks with the College’s financial position,

the restructuring plan concluded as follows:

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 This plan has many moving pieces. The priority with respect to executing is to come
to terms with the state and ServisFirst Bank. If we cannot do this, the college will
have to explore bankruptcy which means it will cease to exist by the end of the
calendar year. The next step will be to procure at least $10 million in funding from
other governmental entities before the end of the summer. This funding is critical
to the restructuring itself.

With bridge funding in place, we can focus on raising private funds to ensure the
college can stand on its own two feet by academic year 2027. We can focus on
building out new programs and increasing enrollment. With any surplus revenue,
we will look to pay down the state as quickly as possible.

81. The president of the College personally addressed several issues the Treasurer

raised concerning the plan and then submitted a revised restructuring plan to the Treasurer on June

30, 2023.

82. To ensure any further issues were addressed immediately, the president provided

the Treasurer his cell phone number and volunteered to make himself available during a pre-

planned family vacation. As everyone involved knew, time was of the essence.

83. By the time of the Treasurer’s July 11, 2023 phone call with the College president,

the Treasurer had not created a loan application or developed a process to obtain a loan, despite

the Treasurer’s subjective knowledge of the time-sensitive nature of the loan program to the

College’s survival and possession of the cash flow projection of the College.

84. Finally, on or about July 14, 2023, the Treasurer’s office published an application

on its website. When contacted via phone by representatives of the College concerning whether to

send hard copy or electronic copies of the application, Chad Wright (an assistant treasurer) stated

the application should not be up yet and removed it from the website.

85. At 10:56AM on August 24, 2023—42 days after first publishing the application

and 70 days after the Governor signed the program into law—the Treasurer’s office informed the

College it would begin accepting applications for the program. The application form is attached as

Exhibit E to this complaint.

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 86. By 4:08PM on that same day, the College had completed and submitted its

application. The submitted application packet from the College is attached as Exhibit F to this

complaint. When he received the College’s application, Chad Wright stated that the Treasurer’s

Office was “very aware of [the College’s] situation and timing.”

87. On the State Treasury website, applicants to the program were strictly instructed

not to communicate with anyone concerning their application, or risk immediate denial:

Efforts to Influence the Process

The integrity of the application process is of primary importance and will not be
compromised. Any written or oral communications beyond the application
submission made by applicants, or others on their behalf, whether paid or unpaid,
to influence the application process, made directly or indirectly to the Treasurer or
Treasury staff will be grounds for immediate denial of the loan application.

See Ala. Treas., Distressed Institutions of Higher Education Revolving Loan Program, at

https://treasury.alabama.gov/distressed-institutions-of-higher-education-revolving-loan-program/

(last visited Oct. 9, 2023).

88. This instruction evidences the Treasurer’s intent to keep secret his plan to

effectively veto the program by delaying a decision until the College could no longer afford to

operate, and to cause as much harm as possible to the College and its constituents.

89. On September 6, 2023, however, the Treasurer asked the president of the College

why the College’s application was only for $27 million, rather than $30 million. In substance, the

president stated that the College did not want to consume the entire fund. The Treasurer said “you

know this fund is set up for you,” meaning the College.

G. The College offers collateral worth 297% of the total requested loan amount and
restructuring of its debt with ServisFirst Bank to ensure a successful application.

90. On September 26, 2023, the president of the College sent the Treasurer a revised

proposal concerning collateral the College would pledge to secure the loan. The revised proposal

17
included a provision that the College’s lenders, including ServisFirst Bank, would agree to write

down $1.9 million of debt owed by the College.

91. The president of the College also stated the College would hold gifts to the new

Foundation in trust. The Foundation would begin with assets of $4.4 million in U.S. Treasuries

and grow to between $5.5 million and $6 million of treasury assets during the course of the loan.

The College offered U.S. Treasuries because they were easily valued, liquid, and not subject to

appraisal differences, like real estate assets are.

92. On September 27, 2023, the president of the College sent the Treasurer an

additional proposal concerning collateral the College would pledge to secure the loan. The

College’s real property available for collateral includes its 192-acre campus, which has 56

buildings and approximately 1.1 million square feet of built space. There are eight residence halls

and 146 apartment units on the campus. The College also has a Government Documents Library

and houses the Southern Environmental Center, which is the largest educational facility of its kind

in Alabama and has an award-winning Interactive Museum and the Hugh Kaul EcoScape garden.

93. In this proposal, the College presented an option of three periodic loan draws, rather

than a lump sum drawn in 2023:

• The College would take a first draw of $16 million in the 2023-’24 academic

year, secured by a first position on the College’s real estate valued at $75 million

(nearly 5 times the amount of the first draw), with a liquidation value of $22

million (almost 138% of the amount of the first draw);

• The College would take a second draw of $9 million in the 2024-’25 academic

year, secured by at least $9 million in treasury notes held by the Foundation; and

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 • The College would take a third draw of $5 million in the 2025-’26 academic

year, secured by at least $5 million in treasury notes held by the Foundation.

94. The collateral proposals submitted by the College to the Treasurer on September

26 and 27, 2023 are attached as Exhibits G and H to this complaint.

95. In all circumstances where treasury notes were to be used as collateral, the College

promised to purchase and hold those notes before drawing any loan funds.

96. Because the College provided more than sufficient collateral to secure the loan, the

Treasurer should have been satisfied and approved the application in accordance with the statute.

97. This proposal was more than sufficient to secure the loan if the Treasurer had acted

rationally, in good faith, and in accordance with the law. It meets the statutory requirement that

any loan made under the program “be secured by a first perfected security interest in all collateral

assets.” Sec. 2(d) (emphasis added).

98. Nevertheless, the Treasurer rejected this plan and demanded that his office be

placed in a first position over ServisFirst Bank on the College’s real estate.

99. On September 28, 2023, the Treasurer requested copies of credit agreements

between the College and ServisFirst Bank from 2017, despite the College having shown it had

more than adequate collateral for the state to make the loan.

100. Until October, the Treasurer indicated the collateral offered as security for the loan

was the only material term of the College’s loan application with which he took issue. He also

stated that he believed “protecting the principal” of the loan was his first priority.

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 H. The Treasurer acted in bad faith, beyond his authority, and/or under a mistaken
application of the law; alternatively, he acted arbitrarily and capriciously.

101. On September 29, 2023, despite earlier positive representations from the

Governor’s office concerning a second possible allocation from the GEER funds, a member of the

Governor’s staff stated that the College would not receive any of those funds.

102. During a phone call or about October 5, 2023, the president of the College was

discussing the College’s application with the Treasurer. The president of the College addressed

the failsafe collateral to the state, but the Treasurer changed the subject to ServisFirst Bank’s

lending relationship with the College.

103. The Treasurer said the College should just get ServisFirst Bank to make the loan,

rather than receiving loan funds specifically appropriated by the Legislature to fund the program—

a program the Treasurer had previously acknowledged was “set up for” the College. The Treasurer

continually returned to how ServisFirst Bank was “getting off easy” in its financial interactions

with the College, continually evidencing an animus toward the College and ServisFirst Bank.

104. At this point, the president of the College asked the Treasurer whether he would

ever make a single loan from the program, which was essentially created to preserve the College.

The Treasurer stated he would never make a loan to any distressed organization regardless of its

collateral, and he would not commit to making a loan from the program to the College even if

ServisFirst Bank subordinated all of its assets to the state.

105. On Friday, October 6, 2023, the Treasurer called the president of the College and

stated he would have a press conference on Tuesday, October 10, 2023 announcing that the

applications of the College and one other institution had been received and denied, and announcing

that the state would not make a loan to the College under the program.

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 106. The Treasurer knows that, without prompt approval of the College’s loan

application, the College will shut down. This will not be caused by a lack of assets, but rather by

the cash flow problems about which the Treasurer has known since June. The Treasurer further

knows a shutdown will irreparably harm the College’s 731 students, 284 employees, almost 17,000

living alumni, its private donors, its lenders, and the approximately 8,500 residents of the

neighborhoods surrounding the College.

107. On Monday, October 9, 2023, a member of the Senate leadership spoke with the

Treasurer and reported to the president of the College “there is a deal to be had but it is going to

take ServisFirst at the table. They will need to give a little” to make a deal. These statements meant,

in effect, that the Treasurer wanted ServisFirst Bank to take a full write-down of its debt and

complete subordination of its interest to those of the state.

108. On Tuesday, October 10, 2023, the president of the College stated ServisFirst Bank

would release its interest first priority security interest in the College’s apartments before the first

draw of the 2024-’25 academic year.

109. The president also stated that the College’s lenders would commit to write down

the loan by $1.9 million. The Treasurer said he would “think about it,” but in reality the Treasurer

was just continuing his strategy of veto by delay. And, as the Treasurer has known since June 30,

2023, the College’s cash flow will run out without a loan from the program.

110. On Wednesday, October 11, 2023, the Treasurer changed course and asked the

president of the College why ServisFirst Bank was being offered U.S. Treasury notes held by the

College and the Foundation as collateral, when he viewed those as superior to real estate. The

president of the College reminded the Treasurer that he was offered the U.S. Treasury notes as

collateral first and rejected them.

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 111. On Thursday, October 12, the president of the College submitted a collateral

proposal where ServisFirst Bank would release all of its security interest in the College’s real estate

assets as collateral except for the Hill Top Apartments. ServisFirst Bank would then release its

security interest in the apartments before the College took its loan draw for the 2024-‘25 academic

year. During a call that day, the Treasurer expressed interest in this proposal and responded

favorably.

112. On Friday, October 13, 2023, the president of the College had a conversation with

the Treasurer during which he again asserted he would not make a loan to the College under the

program. This time, the Treasurer said that ServisFirst Bank should lend all of the money the

College needed, despite the Legislature creating and funding the program. The Treasurer again

implied that, regardless of collateral, the distressed nature of the College means it is not a good

loan to make—despite the Legislature expressly creating the program to save the College because

of its value to the State.

113. During that conversation, the Treasurer for the first time mentioned that other loan

terms needed to be resolved.

114. The president of the College again explained that the program was expressly

created to help a distressed institution while ensuring the state will get its principal back. The

Treasurer stated, for the first time ever, that he would require a better return than that.

115. The Treasurer further stated that he did not “trust the Legislature to get

constitutionality right” in its legislation. This indicates, on information and belief, that the

Treasurer viewed himself as the gatekeeper of the program, despite the Legislature creating the

program and ordering him to make loans under it to qualified institutions.

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 116. The Treasurer also stated that the president should “get ServisFirst to bail [the

College] out” rather than obtaining a loan through the program.

117. As of 5:00PM on Friday, October 13, 2023, the Treasurer had still refused to

approve the College’s loan application. He also had not formally rejected the application, as he

indicated he would during the previous week and earlier in that week.

118. During the weekend, the president of the College continued to try and obtain a

commitment from the Treasurer to carry out his duty under the statute and make the loan for which

the Legislature had already appropriated funds. The Treasurer continued to delay and not fulfill

his obligations.

119. By Monday, October 16, 2023, ServisFirst Bank agreed to both terms the Treasurer

demanded a week earlier (as reflected in paragraph 107). ServisFirst Bank stated it would hold

back a small amount of the collateral until donor collateral replaced it over approximately seven

months. The Treasurer then moved the goalposts again and said to another member of the Alabama

Senate that ServisFirst Bank should make the loan and the state should stay on the sidelines.

120. On Wednesday, October 18, 2023, a letter arrived from the Treasurer that was dated

Friday, October 13, 2023. In that letter, the Treasurer finally formally denied the College’s loan

application. The letter was sent via regular mail and the Treasurer never once communicated to

the College that it was being formally denied.

121. The Treasurer’s unlawful actions are arbitrary and capricious, in bad faith, beyond

his authority, or in a mistaken interpretation of law. They are and contrary to the plain language of

the statute and violate the entire purpose the Legislature showed in creating the program.

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 122. On information and belief, the Treasurer’s veto by delay and ultimate denial was

done in bad faith, beyond his authority, or in a mistaken interpretation of law to cause as much

harm as possible to the College and its constituents.

123. Without immediate relief from this Court, the Treasurer’s unlawful veto of the

program will result in the demise of the College and end its 167-year history.

V. Causes of Action

Count One: For A Declaratory Judgment

124. The College incorporates paragraphs 1 through 123 as if fully set forth here.

125. The College meets all the requirements of the program, is qualified for a loan from

the program, and its application should have been approved.

126. The College applied for the program on August 24, 2023—the day the application

became available for completion.

127. The College fully complied with the application process.

128. The College has agreed to provide the Treasurer first position on more than

adequate collateral to secure the loan, which was valued at almost five times the amount of the

first draw the College requested for the 2023-’24 academic year.

129. The College provided sufficient supporting documentation to justify accepting the

application and making the loan.

130. Despite his statements that he would make a final decision on the application, the

Treasurer unreasonably delayed a ruling before he formally denied the College’s application. He

then did not even communicate that denial to the College for five days.

131. The statute states the Treasurer “may, in his or her judgment, award a loan to any

eligible institution that meets the requirements provided in this section,” Sec. 2(e), but this statute

is not permissive. Instead, it restricts the Treasurer from approving loans to institutions who do not

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meet the criteria of Sec. 2. When an institution meets the criteria of Sec. 2(a)(1) through (a)(5),

there is no discretion not to award the qualified institution a loan under the program.

132. To the extent he possessed any discretion at all, the Treasurer arbitrarily and

capriciously abused his discretion in constructively denying the College’s loan application by

refusing to act, all while knowing the College would run out of cash before the end of the year.

133. There is no hearing process or other administrative procedure by which the College

can have its application reviewed or evaluated. As such, this is a justiciable controversy between

the College and the Treasurer.

134. The College, therefore, petitions this Court for a judgment that (a) it has provided

sufficient information to the Treasurer for its loan application to be approved; (b) it meets the legal

requirements of the program to obtain the requested loan; and (c) orders the Treasurer to take the

necessary steps to issue the requested loan to the College and disburse the loan proceeds to the

College no later than October 30, 2023.

Count Two: Petition for Writ of Mandamus

135. The College incorporates paragraphs 1 through 134 as if fully set forth here.

136. The Court should issue a writ of mandamus “when there is: (1) a clear legal right

in the petitioner to the order sought; (2) an imperative duty the respondent to perform, accompanied

by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction

of the court.” Ex parte Ala. Dept. of Revenue, 315 So. 3d 1260, 1263-64 (Ala. 2020) (internal

quotations omitted).

137. The College has a clear legal right to an order requiring the Treasurer to approve

its loan application. The College further has a clear legal right to an order requiring the Treasurer

to disburse the funds appropriated by the Legislature.

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 138. The Treasurer is required by the statute creating the program to perform his duties

in administration of the program. He has refused to perform those duties.

139. The Treasurer did not have the discretion to exercise a veto by delay or to ultimately

deny the College’s application, undermining the statute creating the program.

140. To the extent the Treasurer has performed any functions that require the exercise

of discretion, he has abused that discretion and acted arbitrarily and capriciously to harm the

College and veto the program he opposed before the Legislature passed it.

141. To the extent the Treasurer has performed any functions that require the gathering

and evaluation of facts, he knew all material facts for months. He further has had ample time to

contemplate and investigate all other facts concerning the collateral offered by the College as

security for the loan.

142. The College lacks any other adequate remedy to obtain the relief it seeks here.

143. This Court has jurisdiction over this dispute because of the nature of the parties, the

questions at issue, and the location of the parties.

Count Three: Preliminary and/or Permanent Injunction

144. The College incorporates paragraphs 1 through 143 as if fully set forth here.

145. To obtain a preliminary injunction the plaintiff must show: (1) without the

injunction the plaintiff would suffer immediate and irreparable injury; (2) the plaintiff has no

adequate remedy at law; (3) the plaintiff has at least a reasonable chance of success on the ultimate

merits of his case; and (4) the hardship imposed on the defendant by the injunction would not

unreasonably outweigh the benefit accruing to the plaintiff. Lott v. E. Shore Christian Ctr., 908

So. 2d 922, 927 (Ala. 2005).

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 146. The College will be irreparably harmed if this Court does not order that the College

meets the eligibility for the program and directing the Treasurer to deem the College’s loan

application complete and issue a final determination approving its loan application.

147. The College has no adequate remedy at law because its injury is not easily or readily

quantifiable in terms of money damages at this point. Should the College be forced to cease

operations because of the Treasurer’s arbitrary and bad-faith failure to act on the application,

however, the monetary harm directly attributable to the Treasurer’s conduct likely will be hundreds

of millions of dollars in immediate and contingent liability to the College, its contractors, its 284

employees, and its students and their families—all of whom acted in reliance on the Legislature’s

enactment of the program when determining their course of action for the 2023-’24 school year.

148. The College has at least a reasonable chance of success on the merits of its claims.

As detailed above, the College timely submitted its loan application and all supporting documents

in accord with the process the Treasurer established.

149. The College meets the statutory eligibility criteria of the program.

150. The College provided the Treasurer more than enough collateral to issue the loan.

151. The Treasurer’s refusal to accept the College’s loan application is inconsistent with

his own ostensible requirements and the language of the statute.

152. The benefit to the College far outweighs any hardship imposed on the Treasurer. If

the Treasurer is required to issue a decision granting the College’s loan application, the Treasurer

faces only the minimal hardship associated with acting in compliance with the law and issuing the

loan, funds for which the Legislature has already appropriated. On the other hand, the College

faces significant harm because it likely will close, costing 292 jobs for its employees and sending

the lives of its 731 full-time students and their families into chaos.

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 153. The College is entitled to injunctive relief because its legal rights are affected by

the Treasurer’s refusal to approve its loan application, in spite of the clear statutory language and

the College’s repeated provision of collateral on terms that are better than those required by the

statute.

154. The College faces immediate and irreparable harm without injunctive relief.

Specifically, the College is threatened with closure if the Treasurer is not ordered to approve the

College’s loan application and act according to the statute.

155. The College has no adequate remedy at law because the injury is not easily or

readily quantifiable in terms of money damages at this point. Should the College be forced to cease

operations because of the Treasurer’s bad-faith failure to approve the loan application, however,

the monetary harm of the Treasurer’s conduct likely would be in the hundreds of millions of dollars

in both immediate and contingent liability to the College, its contractors, its employees, and its

students and their families—all of whom acted in reliance on the Legislature’s enactment of the

loan program when determining their course of action for the 2023-’24 school year.

156. An injunction is necessary and proper under Alabama Code § 6-6-230, the inherent

power of this Court, and this Court’s statutory injunction authority.

VI. Prayer for Relief

The College prays this Court order the following judgment and relief:

a. Grant a declaratory judgment, under Ala. Code §§ 6-6-220, et seq., that the College

is eligible to participate in the Alabama Distressed Institutions of Higher Education Revolving

Loan Program and meets the statutory criteria for eligibility and that the College’s loan application

to the program is complete;

b. Issue a writ of mandamus and/or permanent injunction on the same terms as

paragraph (a) above against the Treasurer and additionally order the Treasurer not to act arbitrarily,

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in bad faith, beyond his authority, or in a mistaken interpretation of law or arbitrarily and

capriciously;

c. Order the Treasurer to loan the College the sum of $16,000,000 from the Distressed

Institutions of Higher Education Revolving Loan Program during the 2023-2024 academic year

from the $30,000,000 previously appropriated by the Alabama Legislature to fund the program on

the following terms:

i. The loan for the 2023-2024 academic year shall be released to the College

in two separate draws. The first draw shall be in the amount of $8,800,000, which

represents 55% of the requested total amount for this academic year. The second draw shall

be in the amount of $7,200,000, which represents the remaining 45% of the requested total

amount for this academic year;

ii. The College shall provide adequate collateral for each draw. If the collateral

pledged by College consists of U.S. Government securities, the collateral is adequate if its

value is 102% of the draw amount. If the collateral pledged is not U.S. Government

securities, the collateral is adequate if it has an appraised value of at least 125% of the draw

amount. All future draws shall be subject to the same definition of adequacy. The College

will provide a first lien on the collateral provided to secure each draw;

iii. Once the College provides documentation of adequate collateral pledged as

security for a draw on the loan, Boozer shall release each draw to the College as soon as

practicable, but no later than 4:00 p.m. Central time on Monday, November 6, 2023, in the

case of the first draw of $8,800,000, and no later than 4:00 p.m. Central time on Thursday,

February 1, 2024, in the case of the second draw of $7,200,000;

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OF COUNSEL:
Harlan F. Winn, III (WIN023)
Adam P. Plant (PLA005)
Mallory Morgan Combest (COM020)
BATTLE & WINN LLP
2901 Second Avenue South, Suite 220
Birmingham, AL 35233
Telephone: (205) 397-8160
Facsimile: (205) 397-8179
Email: hwinn@battlewinn.com
rbattle@battlewinn.com
aplant@battlewinn.com
mmorgan@battlewinn.com

Lee H. Copeland
COPELAND, FRANCO, SCREWS & GILL, P.A.
P.O. Box 347
Montgomery, Alabama 36101-0347
Tel.: (334) 834-1180
Fax: (334) 834-3172
Email: copeland@copelandfranco.com

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DEFENDANT SHALL BE SERVED VIA PROCESS SERVER BY FILER AT THE
FOLLOWING:

Young Boozer
Executive Office of the Treasurer
600 Dexter Avenue, Room S-106
Montgomery, Alabama 36104
Phone: (334) 242-7500

For the State of Alabama:

Steve Marshall
Office of the Attorney General
501 Washington Ave.
Montgomery, AL 36104

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