TIF suit ends in favor of Monett

Wednesday, October 23, 2013

The four-year-old dispute over Monett's tax increment financing (TIF) program concluded on Oct. 1. The Missouri Supreme Court refused to hear the appeal filed by Barry County 911. In issuing rulings and decisions, the Supreme Court issued a one-word decision, "Denied," ending the case.

Barry County 911 was the last of the three parties sued by the City of Monett for failing to send part of its sales tax revenue to Monett, for sales transacted inside Monett's two TIF districts.

In January 2009, Monett city officials discovered a state law that said sales taxes passed after a TIF district is established must pay half of the sales tax into the TIF to pay for improvements raising the territory from a blighted condition.

Despite discussions about the situation with the Barry and Lawrence County commissioners, both commissions subsequently stopped paying the TIF a portion of Monett sales, as had been done since 1996. The city issued a demand letter for payment in June 2009. When there was still no response, the city filed suit against all three taxing entities on Oct. 26, 2009.

Attorneys for both sides faced off in November 2010 and March 2011 before Judge Neal Quitno, of Nevada. Mary Jo Shaney, lead attorney for Monett, complained that the county would never detail the grounds for asserting Monett's TIFs had been formed inappropriately and were null from the outset. The counties argued all the money paid into the TIF over 13 years should be returned.

Quitno issued a rule in favor of Monett on April 20, 2011, which he finalized on July 24, 2011. Quitno concurred with Shaney's arguments that the counties had waited too long to object to the debt. State law did not allow withdrawal from a cooperative agreement in protest of decisions made years earlier.

During the litigation, the counties withheld all sales tax reimbursements and the annual real estate tax income from the TIF, including that collected on behalf of the Monett R-1 School District and the Barry-Lawrence Regional Library. Both the school district and the library objected, without success. Quitno ordered all the money moved into escrow accounts until the case was resolved.

The lack of cash flow raised concern that Monett may be forced into default on its bonds to widen Highway 60.

Lawrence County withdrew from the suit in December 2011, after commissioners chose not to pursue an appeal. Funds for $176,331.31 wer released to Monett in January 2012.

An appeal of Quitno's ruling was heard by the Missouri Southern District Court of Appeals on April 4. The three-judge panel ruled on June 4 in support of Quitno's summary judgment ruling for Monett on May 13. At that time Barry County followed Lawrence County's earlier decision and withdrew from the case. Barry County released nearly $2.4 million in withheld funds in June.

Barry County 911 argued its objection, unlike the counties, had been filed without an acceptable timeframe. Shaney responded that the Missouri General Assembly had chosen to exclude some taxes from collection by TIFs. A 911 sales tax was not among the exceptions.

Barry County 911 proceeded alone to appeal Quitno's ruling, backed by the Court of Appeals, to the state's highest court. Cassville attorneys David Cole and Cordellia Herrin prepared the case.

Commenting on the Missouri Supreme Court's decision to not hear the case, Monett City Administrator Dennis Pyle stated, "We're pleased with the final outcome of this litigation. It's always been the city's position that the TIF projects have been positive developments for Monett and Barry/Lawrence County. We hope that with the additional revenue from the Barry County E-911 emergency services tax being allocated to the TIF, we can pay off the debt ahead of schedule."

Jon Horner, chairman of the Barry County 911 Board of Directors, told The Times, "Of course we wish it had gone the other direction. At the end of the day, they [the Supreme Court justices] have made their decision. We will move on.

"I'm glad we did try [the appeal] with the Supreme Court," Horner continued. "We can tell taxpayers we gave it the best shot we could. We went to the final entity to see whether or not our argument would be held up or not.

"We were fortunate that our financial position is where it is today. Two years ago we'd have been out of business [with this ruling]. Getting a tax increase, we can move forward and can serve the public in the manner in which they expect."

Horner anticipated Monett would file a motion with the court to release the money in escrow. Once the order was received, a check would be cut. At the end of September, Barry County 911 had $409,717.24 in its escrow fund.

Horner said he was not on the board when the litigation began and could not speak about regrets in the case.

"You always wish things could be worked out, without going through a lawsuit and the expenses of that," Horner said. "The attorneys did the best they could, especially on the appeal to the Supreme Court, which was done by local attorneys.

"We let the legal system sort it out," Horner said. "That's why we have courts. We live by the rule of law and will abide by the verdict of the court."

Monett's attorney Shaney added a final comment:

"I think it fair to say there is a combination of excitement, relief and validation [for Monett]," Shaney said. "This goes beyond any individual or official in the city and extends to the citizens in Monett and Barry and Lawrence counties, for whom the infrastructure built with the money from the TIFs has improved conditions for all. The long haul of this case took perseverance and commitment by the TIF Commission and city leaders to do what the city believed was the right thing. We are grateful to our courts and judges who painstakingly and thoughtfully considered the issues."

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