On Tuesday, Aug. 25 the Missouri Court of Appeals, Western District, affirmed the circuit court’s judgment in favor of Platte County in its lawsuit against UMB Bank, the trustee for the Zona Rosa bonds.
Platte County filed the lawsuit in 2018 after the trustee threatened to sue unless Platte County paid shortfalls on the Zona Rosa Bonds in 2018 and each year thereafter.
The Zona Rosa bonds were issued by a third-party entity, not Platte County, to fund construction of parking garages at the shopping district, and are payable from a 1% sales tax in Zona Rosa. The payments demanded by the trustee would have escalated over time, totaling up to $40 million through 2032.
The trial court entered judgment in favor of Platte County, finding that Platte County never promised to pay the shortfalls.
In resolving the appeal, the Court of Appeals stated that “[w]e disagree with the trustee’s interpretation as it is contrary to the plain language of the financing agreement.”
It found that Platte County only agreed “to consider whether to pay on the Zona Rosa Bonds by proposing a payment in the budget for the County Commission’s approval.” As found by the Court of Appeals, “[i]t is undisputed that is exactly what the county did.”
The commission never approved making a payment because it was not required and doing so would deplete the county’s reserve fund and require either a material reduction in core governmental services or a raise in taxes.
“Since day one, the commission has kept every word of its promise regarding the Zona Rosa bonds,” said Todd Graves, counsel for Platte County along with Dane Martin. “The court was correct to reject the trustee’s attempts to impose a bondholder bailout on taxpayers by seeking to alter the terms of the agreement.”
Platte County continues to support Zona Rosa as a private shopping district, and the Zona Rosa Bonds will continue to be funded using the dedicated 1 percent sales tax.
UMB Bank filed an appeal in October 2019 after Platte County Circuit Court judge James Van Amburg ruled in the county’s favor in May 2019.
Van Amburg issued a summary judgement in favor of Platte County, whose attorneys argued had made no promise to cover shortfalls in tax revenues at Zona Rosa.
“There is no promise or requirement in the financing agreement for Platte County to make payment on the Zona Rosa Bonds,” Van Amburg wrote in his judgment. “In fact, in section 2.4, the financing agreement specifically states that it ‘shall not in any way be construed or interpreted as creating a liability or a general obligation of debt of the county... nor shall anything contained therein constitute a pledge of the general credit, tax revenues, funds or moneys of the county.’ The trustee (UMB Bank) has admitted the bonds are not secured by the full faith and credit and taxing power of Platte County.”