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The Missouri Supreme Court last week denied the chance to hear an appeal by UMB Bank in regard to the Zona Rosa bonds. The Landmark first reported the news on Twitter last Wednesday, Dec. 23.
Prior courts have ruled Platte County did not breach its promises on the Zona Rosa bonds: “The plain language of the financing agreement does not contain a promise to pay by the county.”
The Missouri Supreme Court has the discretion to accept appeals in cases like this. It appears the court decided, through its Dec. 22 denial to accept the transfer of UMB’s appeal, there was no adequate reason to hear the case.
It is anticipated the Western District Court of Appeals will finalize the decision in favor of Platte County shortly.
UMB Bank, N.A., the Trustee for the Zona Rosa Bonds, had filed an appeal regarding its efforts to force Platte County to pay shortfalls on the Zona Rosa bonds in 2018 and each year thereafter.
Platte County filed a lawsuit in 2018 after the trustee threatened to sue unless Platte County paid to cover the shortfalls. The Zona Rosa bonds were issued by a third-party entity, not Platte County, and are payable from a one percent sales tax in the Zona Rosa shopping district. The payments demanded by the trustee would have escalated over time, totaling up to $40 million through 2032. The estimated shortfall is currently over $3.6 million. If paid by Platte County, the shortfalls would quickly deplete the county’s $4 million reserve fund and require either a material reduction in core governmental services or a raise in taxes.
“The commission has always supported Zona Rosa as a private shopping district,” said Ron Schieber, the presiding commissioner of Platte County. “Platte County will always pay its contractual obligations, but as confirmed by the courts, Platte County never agreed to be obligated on the Zona Rosa bonds. No county or city should ever approve a bondholder bailout at the expense of basic governmental services.”
Platte County has prevailed at both the trial court and the Missouri Court of Appeals, Western District. The trial court found that Platte County never promised to pay the shortfalls. The appeals court agreed, finding that Platte County only promised “to consider whether to pay on the Zona Rosa Bonds” and “[i]t is undisputed that is exactly what the county did.” The trustee sought to appeal the decision to the Supreme Court of Missouri, which rejected the effort.
Todd Graves of the law firm Graves Garrett served as counsel for Platte County, along with Dane Martin. In a news release this week, Graves said: “This puts an end to the unfortunate effort by the trustee to force Platte County into paying taxpayer funds to bondholders that it never agreed to pay at the outset.”
For their role in this matter, Missouri Lawyers Media recently recognized Graves and Martin as “Legal Champions,” an award reflecting the importance of the principle or policy at stake and for protecting millions of dollars of taxpayer money.
This case could potentially impact countless bond financing arrangements for counties and cities throughout Missouri.