TIF case reaches Missouri Court of Appeals
After more than three years of argument, the litigation between the City of Monett, Barry County and the Barry County 911 reached the Missouri Court of Appeals on April 4. Oral arguments were presented in Southern District Court in Springfield over Judge Neal Quitno's July 27, 2011, ruling in support of Monett's tax increment financing (TIF) program.
Appeals Court Judges Jeffrey Bates, Daniel Scott and Don Burrell heard arguments from Cassville attorney David Cole for the county. Mary Jo Shaney, who works at the Kansas City-based law firm of White Goss Bowers March Schulte and Weisenfel, presented the city's case.
Cole was accompanied by fellow attorney Cordelia Herrin. Presiding Barry County Commissioner Cherry Warren also attended. Shaney was accompanied by fellow attorney Christine Bushyhead. Monett Commissioner Mike Brownsberger and Mark Nelson, chairman of the Monett TIF Commission, and City Administrator Dennis Pyle attended for the city.
Quitno ruled that the Barry and Lawrence county governments owed Monett half of sales tax revenues collected in Monett's TIF districts. The counties claimed Monett's TIF had been formed improperly and had no claim to the sales tax which the counties stopping repaying after 12 years.
The ruling also obligated Barry County 911, which did not exist until after the TIFs formed, to pay a portion of its sales tax revenue generated within the TIF districts to Monett, in compliance with state law.
Cole led off the presentation for filing the appeal. He challenged the premise that Quitno made his ruling by summary judgment. Such a premise requires considerable agreement on the facts of the case, from which the judgment flows.
"The record is replete with inconsistencies on material facts presented by the city," Cole said.
Focusing on the city's comprehensive plan, drafted in 1971, Cole turned to the 1997 case of St. Charles v. DeVault Management. St. Charles' master plan, Cole asserted, used the same language as Monett's and required annual review and updating, which Monett did not do.
Cole displayed a map showing Monett's 1971 comprehensive plan, which had a "planning area" outside the city limits. Monett's two TIF district included land beyond the planning area. He said the city's defense that the planning area runs a specified distance beyond the existing city limits is "strange credulity at best."
The Southern District Court of Appeals ruled in the 2008 Great Rivers Habitat Alliance v. St. Peters case that claiming the TIF conforms to the master plan "isn't conforming," but requires documentation.
In Monett's defense, Shaney said the county's arguments failed to put Monett's comprehensive plan in perspective. She said state statutes command that a master plan should conform to a redevelopment plan "as a whole."
The St. Charles case stated the master plan "shall conform" to the redevelopment plan. Monett's plan, in contrast, "is long-range and flexible," Shaney said. "The city's plan is not a straight jacket; it is a guide."
Monett's master plan further stated predicted development "could take shorter or longer" than the predicted 20 years. Shaney said the plan reflected significantly more flexibility than the St. Charles case.
"Facts" claimed by the county did not make it into Quitno's ruling. Shaney cited another case stating denial of facts in a summary judgment case is not appealable. The trial judge can include facts "intertwined and relevant," and has the authority to discard others. "That's exactly what happens here," Shaney said.
Cole argued that the widening of Highway 60 in 2007, creating a $6.1 million debt, fell outside the 10-year window for adding projects to a 23-year TIF. He disputed Monett's claim that the county filed its argument too late, in the final months of the original litigation, after the period for making new arguments had passed.
Cole questioned the county's obligation to pay the debt claimed by the city. Judge Scott then asked if Monett's TIF districts were formed validly, which Cole conceded. Did the county use uncontroverted facts to challenge the summary judgment decision, Scott asked.
"I won't defend the trial court's presentation," Cole said, made by Ivan Schrader, who argued the case in front of Quitno. "It was less than stellar."
Cole argued even the 1997 addition of the Ramey Supermarket to the first TIF could not be supported. Construction of highways around the Walmart Supercenter was the sole legitimate TIF project. Monett claimed payment for the Ramey project as a "ministerial duty," and there could be no right to a claim for the $6.1 million for the 2007 Highway 60 project. Cole said "the plain reading of the statute" also cleared Barry County 911 of any payments due.
Shaney began her rebuttal by establishing context. She noted the county's challenges came after a blight study had been done, infrastructure built and tax revenue increased. Barry County took advantage of the increased revenue as did Barry County 911, receiving tax money to the present day.
"The trial court properly determined the county failed to meet its burden under summary judgment to establish controverted facts, where there are two plausible but contradictory facts made," Shaney said. "The trial court was correct in its summary judgment and properly excluded facts from the record." For example, the argument about the Ramey Supermarket, Shaney said, "never came into the case."
"If the trial court ruled out facts and there was no challenge, aren't we bound to that?" Judge Bates asked.
"I agree," Shaney said. "The county failed to preserve facts that they're arguing now."
Judge Scott asked on rebuttal if Cole found any rulings after 12 years that set aside a standing TIF. Cole said all TIF cases were different. In the St. Charles case, the court found the TIF did not conform to the master plan and sent the case back to the lower court. The St. Peters case also had two rounds in the courts. The second ruling, which favored the city, came earlier in 2013.
If the county's argument challenging additional debts to the 1996 TIF has legitimacy, Judge Scott said the case would have to be remanded back to the lower court for more proceedings. He asked Cole if the defendants challenged the 2007 debt increase at the time.
"No, but they were in 2009," Cole said, when the current litigation started. He agreed with Scott that Barry County 911 had never paid any money to Monett on its TIF claim.
The judges ended the proceedings on a time limit. They are expected to take up to three months to make a ruling.