Missouri Supreme Court rejects bid for Zona Rosa bondholder bailoutRoss Martin
The Supreme Court of Missouri has denied a request by UMB Bank, N.A., the Trustee for the Zona Rosa Bonds, to file an appeal regarding its efforts to force Platte County to pay shortfalls on the Zona Rosa Bonds in 2018 and each year thereafter.
Platte County filed a lawsuit in 2018 after the Trustee threatened to sue unless Platte County paid to cover the shortfalls. The Zona Rosa Bonds were issued by a third-party entity, not Platte County, and are payable from a 1% sales tax in the Zona Rosa shopping district. The payments demanded by the Trustee would have escalated over time, totaling up to $40 million through 2032. The estimated shortfall is currently over $3.6 million. If paid by Platte County, the shortfalls would quickly deplete the county’s $4 million reserve fund and require either a material reduction in core governmental services or a raise in taxes.
The case continued to receive extensive national and regional coverage, including articles in Bond Buyer and the Kansas City Business Journal. Please note, a subscription may be required to read the full version of the articles.
“The Commission has always supported Zona Rosa as a private shopping district,” said Ron Schieber, the Presiding Commissioner of Platte County. “Platte County will always pay its contractual obligations, but as confirmed by the Courts, Platte County never agreed to be obligated on the Zona Rosa Bonds. No county or city should ever approve a bondholder bailout at the expense of basic governmental services.”
Platte County has prevailed at both the trial court and the Missouri Court of Appeals, Western District. The trial court found that Platte County never promised to pay the shortfalls. The Court of Appeals agreed, finding that Platte County only promised “to consider whether to pay on the Zona Rosa Bonds” and “[i]t is undisputed that is exactly what the County did.” The Trustee sought to appeal the decision to the Supreme Court of Missouri, which rejected the effort.
“This puts an end to the unfortunate effort by the Trustee to force Platte County into paying taxpayer funds to bondholders that it never agreed to pay at the outset,” said Todd Graves, counsel for Platte County along with Dane Martin. For their role in this matter, Missouri Lawyers Media recently recognized Graves and Martin as “Legal Champions,” an award reflecting the importance of the principle or policy at stake and for protecting millions of dollars of taxpayer money. This case could potentially impact countless bond financing arrangements for counties and cities throughout Missouri.