A dispute has arisen about whether a portion of the Nodaway County gravel tax, that voters passed in April 2014, can be legally applied toward paying off Maryville’s tax increment financing (TIF) debt for the Town Center redevelopment.
During the Nodaway County Commissioners meeting, on December 14, Maryville City Manager Greg McDanel addressed the commissioners for the second time regarding the gravel tax monies.
“It is our legal determination that we do not need the county commissioners approval to capture this revenue and we will begin billing you (commissioners) January 1, and if you chose not to pay the tax obligation, then that’s your choice,” McDanel stated.
After McDanel’s statement, Nodaway County Prosecuting Attorney Robert Rice addressed the commission.
“It is my official recommendation that this commission not pay any money from the gravel tax toward the TIF,” Rice said.
During a commission meeting earlier this month, Maryville officials informed the commissioners that they would begin collecting approximately $31,000 from the half-cent gravel tax as part of the TIF debt repayment beginning January 1.
According to Rice, Missouri State Statute 99.845 allows any state taxes collected to be applied toward paying TIF funds. An exception, House Bill 1504, went into effect in 2016. It stated that beginning August 28, 2014, any additional revenues from a sales tax approved by voters shall not be considered economic activity for purposes of collection into the TIF district.
The gravel tax in question was passed by voters in April 2014, but was not put into effect until October 2014, placing the house bill exemption in between the two dates.
Rice stated that there is no case law that interprets whether the exception is applied to the date the sales tax was approved or the date the tax began being collected.
When the sales tax was put on the ballot, the language stated that the tax would be used solely and specifically for roads, highways, bridges, maintenance, repair or construction. The ballot did not say the money would be used to pay the TIF debt. The commissioners feel that the money should go toward items the voters approved.
“In the end, our voters voted for road improvements not to pay off the city’s old TIF. The right thing to do is fight for the taxpayers and funding for roads and bridges. Protecting the funds for roads and bridges is paramount,” Rice stated
McDanel explained that had the gravel tax been passed after the house bill, the city would need the commissioners approval to obtain the funds. However, the City of Maryville’s attorney Sid Douglas, Gilmore and Bell PC, Kansas City, has interpreted the statue to mean it applies to the date the gravel tax was approved by vote in April 2014, not when it went into effect. This would place the gravel tax before the house bill exemption, entitling Maryville to a portion of the funds to apply toward the TIF debt without the consent of the commissioners.
McDanel said city officials knew about this development in April 2016, but chose to wait until the commissioners were working on the county budget to address it, allowing them to compensate in their budget planning. He stated the city has no intention to collect back pay for the past two years, but wants to start January 1.
There are about 10 years left on the TIF debt. The city wants to collect approximately $31,000 a year until the debt is retired, meaning $310,000 is riding on the interpretation of House Bill 1504 timing.