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State ex inf. Dykhouse v. City of Columbia

Court of Appeals of Missouri, Western District, Second Division

January 17, 2017

STATE OF MISSOURI ex inf. CHARLES J. DYKHOUSE, BOONE COUNTY COUNSELOR, in his official capacity, Respondent,
v.
CITY OF COLUMBIA, MISSOURI, Appellant.

         Appeal from the Circuit Court of Boone County, Missouri The Honorable Gary M. Oxenhandler, Judge

          Before: Lisa White Hardwick, Presiding Judge, and Karen King Mitchell and Anthony Rex Gabbert, Judges

          Karen King Mitchell, Judge

         Charles J. Dykhouse filed a petition in quo warranto, purportedly in his capacity as Boone County Counselor, seeking to oust the City of Columbia from engaging in any tax increment financing (TIF) projects for a minimum of five years. Dykhouse argued that, while engaged in previous TIF projects, City violated the statutory reporting requirements for municipalities engaging in TIFs and, therefore, lost its authority to continue engaging in TIF projects by operation of law. Despite numerous objections, writ petitions, and dispositive motions from City arguing that Dykhouse lacked authority to file a quo warranto action and that the alleged violations did not fall within the purview of quo warranto proceedings, the circuit court nonetheless entered a judgment of ouster, prohibiting City "from implementing any new tax increment finance project . . . through December 31, 2019." Because Dykhouse lacked authority to seek quo warranto and because City's alleged violation is not the proper subject for a quo warranto proceeding, we reverse the decision of the trial court with instructions to dismiss the petition.

         Background A. The TIF Act, §§ 99.800-99.865[1]

         "The TIF Act authorizes a city to undertake a redevelopment project under certain conditions laid out in Section 99.810." State ex rel. City of Desloge v. St. Francois Cty., 245 S.W.3d 855, 858 (Mo. App. E.D. 2007). "Funds for the redevelopment project come essentially from the future increase in the value of the land once the redevelopment project is complete." Id. "The TIF Act calls for the city implementing the plan to create a TIF Commission to formulate the plan and oversee its implementation." Id. "The Commission's actions are subject to the final approval of the governing body of the municipality." Id. "The Commission's recommendations go into effect upon the municipality's adoption of them by ordinance or resolution." Id. "Once the redevelopment plan is in place, the municipality begins to accumulate funding in a special allocation fund." Id. "Each year that the post-plan assessed value of the taxable real property within the redevelopment project area exceeds the pre-plan assessed value, property taxes on the increase in value are abated." Id. "Instead of paying taxes, the landowners make payments in lieu of taxes equal to the amount the taxes would have been after improvements." Id. "Those payments go into the special allocation fund." Id.

          Under § 99.865, municipalities engaging in TIF projects have certain reporting obligations regarding the status of each redevelopment plan and project. Before 2009, the statute was silent regarding any penalty for noncompliance. But, in 2009, § 99.865.7 was enacted, and it provided: "Any municipality which fails to comply with the reporting requirements provided in this section shall be prohibited from implementing any new tax increment finance project for a period of no less than five years from such municipality's failure to comply." 2009 Mo. Laws 379 (HB 191).

         B. City's TIF projects and quo warranto proceedings

         Beginning in 2009, under the authority of the TIF Act, City engaged in the creation of three separate TIF projects-the 10th and Locust Redevelopment Plan, the Tiger Hotel Redevelopment Plan, and the Regency Hotel Redevelopment Plan. The 10th and Locust Redevelopment Plan was never constructed, but both the Tiger Hotel and the Regency Hotel Redevelopment Plans were substantially complete and in operation by 2014. In December 2013, City began an evaluation to determine whether to establish an additional TIF district in central Columbia, and it performed a cost-benefit analysis to determine feasibility.

         On January 24, 2014, the Boone County Commission (Commission) sent a letter to City via the city council (Council), formally requesting City to abandon any efforts to create a downtown TIF district. The Commission identified various concerns and asked to be included in a discussion of possible alternative solutions. The Commission's letter closed by expressing a desire "to avoid a needless and costly legal battle regarding Columbia's ability to implement any new tax increment financing projects due to its failures to provide required, annual reporting on its existing TIF efforts." The Commission requested that City "terminate the TIF effort currently underway" and confirm its intent to do so no later than January 31, 2014.

          On February 6, 2014, Dykhouse, purportedly acting ex officio as the Boone County Counselor, filed a petition in quo warranto, naming City as Respondent, seeking a "[j]udgment of [q]uo [w]arranto finding that [City, via the operation of § 99.865.7] lacks the authority it is usurping to itself by attempting to engage in a new TIF project[ and] ordering that such lack of authority will persist through at least December 31, 2017." Dykhouse alleged that his authority to file the petition derived from § 56.640.3.

         On February 17, 2014, City abandoned its effort to create the central Columbia TIF district, and as of April 2014, City was no longer pursuing the formation of any TIF district within its borders.

         In response to Dykhouse's petition, City repeatedly, but unsuccessfully, argued in dispositive motions and writ petitions that Dykhouse, as County Counselor, lacked standing to bring a quo warranto action, that quo warranto did not lie under the facts alleged, and that the issue was not ripe in light of the fact that City had abandoned its only effort to create a new TIF district. The trial court rejected City's arguments and entered findings of fact and conclusions of law, determining that City had repeatedly violated its reporting obligations under § 99.865 and was, therefore, "prohibited from implementing any new tax increment finance project for a period of no less than five (5) years from the last violation of the reporting requirements of RSMo §99.865, or through December 31, 2019." City appeals.

         Analysis

         City brings nine points on appeal. In its first point, City argues that the trial court erred in finding the matter ripe for review in light of the facts that City had abandoned its only existing effort to create a new TIF district and had no new plans in the works. In its second point, City argues that the trial court erred in finding that quo warranto was the appropriate vehicle for Dykhouse's challenge, as City had the power to create TIF districts and, therefore, was not a usurper. In its third and fourth points, City argues that Dykhouse, as a County Counselor, either lacked standing to bring a quo warranto action or failed to prove necessary facts to establish standing. In its fifth and sixth points, City challenges the trial court's determination that City violated its reporting obligations. In its seventh and eighth points, City challenges the admission of certain evidence as beyond the scope of the pleadings. And in its ninth and final point, City argues that the trial court erred in finding that the most recent violation occurred on December 31, 2014. Because we find the second and third points dispositive, we do not reach City's remaining points.

         A. Dykhouse lacked authority to bring a quo warranto action.

         In its third point on appeal, City argues that Dykhouse lacked "standing" to bring a quo warranto action because (among other reasons) he is neither the Attorney General nor the county prosecutor. We find that Dykhouse had no authority to bring a quo warranto action.

         "[A]ppellate review of whether a party has standing to sue is conducted de novo." Exec. Bd. of Mo. Baptist Convention v. Carnahan, 170 S.W.3d 437, 445 (Mo. App. W.D. 2005). "The question of standing is determined as a matter of law, based upon the petition 'along with any other non-contested facts accepted as true by the parties at the time the motion to dismiss was argued.'" Id. (quoting Inman v. Mo. Dep't of Corr., 139 S.W.3d 180, 184 (Mo. App. W.D. 2004)). "The question of standing is a threshold issue." Id. "A party cannot obtain relief from a court if that party lacks standing." Id. (quoting Cont'l Coal, Inc. v. Mo. Land Reclamation Comm'n, 150 S.W.3d 371, 378 (Mo. App. W.D. 2004)).

         When Dykhouse filed the petition, he purportedly did so on personal information.[2]Rule 98.02, [3] at the time the petition was filed in 2014, provided that, when based upon personal information, "[a]ny of the following may be relators [in a proceeding for quo warranto]: . . . [t]he attorney general of this state . . . or . . . [t]he prosecuting attorney." But Dykhouse was neither the Attorney General nor the prosecuting attorney. As County Counselor, he did not fall within the purview of proper relators under Rule 98.02. See State ex rel. St. Charles Cty. Counselor v. City of O'Fallon, 53 S.W.3d 211, 213-14 (Mo. App. E.D. 2001) (noting that a county counselor constituted a private relator and, therefore, could prosecute an action in quo warranto "only . . . if the Attorney General or the prosecuting attorney authorize[d] the action.").

         In the petition, however, Dykhouse invoked the authority of § 56.640.3. That statute provides,

Notwithstanding any law to the contrary, the county counselor in any county of the first classification and the prosecuting attorney of such county may by mutual cooperation agreement prosecute or defend any civil action which the prosecuting attorney or county counselor of the county is authorized or required by law to prosecute or defend.

         Dykhouse argued that he and the Boone County Prosecutor had entered a mutual cooperation agreement and that Dykhouse was, therefore, authorized-by virtue of the county prosecutor's authority under Rule 98.02-to bring a quo warranto action. In support of his argument, Dykhouse ...


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