Under state TIF laws, sales tax and real estate tax generated within a specific area can be captured and used to pay for improvements to remove economic "blight." Monett established two TIF districts, in 1996 and 2005, which have been used to make highway and other infrastructure improvements.
A pre-improvement base was established in both cases for what taxes could be generated from these specified areas. Half of the sales tax and all of the real estate tax generated from beyond the base amount the city was subject to capture by the city to pay for improvements.
The lawsuit came about when the discovery was made that state laws seemed to say that taxes authorized after the TIF had been created also had to pay into the TIF. This suggested that both the half-cent sales tax approved in Lawrence County to pay for the Judicial Center and the quarter-cent sales tax approved in Barry County to pay for 911 services also had to repay Monett half of revenues generated inside the TIF districts.
In January, the city informed both counties and the Barry County Emergency Services Board that sales tax revenue from the newer taxes were due to the TIF. Mark Nelson, Monett TIF chairman, said at the time that the city did not have the authority to forgive unpaid taxes. All three parties refused to pay, and both Lawrence and Barry counties began withholding reimbursement from its other sales taxes, which had been paid up to that time.
A demand letter seeking payment was sent on June 25. The court petition followed after the county entities continued to withhold payment.
Legal counsel for Lawrence County alleged Monett's TIF program had been improperly organized and/or reorganized when the second TIF district was added, thus justifying withholding of all payments. The Barry County Commissioners voted on July 30 to follow Lawrence County example and withhold further payment of TIF funds.
The city's lawsuit filed last week laid out the city's case. Mary Jo Shaney and Christine Bushyhead, of the Kansas City firm of White Goss Bowers March Schulte and Weisenfels, submitted the petition, along with City Attorney Amy Boxx.
"The city seeks relief in this petition to enforce the statutory obligations of the respondents to allocate a percentage of taxes generated within specially defined and created redevelopment areas under the State of Missouri's Real Property Tax Increment Allocation Redevelopment Act," the petition read "These redevelopment areas help to eliminate blight in areas that have not been subject to growth or development with the goal of improving the overall economic conditions within a city."
The 2007 court ruling "State ex. rel. City of Desloge et al. v. St. Francois County" is cited in all the suits as laying out the guidelines for how TIF plans are adopted and operate. According to the court ruling, the county collector is obligated to distribute property taxes while the treasurer handles sales taxes.
The suit against Barry County was served on Clerk Gary Youngblood for the county commission, Treasurer Lois Lowe and Collector Janice Varner. In the Lawrence County suit, Clerk Gary Emerson, Treasurer Sharon Kleine and Collector Kelli McVey were served. The Barry County Emergency Services Board was served by delivery of the suit to Bill Shively, chairman of the board.
The petition claims "The county, the county collector, the county treasurer and the Barry County E-911 Board had notice and knowledge of the adoption and inception of redevelopment plans adopted by the city."
State law is cited stating that while tax increment financing remains in effect, economic activity taxes such as property and sales taxes, "shall be allocated to, and paid by the local political subdivision collecting officer to the treasurer or other designated financial officer of the municipality, who shall deposit such funds in a separate segregated account within the special allocation fund."
The sales tax approved to pay for 911 service in Barry County is also considered to be an economic activity tax. The city further challenged the legitimacy of the Barry County Emergency Services Board by stating the board had failed to file a correct and current annual report. Consequently the board was declared administratively dissolved as a non-profit corporation by the Missouri Secretary of State on Dec. 17, 2008.
Relief sought by the city related in part to the consequences of the counties withholding payment at the present time.
"As a result of the county's withholding of further payment to the city of (funds) pursuant to the Redevelopment Plans and the TIF act," the suit read "the city is suffering and will continue to suffer the loss of substantial revenue that is intended for payment of redevelopment costs, including bond financing costs, unless and until the county, the county collector and the county treasurer are ordered to make the payments required."
The petition asked the court for a preliminary order compelling the county and its officers to perform their "clearly defined duty" to pay the economic activity taxes to the city. The petition also asked for a permanent order to continue payments over the life of the TIF districts.
The city is asking for court costs, attorneys fees and interest on withheld funds.
Carl Yates, legal counsel for the Monett TIF Commission who shaped the city's legal case, told The Times he is not listed as the city's attorney in the filing as he may need to be called as a witness.
The petition was filed in Circuit Court in both Barry and Lawrence counties. Separate hearings may be held for both counties.