Madison County will appeal a federal judge’s ruling obligating taxpayers for a minimum $3.1 million in shortfalls surrounding a private land development involving a 2005 contribution agreement being disputed by a bond insurer after landowners defaulted on a $27 million loan.

The crux of the lawsuit is the 2005 contribution agreement between the county and the Parkway East Public Improvement District after the private developers defaulted on the loan that funded the Galleria Parkway, despite previous taxpayer bailouts.

Supervisors contend that the county agreed to make shortfall payments — similar to a bridge loan — for a period of two years and the PID would reimburse the county. After two years, if the county wasn’t reimbursed, supervisors contend the county’s obligation ended, according to the contribution agreement.

The county made its first shortfall payment of $374,021 on Oct. 24, 2011, and followed up with a $464,376.60 payment on April 25, 2012. On Oct. 24, 2012, another payment was made in the amount of $518,401.44 until the final payment of $676,514.19 on April 16, 2013.

In total, the county paid over $2 million in shortfall payments.

When an October 2013 payment came due, the county invoked the contribution agreement and did not make a shortfall payment, leading to the lawsuit by bond insurer Radian.

Madison County Board of Supervisors President Trey Baxter said in a release last week that the board “disagrees with the Court’s interpretation of the (contribution) agreement.”

He said, “Our position is and will continue to be, that Madison County’s only obligation is to advance shortfalls in the PID collections if the PID is paying Madison County back in two years.

“While the current Board of Supervisors inherited this issue, we will work through other legal avenues with the goal of making sure that the taxpayers of Madison County do not make any payments for which they are not responsible.”

Assured Guaranty, the bond insurer suing the county, bought the initial bond insurer Radian. Assured argues the contribution agreement has no life span and the county is on the hook for the shortfall payments for the life of the bonds.

U.S. District Judge Carlton Reeves granted a second order of summary judgment to Assured last Wednesday, saying, “At heart, the parties disagree about how long Madison County agreed to make bond payments on behalf of Parkway East Public Improvement District, when the District became unable to make payments on its own.

“The (bond insurer) says the answer is ‘forever,’ while the County suggests the answer is ‘two years,’” his order stated. “The contract contains no time limit on the County’s duty to make bond payments. Nothing precluded the County from seeking to add such a limit, or perhaps a ceiling of the money it would agree to pay. But such a limitation is not present.”

Former Supervisor Andy Taggart, one of the five who unanimously approved the contribution agreement, said everyone believed the agreement had a two-year lifespan for repayment.

Taggart said there would have been no use in buying bond insurance in the first place if the county was on the hook for the loan in its entirety.

Fourteen original landowners agreed to a special assessment on their property in exchange for $27.7 million in bonds to build the 4.3-miles Galleria Parkway that connects Gluckstadt to Madison and parallels I-55.

Currently, there are 17 landowners, of which Madison County is one. Six of the 17 landowners paid assessments in 2015 to the tune of $879,938, or roughly 34 percent of the total assessments issued, according to documents obtained from the county.

Those paying landowners include:

• St. Dominic paid $665,160 on nine parcels totaling 443 acres.

• Barnett Place Properties paid $161,635 on three parcels totaling 26 acres.

• Curtis and Janet Whittington paid $36,594 on one parcel totaling 15 acres.

• Morris Real Estate LLC paid $5,033 on one parcel totaling three acres.

• Show Dog Properties LLC paid $3,137 for one parcel on one acre.

• Gideon Real Estate LLC paid $8,380 on one parcel totaling 19 acres.

The total assessments not paid by landowners amounts to over $1.7 million. Land owned by Madison County and the Madison County Economic Development Authority, neither subject to assessments, totaled 218 acres.

The initial assessments for that land which was later deeded to them by the Secretary of State, totals $740,454.

Other non-paying landowners include:

• Rolling Meadows LLC did not pay $210,434 for one parcel on 32 acres.

• Madison Parkway did not pay $51,238 for one parcel on 11 acres.

• ADAB LLC did not pay $104,805 for one parcel on 23 acres.

• MG Parkway LLC did not pay $48,909 for one parcel on 11 acres.

• Landstock Tustmark did not pay $11,349 for one parcel on one acre.

• Landstock LLC did not pay $91,320 for one parcel on 35 acres.

• YMCA of Metropolitan Jackson did not pay $364,658 for one parcel on 29 acres.

• Larry Lewis did not pay $32,040 for one parcel on nine acres.