Platte County, Missouri, bears no legal obligation to repay tax revenue shortfalls on a $32 million appropriation-backed industrial bond issue, a Missouri appellate court panel concluded in an opinion upholding a lower court decision. Platte County leaders decided in 2018 to not cover a $765,000 shortage in tax monies generated by the Zona Rosa shopping center in Kansas City. Revenues had been pledged to repay a 2007 Platte County Industrial Development Authority issue. The decision cost the county its investment-grade rating. The county said bond trustee UMB Bank NA’s demand that the shortfall be covered and its threat of litigation prompted its decision in November 2018 to file a lawsuit seeking a legal determination that it was not required to make up the difference. While appropriation pledges are subject to an annual decision by the sponsoring government, the trustee argued the financing agreement supporting the bond issue represented a legally enforceable promise to pay. Platte County Circuit Court Judge James Van Amburg in a May 2019 agreed with Platte County that it’s not on the hook to cover gaps in project revenues to repay the remaining $29 million of transportation refunding and improvement bonds sold through the authority.
Source: Bond Buyer.
