Attorneys for all the sides in the litigation over Monett's tax increment financing (TIF) program had a final local hearing on Friday in Mt. Vernon. Vernon County Circuit Judge Neil Quitno heard arguments in Lawrence County Circuit Court on amending his April 20 ruling, which ruled in favor of the City of Monett.
The entire Monett City Council and City Administrator Dennis Pyle were present for the hearing. All three members of the Barry County Commission, Cherry Warren, Frank Washburn and Wayne Hendrix, were also present. The Lawrence County commissioners were absent from all the local hearings.
Attorneys for both sides asked the judge to modify his ruling to some extent.
Ivan Schraeder, representing the two counties, said key points remain unresolved. Schraeder continued to argue that because the E911 sales tax was created after the last amendments to Monett's two TIF districts, E911 funds should not go back to Monett's TIF as the judge concluded. Schraeder was accompanied by Cassville attorney David Cole, representing the Barry County Emergency Services Board,
The E911 service raised an objection to paying Monett's TIF within the first five years of its existence. Thus, Schraeder said, the grounds for discounting the counties' appeal for timeliness do not apply. Schraeder also disputed the position that the E911 exists as a subset of the county and it cannot be assumed to have any knowledge of taxing issues held by the county.
Schraeder further argued the counties could legitimately object under the five-year statute of limitations to the 2006 amendment to TIF 2, improving Chapell Drive for EFCO, and the 2007 amendment to TIF 1, widening Highway 60. He argued projects are not allowed beyond 10 years after the creation of a TIF and that public hearings comparable to the creation of the TIFs were necessary for amendments, a process Monett did not undertake.
"Our position is nothing is capturable [from E911]," Schraeder said. "The law excludes special taxes that didn't exist when the TIFs were created."
Responding for Monett, attorney Mary Jo Shaney said the counties did not raise the question of the dates of the amendments in a timely manner. All the projects were continuations of the original goal: to remove the economic blight identified when the TIFs were created. The suggestion that the city wanted to extend the TIFs indefinitely by adding projects failed to recognize that state law ended a TIF after 23 years, regardless of the projects involved.
The city had presented case law describing when an amendment to a TIF is required, Shaney continued. Monett followed the ground rules set down in the legal case involving Ste. Genevieve.
"Consideration of the 1996 TIF is not an academic exercise," Shaney said. "We can look back and say it was not a perfect plan. Public policy in the state is to remove blight and provide incentive to do so. Blight has been removed. Infrastructure has been built. The city incurred debt. The goals have been accomplished."
Shaney said the judge's ruling in April 20 did not need to be changed for any shortcoming. Unlike Schraeder, she believed the judge had addressed all the outstanding issues.
"If the real issue is E911," Shaney said, "the validity of the two TIFs were thrown into the mix and became a kind of pressure. The money stopped, and that jeopardizes payment of the bonds."
Since the counties and the Barry County Emergency Services Board contended the TIFs were not legitimate and stopped all reimbursements, Quitno ordered all of the contests money to be placed is escrow accounts. The city requested the court release sales tax money that would be reimbursed to the TIFs, now that the issues in the case had been resolved.
The Monett R-1 School District, the largest taxing entity outside of the litigants whose funds were being held in escrow, attempted to file a Friend of the Court brief, in support of the city. Laura Johnson, with the Springfield law firm of Ellis, Ellis and Hammons, spoke for the school district. She argued state statutes give the counties only an administrative role in handling funds, not to hold them. The school district wanted to support the city's request placing the money into the TIF, as the school district had originally intended.
Schraeder objected. He asserted the school district was attempting to intervene in the case, claiming a right to the money. To make a legitimate claim to the money, Schraeder said the district would have to file substantial additional facts. Johnson said the school district wanted to see its funds handled "appropriately under the law" and did not want to intervene.
Quitno denied the school district's request. He said there were other rights and remedies available under the law.
The amount of funds placed in escrow remained an issue. The Barry County Emergency Services Board had placed $262,000 into escrow from sales tax generated in Monett. The city had calculated the amount owed to be $530,481.
The city also asked for the payment of legal fees incurred by the city, running over $350,000, and the cost of witness depositions, totaling $5,390.
Shaney recounted the steps taken over the course of the litigation, which began in October 2009.
Shaney said the time and labor spent developing a defense in a case where the complaint was not clear constitutes special circumstances. She said the city had "no choice" but to ask for legal fees and would present monthly bills to support the amount requested.
Shaney added that in the St. Peters TIF litigation, also settled over a timeliness issue, the court denied the payment of legal funds to the winning party.
Quito said he would make his ruling "fairly promptly." Quitno said he would likely modify his initial ruling.
"The court had made its best effort to understand these matters in which you are the experts," Quitno said. "I have tried my best to make the best rulings from the evidence presented."