Ste. Genevieve School v. Board of Aldermen

Decision Date22 January 2002
Docket NumberNo. SC 83777.,SC 83777.
Citation66 S.W.3d 6
PartiesSTE. GENEVIEVE SCHOOL DISTRICT R-II, et al., Appellants, v. BOARD of ALDERMEN OF THE CITY of STE. GENEVIEVE, et al., Respondents.
CourtMissouri Supreme Court

Steven L. Wright, Columbia, for appellants.

James E. Mello, Jeffery T. McPherson, Armstrong, Teasdale, LLP, Shulamith Simon, St. Louis, for Respondents.

Kelli Hopkins, Amicus Curiae, Missouri School Board Association, Columbia.

JOHN C. HOLSTEIN, Judge.

The Ste. Genevieve school district and Mikel A. Stewart, an individual, appeal a trial court order dismissing their joint petition for declaratory judgment based on lack of standing and failure to state a claim upon which relief can be granted. After the court of appeals issued an opinion, the case was transferred to this Court. Mo. Cont. art. V, sec. 10. The judgment of the trial court is reversed, and the case is remanded.

I. FACTS

In 1992, the City of Ste. Genevieve created a Tax Increment Financing (TIF) Commission pursuant to Missouri's Real Property Tax Increment Allocation Redevelopment Act. See sec. 99.800 et seq.1 The commission recommend that the city establish a redevelopment area and approve a redevelopment project plan within it entitled the "Redevelopment Plan for Valle Springs Tax Increment Financing District." The city subsequently adopted ordinances embodying both recommendations and established the proposed redevelopment area and redevelopment plan.

The commission acted again in 1997, recommending that the boundaries of the pre-existing redevelopment area be enlarged to included three new redevelopment project areas (RPA 2, RPA 3, and RPA 4) and that the redevelopment plan be amended to provide for additional projects within these three new areas. Specifically, the plan called for the use of TIF revenues to pay for improvements in the water, storm water and sanitary sewer systems in RPA 3. All these changes were also adopted by city ordinance.

The city then solicited proposals for the redevelopment of part of RPA 3. Golden Management, Inc., submitted a proposal for the redevelopment of the Pointe Basse Plaza, a shopping center located in RPA 3. Golden's proposal called for TIF revenues to be used for property acquisition, site preparation, the relocation of utilities, road and traffic signal improvements, the relocation of some tenants of Pointe Basse Plaza, and parking lot improvements to the shopping center. These improvements were in addition to the improvements already proposed for RPA 3. The proposal increased the overall costs associated with RPA 3 by over 360 percent adding well over $1,000,000 to the project's costs.

The city decided not to reconvene the TIF commission, which would have required the appointment of commission members by both the city and the Ste. Genevieve school district. Instead, the city adopted an ordinance that amended the overall redevelopment plan to embody the changes in RPA 3 proposed by Golden and that directed the city mayor to execute a redevelopment agreement with Golden. The ordinance also authorized the issuance of TIF notes to fund the cost associated with the redevelopment of Pointe Basse Plaza.

The Ste. Genevieve school district and Mikel A. Stewart then filed a petition for declaratory judgment, arguing that the city was without authority to amend the redevelopment project without reconvening the TIF commission.2 If the TIF commission had been reconvened, the Ste. Genevieve school district would have been able to appoint a certain number of members to the commission. Part of the property taxes abated by the redevelopment project would otherwise have gone to the school district. Stewart, according to the petition, is the superintendent of the Ste. Genevieve School District and is also a taxpayer of both the school district and the city. Originally, only the city was named as a defendant in the declaratory judgment action. However, Stewart and the school district later added Golden as a defendant.

The city and Golden filed motions to dismiss the action, claiming that both plaintiffs lacked standing to sue and that the petition failed to state a claim upon which relief could be granted. The trial court ruled that neither plaintiff had standing and, even if either one had standing, the petition failed to state a claim.

II. STANDING

Both Stewart and the school district have standing to bring the declaratory judgment action at issue in this case. Reduced to its essence, standing roughly means that the parties seeking relief must have some personal interest at stake in the dispute, even if that interest is attenuated, slight or remote. See Raines v. Byrd, 521 U.S. 811, 819, 117 S.Ct. 2312, 138 L.Ed.2d 849 (1997). In the context of an action for declaratory judgment, Missouri courts require that the plaintiff have a legally protectable interest at stake in the outcome of the litigation. Battlefield Fire Protection District v. City of Springfield, 941 S.W.2d 491, 492 (Mo. banc 1997). A legally protectable interest exists if the plaintiff is directly and adversely affected by the action in question or if the plaintiff's interest is conferred by statute. Id.

The school district has a legally protected interest, conferred by statute, in appointing members to the TIF commission. Its power to appoint members to the commission is given in the very same statute that grants municipalities the power to use tax increment financing to fund redevelopment projects like this one. Sec. 99.820.

The district also has standing because the city's actions, if improper, would unlawfully deprive the district of tax revenue. Under Missouri law, a school district that is threatened with the imminent unlawful deprivation of part of its funds has standing to seek a declaratory judgment challenging the statutory interpretation that would lead to the deprivation. State ex rel. Sch. Dist. Independence v. Jones, 653 S.W.2d 178, 189 (Mo. banc 1983).

The very nature of TIF financing is that it funds the redevelopment of a particular parcel of property by abating increases in the property taxes on that parcel for a period of time determined by the costs of the redevelopment project. See generally sec. 99.845. This abatement applies both to taxes imposed by the municipality that authorizes the redevelopment project and to taxes imposed by any other taxing district, like a school district, in which the property is located. Sec. 99.845. If the city's amendment of the redevelopment plan without reconvening the TIF commission was unauthorized, the school district will be unlawfully deprived of tax funds to which it would otherwise be entitled.

The taxpayer, Stewart, also has standing to bring the declaratory judgment action, although his right to do so is less clear than the right of the school district. He has standing under his status as a taxpayer of the city and of the school district. A taxpayer has standing to challenge an alleged illegal expenditure of public funds, absent fraud or compelling circumstances, if the taxpayer can show either a direct expenditure of funds generated through taxation, an increased levy in taxes, or a pecuniary loss attributable to the challenged action of the municipality. Eastern Missouri Laborers District Council v. St. Louis County, 781 S.W.2d 43, 47 (Mo. banc 1989).

Missouri courts allow taxpayer standing so that ordinary citizens have the ability to make their government officials conform to the dictates of the law when spending public money. State ex rel. Nixon v. American Tobacco Co., 34 S.W.3d 122, 133 (Mo. banc 2000). In this case, both the city and the school district will suffer a pecuniary loss from the transaction. Because the TIF financing in this case abates increases in property tax, both the...

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