The Rock Township Ambulance District has been ordered to pay the city of Arnold $1,942,992.90 to help pay off infrastructure debt for the Arnold Crossroads and Arnold Commons retail developments.
Jefferson County Div. 1 Circuit Judge Joseph A. Rathert ruled Dec. 16 that Rock Township must pay half of the additional sales tax revenue it has collected over the past 12 years from the Arnold Crossroads and Arnold Commons tax increment finance (TIF) districts.
Those TIF districts were set up to help cover the cost of infrastructure related to the two developments.
The approximately $1.94 million the ambulance district must pay the city includes interest on the sales tax revenue it owes.
Rathert also ruled that Rock Township will have to continue to send half of the additional sales tax it collects from the two TIF districts until the bonds issued to finance the developments are paid off, according to the judgement.
Rock Township Chief Jerry Appleton said the district’s Board of Directors voted unanimously Dec. 22 against appealing Rathert’s ruling.
Appleton also said the district will pay the city the full amount owed in a lump sum, using some of the money in the district’s approximately $4.5 million reserve funds.
“The district was prepared because we didn’t know how it was going to go,” Appleton said of the lawsuit the city filed against the district in December 2014. “It (paying the $1.94 million) will not affect the district in any sort of way where we will have hardships. It will set us back in reserves, but we will move forward and keep the district solid.”
In May 2019, Rathert ruled that Rock Township must pay Arnold half of the sales tax revenue from the TIF districts, but he did not decide the amount owed until this month.
“We are happy to be finished with it, so we can move on,” Arnold City Administrator Bryan Richison said.
In August, Arnold requested that Rock Township also cover the cost of the legal fees the city has accumulated since the lawsuit was filed seven years ago.
Rathert’s ruling did not include an award for attorney’s fees, but he could rule on it later, and the city plans to submit a bill for its legal fees, said attorney Allison Sweeney, who represented Arnold in the dispute.
She said the city’s legal fees are just less than $100,000. Appleton said Rock Township’s legal fees are $182,384.66.
Sweeney said she is pleased with the lawsuit’s outcome.
“These were choices that Rock made to not pay into this TIF, and all of the tax-paying entities were being harmed by their lack of contribution,” she said. “That is now going to be made right. The real victory is the pay back of the EATS (Economic Activity Taxes), and (having Rock Township) pay in every month. It is a continuing order, and that is what we wanted.”
The dispute
The TIF districts were formed when Arnold agreed to sell bonds to help cover infrastructure costs when the Arnold Commons complex at Hwy. 141 and Church Road was developed and when the Arnold Crossroads complex at Hwy. 141 and Jeffco Boulevard was redeveloped.
In 2009, the city issued $28,485,000 in bonds to finance infrastructure costs for the projects.
As part of the TIF, all taxing entities were required to pay back 50 percent of the new sales tax revenue created in those retail districts to go toward paying off those bonds.
However, in 2008, Rock Township passed an ordinance stating it would not pass on any of its share of the sales tax from the TIF districts to help pay off the bonds.
That left Arnold, Jefferson County, Jefferson County 911 Dispatch, the Rock Community Fire Protection District and the Arnold Retail Corridor Transportation Development District as the only tax-collecting entities paying toward the debt.
Appleton said he was disappointed the judge ruled against the ambulance district.
“I don’t agree that the TIFs can be financed without a vote of the people,” he said. “This (money) was allocated for emergency services and to use it for projects like TIFs doesn’t seem fair because you have allocated the money for community needs and you are taking it away for some development. I understand for the overall scope of things it improves our local economy, but when you expect the money to provide a service and you no longer have it, that is tough. I understand the ruling. I don’t necessarily agree with it.”
Sweeney said it has taken “a ridiculously long amount of time” for the lawsuit to end.
She said promotions and elections brought the case before six judges over the years, ending with Rathert’s election in 2018.
Appleton said the amount of time it took to settle the suit has contributed to Rock Township paying more money because of the interest that has accrued since the bonds were first issued.
“This process lasted for many years,” he said. “It should have been handled and satisfied a long time ago. That has led to a lot of interest that the judge ruled that we owe.
“I think the legal process being delayed like that should not have been faulted toward the district, city of Arnold or anybody else. It wasn’t our fault this process took so long. That is my biggest disappointment. No one wins here. It affects our entire community because it is taxpayers’ dollars.”
The bonds
Arnold refinanced the bonds in 2016, and after originally having three bond series, the city consolidated the bonds into two series. One of those series 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 and will be paid off by Rock Township. No payments have been made toward it, and the debt has accumulated $2,238,047 in interest so far.
The pay-off cost, as of Dec. 23, was $6,862,547.76. There is no timetable for when that bond will be fully paid.
“Now we will be able to start making those payments, and that will help pay off the TIF on time and potentially early, which benefits everyone,” Richison said.
When the bonds are paid off, taxing entities will start keeping 100 percent of the sales tax from the Arnold Commons and Arnold Crossroads developments.