The city of Arnold has moved a step closer to collecting past and future sales tax money from Rock Township Ambulance District to help pay off infrastructure debt for two development projects.
On May 7, Jefferson County Div. 1 Circuit Judge Joseph A. Rathert ruled Rock Township must pay the city of Arnold half of the sales tax revenue the ambulance district has collected from the Arnold Crossroads and Arnold Commons tax increment finance (TIF) districts.
As of April 2019, the city reported Rock Township owes $1,021,784.86 to Arnold.
“Nobody wins on a thing like this, because we are using taxpayer dollars,” Arnold Mayor Ron Counts said.
The dispute started in 2004, when the first of the TIF districts was being formed.
“At the end of the day, the judge looked at this thing and reviewed it, and his decision came down, I believe, in the best interest of our community and taxpayers,” Counts said. “My hope and goal are we can get this behind us, and we can move forward as a community.”
By late September or early October, Rathert is expected to rule how much Rock Township owes in past payments – which were slated to start in 2009, when bonds were sold to finance infrastructure for the two retail developments, said Allison Sweeney, an attorney representing Arnold.
Rock Township reaction
“I’m disappointed in the judge’s ruling,” Rock Township Chief Jerry Appleton said. “He hasn’t ruled on how much, so that is a question to be answered. The board will take up the information and we will wait on further information from the judge, before we make any decisions.”
Arnold city attorney Bob Sweeney said he hopes there will not be any appeals.
“They took their best stab at it,” Sweeney said. “They were incorrect and have been incorrect from the beginning. The judge has ruled, so it would be nice if they accepted the Jefferson County Circuit Court’s decision on a couple of Jefferson County taxing districts as to what the obligation is, and let’s move forward.”
Arnold officials said the lawsuit the city filed to require Rock Township to pay its part of the TIF started in December 2014 and has cost taxpayers in legal fees and the inability to pay off the bonds quicker because not as much money could be used to pay down the principal.
The city of Arnold has spent approximately $70,000 in legal fees, Allison Sweeney said.
Rock Township has spent approximately $132,000 in legal fees, Appleton said.
“Nobody was happy to do this, as evident by how long it took us to do it,” Arnold City Administrator Bryan Richison said. “At the end of the day, it became clear they had one view, and we had a completely different view.
“When you get to that point, the only way to resolve it is a judge, unfortunately. If there would have been another way, we would have done it. It had to go to court.”
Richison said the city will be able to work out a payment schedule with Rock Township, if the ambulance district cannot pay the full sum of taxes owed toward the TIF at once.
“We understand that it is a large amount of money, and if the judge orders them to pay the full amount, we are willing to sit down with them to try to work something out,” Richison said. “We are not looking to bankrupt them.”
Appleton said the ambulance district will be able to pay what the judge orders.
“The district is in an OK position to handle whatever the judge rules,” Appleton said. “It will be a hardship on the district.”
Allison Sweeney said the lawsuit has taken “a ridiculously long amount of time.”
“That wasn’t any of the parties’ fault,” Sweeney said. “We got shuffled around because of elections.”
She said promotions and elections brought the case before six judges over the years, ending with Rathert’s election in 2018.
“So, we had to argue in front of another judge this year,” she said.
History
The TIFs were formed when Arnold agreed to sell bonds to help develop Arnold Commons at Hwy. 141 and Church Road and Arnold Crossroads at Hwy. 141 and Jeffco Boulevard.
The city issued TIF bonds in 2009 for $28,485,000 in infrastructure costs for the projects. As part of the TIF, all taxing entities were required to pay back 50 percent of the sales tax received in the retail districts.
However, in 2008, Rock Township passed an ordinance stating it would not pass on any of its share of the increment to help pay off the TIF debt.
Rock Township has the ability to appeal the judge’s ruling, but Appleton said the board will consult with the district’s attorney before deciding how to proceed.
“We will see where it goes from here and let the board make a decision to benefit the community,” Appleton said.
Arnold refinanced the bonds in 2016, and after originally having three separate bond series, the city condensed the sale into two series. One of those two was created to take into account Rock Township’s eventual payment toward the TIF.
One bond incorporated all the taxing entities already paying in. That bond was for $23,050,000 and was publicly sold. It is expected to be paid off by May 2028.
The other bond, for $4,624,500.76, is held by THF Realty. No payments have been made toward it, and the debt has accumulated $760,121.86 in interest, so far.
The pay-off cost, as of 2018, was $5,384,622.62. There is no timetable for when that bond will be fully paid.
When the bonds are paid off, taxing entities will start keeping 100 percent of the sales tax from Arnold Commons and Arnold Crossroads.
“The quicker these things get paid off, the quicker we get the tax increment going to the jurisdiction,” Arnold finance director Bill Lehmann said.
Arnold officials and Appleton said they are happy that a conclusion to the dispute is drawing near.
“This has been going on for a long time. It is nice to see some direction,” Appleton said. “Even if the direction doesn’t go in your favor. I don’t believe it should have taken this long, but here we are.”