Attorney Carl Yates and City Administrator Dennis Pyle explained that based on three different court rulings, it appears that TIFs, unlike other taxes, have been authorized by the State Legislature to capture a portion of taxes enacted prior to the TIF coming into existence, as well as taxes passed later.
In the 1998 Village of Bel-Ridge v. Lohman case, the Missouri Court of Appeals ruled that "even special purpose taxes are included in TIF revenues unless expressly excluded by the TIF Act" under the last revisions in 1997.
Under this premise, both the Barry County "911" quarter-cent sales tax and the Lawrence County half-cent sales tax paying for the county's new Judicial Center are both subject to Monett's TIF.
According to Yates, the only exemptions written into the TIF law are for districts, such as the new Purdy Fire District. Yates does not consider Barry County's "911" operation to be a political subdivision, because it lacks the authority to condemn property or "to carry on the police powers of the state." He said there is an opinion by the Missouri Attorney General that a "911" service is not a political subdivision.
City officials met with representatives of the Barry County Emergency Services Board over lunch on March 18, informing them of the situation. Mayor Jim Orr and Pyle went to the Lawrence County Commission's meeting on March 25.
Pyle said the city asked for a response and has received no word of any kind from the Barry County board. Lawrence County Presiding Commissioner Sam Goodman has called twice to say the county's legal counsel is still reviewing the matter.
Getting no response, the city began billing both bodies in April. Bills request 50 percent of the sales tax generated over the 1995 base for sales taking place inside the TIF district for both taxes.
The "911" tax, authorized by voters in June 2005, began collections the following October. The city calculated billing back to January 2006 and sent a bill for approximately $5,000 a month. The total bill at present is $208,111.43.
Lawrence County's tax, authorized by voters in February 2007, began collections the following July. Monett calculated its billing beginning in October 2007. Very little Lawrence County property falls inside either of Monett's TIF districts. Lawrence County's bill to date is a little over $22,000.
Pyle said since the billing was issued, Lawrence County has stopped payments to the TIF on its other two half-cent sales taxes as well.
TIF commissioners were asked what steps should be taken next.
"We've always tried to be consistent, upholding state statutes," said TIF Commission Chairman Mark Nelson. "It's not our discretion to waive taxes."
Yates said bondholders could in fact sue the city if collections were not made in accordance with bond covenants. Commissioners felt there was a gray area over the time when even the TIF Commission did not know additional payments were due. Nelson said waiving taxes would send a message to other taxing entities.
"We must be consistent on what we're charging," Nelson said.
|In the Bel-Ridge case, the director of the Missouri Department of Revenue was sued to send taxes to the appropriate party. If the Department of Revenue, which collects the taxes, distributed them properly, there would be no problem, Yates said. Under the TIF statute, TIF districts receive priority in tax collections and the burden of proof falls on the other taxing entities to prove they are exempt from TIF rules.|
TIF commissioners discussed what problems the timing of the discovery created for both the Barry and Lawrence county entities. With budgets prepared for the year, neither were positioned to make additional payments to Monett. Pyle said the city offered to work out payment over time but again received no response. Litigation had not been mentioned.
At Yates's suggestion, commissioners agreed to send a demand letter to both entities, asking for payment. A time period of 30 days was set for a response. The director of the Department of Revenue would receive copies of the letters.
Commissioners voted unanimously to send the letters.