Platte County wins appeal in Zona Rosa bond lawsuitRoss Martin
The Missouri Court of Appeals for the Western District affirmed the judgment in favor of Platte County in its lawsuit against UMB Bank, N.A., the trustee for the Zona Rosa bonds. Graves Garrett attorneys Todd Graves and Dane Martin represent Platte County in the case.
Platte County filed the lawsuit in 2018 after the trustee threatened to sue unless Platte County paid shortfalls on the Zona Rosa bonds in 2018 and each year thereafter. The Zona Rosa bonds were issued by a third-party entity, not Platte County, and are payable from a 1% sales tax in Zona Rosa. The payments demanded by the trustee would have escalated over time, totaling up to $40 million through 2032.
The trial court entered judgment in favor of Platte County, finding that Platte County never promised to pay the shortfalls. In resolving the trustee’s appeal, the Court of Appeals stated that “[w]e disagree with the trustee’s interpretation as it is contrary to the plain language of the Financing Agreement.” It found that Platte County only agreed “to consider whether to pay on the Zona Rosa bonds by proposing a payment in the budget for the County Commission’s approval.”
As found by the Court of Appeals, “[i]t is undisputed that is exactly what the county did.” The commission never approved making a payment because it was not required and doing so would deplete the county’s reserve fund and require either a material reduction in core governmental services or a raise in taxes.
This case continues to receive both local and national media coverage. The Kansas City Business Journal highlighted the ruling in favor of Platte County here, while Bond Buyer provided detailed analysis of the litigation here.
“Since day one, the commission has kept every word of its promise regarding the Zona Rosa bonds,” Graves said. “The Court was correct to reject the trustee’s attempts to impose a bondholder bailout on taxpayers by seeking to alter the terms of the agreement.”
Platte County continues to support Zona Rosa as a private shopping district, and the Zona Rosa bonds will continue to be funded using the dedicated 1% sales tax.