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Judge says Platte County doesn’t owe for garage bonds

Scott Lauck//June 13, 2019

Judge says Platte County doesn’t owe for garage bonds

Scott Lauck//June 13, 2019

A judge ruled May 30 that Platte County has no legal obligation to make up a shortfall in bond payments connected to a Kansas City-area shopping district.

UMB Bank serves as the trustee for a series of bonds that helped finance parking garages at the Zona Rosa shopping center in northern Kansas City. The bonds are payable from a 1 percent sales tax in the Zona Rosa district.

Last year, the bank alleged that Platte County was responsible for shortfalls on those bonds, which was partly attributed to less-than-expected sales tax revenue at the open-air shopping center. The immediate demand was for more than $765,000, and the county’s long-term liability was as much as $40 million through 2032.

Platte County filed a declaratory judgment action to back its argument that it was not responsible for additional payments. Circuit Judge James Van Amburg agreed with the county.

TaxThe bonds were issued in 2007, when the Development Authority of Platte County (a separate entity from the county itself) entered into a financing agreement with two transportation districts to fund the garages. Platte County also entered into the agreement, though its role in the deal was disputed.

UMB alleged that the county had agreed to pay any shortfalls in the bonds. But Van Amburg found that the county had agreed only that its auditor’s office would include a potential payment for the Zona Rosa bonds in its proposed annual budget.

Had the agreement actually obligated the county to make those payments, the judge wrote, the Missouri Constitution would have required voter approval of that debt.

“This is a great day for taxpayers — and a firm rebuke to financiers attempt-ing to abuse the public treasury,” Todd Graves of Graves Garrett, who represented the county, said in a news release.

Graves, who worked on the case with attorneys Dane Martin and Jennifer Donnelli, added that the bonds would continue to be paid using the dedicated 1 percent sales tax in Zona Rosa.

Joseph Bednar of Spencer Fane, an attorney for UMB, referred a request for comment to the bank. In an emailed statement, UMB said it would “continue to work with counsel to explore options and keep working in the best interest of bondholders.”

The case is Platte County, Missouri v. UMB Bank, N.A. the Trustee of the Transportation Refunding and Improvement Bonds (Zona Rosa Retail Project) Series 2007, 18AE-CC00379.

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