According to a press release issued Monday, the Platte County Commission has asked the Platte County Circuit Court to issue a summary judgement prior to the scheduled May bench trail regarding the debts related to parking garages at Zona Rosa Town Center.
Last November, the county filed suit against UMB Bank and the Industrial Development Authority of Platte County and asked the court for a declaration regarding the legality of a demand that the county repay bonds issued in 2007 for infrastructure at Zona Rosa.
Platte County special attorney Todd Graves filed a motion for summary judgement Friday, March 15. According to online court records, all three commissioners and the county auditor are scheduled to give depositions on Monday, April 1. Prior to the Friday filing, the matter was set for bench trial before judge James Van Amburg on Friday, May 24.
In the filing, Platte County seeks a declaration from the court that, contrary to UMB Bank’s stated position, the county never obligated itself to appropriate for or make payments on the Zona Rosa bonds, according to the press release. The county also seeks a declaration that the trustee UMB Bank’s arguments otherwise would violate the Missouri Constitution.
The requested declarations would resolve each of the demands made by the trustee, according to the release. UMB Bank has demanded that Platte County execute a “binding declaration” to make a payment, including a payment of $765,390.95 to cover the shortfall for the Zona Rosa bonds in 2018. It has further demanded that Platte County appropriate and pay for shortfalls in later years of an equal or greater amount through 2032. Because the principal and interest due on the bonds increases each year, the demands by the trustee could total up to $40 million.
A payment of about $1 million on the bonds was due in December 2018. That payment was not made and Van Amburg issued an order that Platte County must set aside $763,390 in a reserve fund until conclusion of the lawsuit.
Tax collections in Zona Rosa have come up short every year, but former ownership covered the shortfall until last year. The county received notice from the bond trustee in October that revenues to make the bond payment were short more than $1 million.
The commissioners’ statements last fall that they would not cover payments without a plan sparked off retaliatory strikes from credit rating organizations. In September, Moody’s and Standard and Poors reduced the county’s credit rating. Since the suit was filed in November, Standard and Poors reduced Platte County’s bonds to junk rating.
According to the attorney’s Monday statement, the Zona Rosa bonds were issued by a third party entity (not Platte County) to finance parking garages in a private shopping center. Under a financing agreement, the bonds are payable from a 1 percent sales tax in Zona Rosa and contributions from the shopping center developer. Platte County also supported Zona Rosa by agreeing to take certain administrative steps that would allow the commission to consider making a voluntary payment to support the bonds.
This arrangement is a common method used by financiers to obtain the support of counties and other political bodies that, under the Missouri Constitution, cannot become indebted without voter approval, according to the release.
Presiding commissioner Ron Schieber has called this method a way to cut out a vote of the people, a stance which he reiterated Monday, March 18 at an informational meeting for the upcoming half-cent jail tax held in Weston.
“It’s a mechanism created by the financiers to get around the Missouri Constitution,” Schieber said, when questioned by a citizen about the effect the situation at Zona Rosa could have on a future jail project. “It’s a lie that the only thing the trustee is asking for is making the 2018 payment. They are expecting this commission to bind the county to make these payments through 2032.”
According to the release, Platte County filed the suit for declaratory judgment because it cannot comply with both the Missouri Constitution and the trustee’s demands. In addition, from a financial standpoint, the trustee’s demands would require Platte County to make substantial draws on its reserve fund — a fund that exists for emergencies or other unforeseen circumstances — which would quickly be depleted.
County taxpayers would then face either a cut to county services or an increase in taxes, up to double or triple current property tax levies to cover the shortfalls on an ongoing basis, according to the release.