Old Law Spells Big Tax Break
by Ron Davis
City officials in Independence, MO, must give a big tax break to the local developer of a new retail complex—whether they like it or not.
That’s because the developer discovered after buying the property that Missouri law designates the building he constructs there an “urban renewal project.” As such, he gets a sizable abatement in property taxes.
City officials have battled to prevent the windfall, however. They contend that the law governing urban renewal in Independence is longer valid.
In fact, that law has existed for more than 50 years. The state’s legislature enacted it in the 1950s to encourage redevelopment in blighted areas of Missouri’s cities. The Independence city council eventually adopted the provisions of that law to focus on urban renewal of its Old Town area, in a joint venture with the property owners there.
But over the years the city lost interest in that venture. And although the law has remained on the books of the city code, no owner of Old Town property had ever previously applied for a tax abatement. As a result, city officials considered the Old Town plan “closed out,” despite needing approval for such action from the property owners there.
City officials were therefore obviously surprised when the developer applied for the tax abatement. They soon responded, however, by rejecting his application.
The developer sued, arguing that the urban-renewal law still applies because, under law, city council and the Old Town property owners had never officially invalidated the urban-renewal plan.
A Missouri appellate court agreed with the developer, explaining, “The Old Town plan expressly states that it automatically renews for successive five-year terms, ‘unless by vote of the then owners of a majority of the square footage within the area, and by approval of the governing body of the locality, it is agreed to terminate the plan at the end of any such period.’ It is undisputed that the owners have never voted to terminate the Old Town plan. Therefore, the plan likewise continues to exist.” (Casey’s Marketing Co. v. Land Clearance, 101 S.W.3d 23 [Mo.App. W.D. 2003])
Decision: January 2003
Published: May 2003