Judge Van Amburg sides with county in lawsuit against UMB bank

Platte County is off the hook for payments on parking garages at Zona Rosa — for now.

On Thursday, May 30, Platte County Circuit Court judge James Van Amburg ordered summary judgment in favor of Platte County.

“There is no promise or requirement in the financing agreement for Platte County to make payment on the Zona Rosa Bonds,” Van Amburg says in the judgment. “In fact, in section 2.4, the financing agreement specifically states that it ‘shall not in any way be construed or interpreted as creating a liability or a general obligation of debt of the county... nor shall anything contained therein constitute a pledge of the general credit, tax revenues, funds or moneys of the county.’ The trustee (UMB Bank) has admitted the bonds are not secured by the full faith and credit and taxing power of Platte County.”

Shortly after the announcement, Platte County issued a statement through its attorneys at the Graves Garrett law firm. Commissioners said they had no further comment at this time.

“The commission’s lawsuit has saved Platte County taxpayers tens of millions of dollars,” said special county attorney Todd Graves. “The court was correct to reject the trustee’s effort to impose a bondholder bailout on taxpayers. This is a great day for taxpayers and a firm rebuke to financiers attempting to abuse the public treasury.”

Graves — and commissioners — contend that UMB Bank’s demands for the county to cover payment shortfalls would have imposed an immediate liability of more than $700,000 and a long-term liability of up to $40 million through 2032. Cuts to services — including law enforcement — and property tax increases were proposed to cover the payments should the county have been forced to pay.

In a statement, UMB representatives said they would continue to look at options “in the best interests of bondholders.”

Platte County brought the suit last November, seeking a declaration from the court regarding the validity of UMB’s demands that it cover shortfalls in tax revenue used to pay the bonds. The bonds are payable from a one percent sales tax in Zona Rosa.

In his judgment, Van Amburg agreed that while the county auditor was required to include a potential payment for the bonds in his proposed budget, the commission is not bound to accept that proposed budget. “The financing agreement recognizes that the county commission may decide each year whether to appropriate or not to appropriate for a potential payment on the Zona Rosa bonds,” the judgment states.

County commissioners refused to cover the 2018 bond payment shortfall due last December and did not appropriate funding for the 2019 bond payment. Credit rating agencies dropped the county’s bond rating to junk status last fall based on commission statements made on the bonds before the bond payment default.

During his presentation to the court, Graves said commissioners believe that the judge’s ruling in the county’s favor would be the first step to restoring the county’s credit rating.