The city of Arnold and Rock Township Ambulance District are returning to the courtroom to try to settle a lawsuit over payments on two tax-increment financing districts filed more than six years ago.
However, the dispute between the two entities began in 2004, when the city of Arnold began looking at setting up a TIF to help cover the cost of infrastructure improvements for the Arnold Commons development.
Later the TIF was expanded to fund infrastructure improvements for the redevelopment of the Arnold Crossroads development.
A hearing is scheduled for 10:30 a.m. May 21 in front of Jefferson County Div. 1 Circuit Judge Joseph A. Rathert to once again determine if Rock Township owes Arnold money from sales tax revenue generated from the TIFs, court documents said.
It will be the second time Rathert has been asked to rule on that question. In May 2019, he ruled in favor of the city, saying the TIFs were created legally and Rock Township should pay its share toward paying off the TIF debt.
Attorney Ivan Schraeder of the St. Louis-based Schraeder Law Firm is representing Rock Township in this case and refiled a motion of summary in November 2020, asking for another ruling on the question.
Allison Sweeney, Arnold’s attorney for the case, said the ambulance district’s motion is virtually identical to the one Rathert ruled on when he declared the TIFs legal.
Schraeder said the 2019 ruling only proved the TIFs were created legal, and the upcoming court date will determine how much money Rock Township may or may not have to pay.
As of April, Sweeney said Rock Township owed Arnold about $1.9 million. The city also is asking that Rock Township cover Arnold’s legal costs, which so far total $75,000.
“All we are asking is for the ambulance district to do the right thing and pay what they owe,” Mayor Ron Counts said. “Without that, the price just continues to go up and up. It is costing our taxpayers because this is their money.”
Rock Township Chief Jerry Appleton said on Monday that the district had spent about $152,000 in legal fees on the case so far.
Appleton said any money the ambulance district has to pay toward the TIFs takes away from services it can provide.
“The voters approved a tax rate for emergency services, and all these TIF projects do is take away money from voter-approved funds for emergency services without a vote of the people, and that is wrong,” Appleton said.
During an April 29 Arnold City Council special work session, Sweeney encouraged council members to attend the May 21 hearing.
Rock Township’s view
Schraeder said the district believes it should not give up any of the money generated by the shopping centers’ sales tax.
“We believe the statute that relates to sales tax that was in effect at the time the TIF was created put the determination in the hands of the taxing districts to determine if or how much they were willing to allow of their sales tax to be taken,” he said.
Sweeney said the city believes Rock Township is misinterpreting the statute in place when the TIFs were created in 2008.
“There is a change in the legislation that allows entities to assign their percentage,” Sweeney said. “That change didn’t happen until 2018. We are not governed by that (because the TIFs were created before that).”
If the judge rules against Rock Township again this month, the district could appeal that decision.
Schraeder said it was too soon to say if the district would file an appeal.
“We have had several elections where the ambulance district’s board has changed over time, and each time the board changes, the new board has the ability to make those decisions,” Schraeder said. “If the judge rules against the ambulance district, the amount is huge. It would be money that would come out of the operating budget of the ambulance district.”
Arnold filed its initial lawsuit against Rock Township in December 2014 after city staff and elected officials tried to resolve the dispute, City Administrator Bryan Richison said.
After the TIFs were formed, the city of Arnold, Jefferson County, Jefferson County 911 Dispatch and Rock Community Fire Protection District began using half of the sales tax they collected from the Arnold Commons and Arnold Crossroads developments to pay off the debt from bonds issued to create the infrastructure to build the shopping complexes.
Since the case was filed, it has been assigned to six different judges because of promotions and changes in judges after elections.
Rathert was assigned the case in April 2019.
After he ruled on the case in May of that year, he was scheduled in March 2020 to determine how much Rock Township should pay Arnold and if the ambulance district should cover the city’s legal costs. However, that ruling never came because the COVID-19 pandemic shut down virtually all court proceedings.
After Rathert’s May 2019 ruling, Rock Township made a motion for a new trial that was rejected in July 2019, and then the ambulance district filed an appeal that was rejected in August 2019 because a final ruling about how much the ambulance district should pay had not been made.
The motion Rathert is scheduled to hear this month makes the same claims that Rock Township should not have to pay the TIF, but it no longer claims the TIF was formed illegally, according to court documents.
“If the judge determines the district gets to make the decision as to how much gets paid, that ends the fight as to money, and that means zero will be paid,” Schraeder said.
Arnold determined it needed the Arnold Commons development and the redevelopment of the Arnold Crossroads development because sales tax revenue was dropping at an alarming rate after the Gravois Bluffs shopping center in Fenton was developed.
The city of Arnold issued $28,485,000 in TIF bonds in 2009 for infrastructure costs tied to the two developments. As part of the TIF, all taxing entities were required to pay back 50 percent of the sales tax they receive from the retail districts.
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.
Arnold refinanced the bonds in 2016, and after originally having three separate bond series, the city condensed the sale into two series, both which are supposed to be paid off by 2028.
One of the bonds is being paid with revenue from all the taxing entities that have been contributing their share. That bond was for $23,050,000 and was publicly sold.
As of May 3, that bond had a principal balance of $12,905,000 and is expected to be paid off by 2026, said Bill Lehman, Arnold’s director of finance.
The other bond, for $4,624,500.76, was created for Rock Township’s eventual payment toward the TIF, and it is held by THF Realty. No payments have been made toward it, and the debt has accumulated $1,966,181 in interest, increasing the pay-off amount to $6,590,682 so far, Lehmann said.
Once the bonds are paid off, taxing entities will start keeping 100 percent of the sales tax from the Arnold Commons and Arnold Crossroads.
“The ambulance district is wrong on the law and the morals,” said Bob Sweeney, Arnold’s attorney and Allison Sweeney’s father. “We just want them to play fair.”