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Category Archives: economic development

Branson seeks advice on how to revitalize Highway 76; will designers study the market?


For a decade, the first mile or two of State Highway 76 west of US 65 in Branson has languished. In this section of the Strip, most of the construction of restaurants, motels and retail strip centers took place 30 t0 40 years ago, under the economic conditions and design sensibilities of the time. For most of a year, the City of Branson’s leadership has been working toward a vision for the revitalization of this portion of the Strip.

The City has followed the usual path of soliciting proposals from firms with expertise in land-use planning, incorporating the disciplines of engineering, architecture and design. The City is nearing the point of awarding a contract for producing a plan with design standards that will to some extent dictate the look of this part of the Strip, much of which was heavily damaged by the February 29, 2012 tornado.

Design standards have another effect, which is to set constraints on the returns on investment in land and building. Real estate appraiser Skip Preble takes a critical look at how land-use planners often neglect to evaluate real estate markets when they formulate design standards in “How Marketing Could Boost Land Development,” published on the New Geography web magazine.

Can land-use planners can be expected to examine real estate market data and translate what they learn into practical design standards? How would a governmental body, in adopting regulations incorporating the new design standards, know whether they will work well with the realities of future real estate markets?

 

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Taxpayers vs. Ratepayers: Taxpayers lose


St. Charles County wanted to widen a road, which required moving the gas line within the right-of-way of Pittman Hill Road. Pittman Hill Road was created by subdivision plats which designated the road’s right-of-way as a utility easement for gas lines (among other utilities), dedicating the entire right-of-way to the public. 

The County asked Laclede Gas Company to pay for the relocation of its gas lines to the right-of-way of the reconstructed road. Laclede claimed that this amounted to an unconstitutional taking of its property. On a motion for summary judgment, the trial court ruled for the County, requiring Laclede Gas to pay for the relocation. Laclede appealed directly to the Missouri Supreme Court.

On appeal, the County made four objections: Read the rest of this entry

Invest now in vacation property!


In preparing for a short talk about how to convey various kinds of vacation real estate, I arrived at the unbrilliant conclusion that people make decisions to buy vacation real estate (RV lots, lake houses, timeshares) based on what they think they want at the time of purchase, with some attention, but not enough attention, to the future. A short version of my presentation is posted here.

Many decisions to purchase vacation property are made when buyers are in a state of vacation bliss, a kind of wistfulness, that makes them less critical than when they’re on their home turf. They hope the vacation property will be a place of togetherness for family and close friends, where memories are created. Perhaps it will become a retirement home, where the grandchildren will want to visit. The sales techniques for vacation property are addressed squarely at those sentiments.

Many of those good things do happen. But vacation properties have the same drawback as all real estate investments: real estate is immobile. If you must to sell it quickly, the price must be low. You probably can’t sell it yourself, because you’re not there.

Ownership of most objects becomes undesirable. Our family situations change. Rising fortunes suggest that we should upgrade. Declining fortunes require that we sell. Seclusion that initially provided peace now brings feelings of loneliness. Or seclusion is ruined by the tasteless vacation home just built next door. The only time available to be at the vacation property is consumed with mowing and repairs.

Now is a great time to buy, because many owners need to sell. Get some advice about your purchase from people who aren’t going to make a commission if the sale goes through, whom you can confide in about your needs.

The advisors you need when considering purchasing vacation property should be able to advise you on such topics as:

  • the history of the project (subdivision, resort, condominium), including the reputation of its developer
  • subdivision restrictions and plats
  • maintenance fees
  • responsibility for road maintenance
  • recreational amenities
  • water and sewer systems
  • lake or river access
  • police and fire protection
  • homeowner association status and activities
  • distance to medical facilities
  • resale opportunities
  • nearby employment opportunities

The information that you need probably isn’t available from just one person. Take your time in making a decision. Don’t sign anything while you’re in the wistful state.

 

 

 

 

 

 

 

Coverdell decision set aside, as Branson Landing case goes back to trial court

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Using the “plain error” doctrine, rarely used in civil cases, the Court of Appeals for the Southern District of Missouri, in Empire District Electric Co. v. Coverdell, reversed and remanded a January 14, 2010 jury verdict that had awarded Douglas Coverdell and Coverdell Enterprises the north third of Branson Landing and adjacent areas. This decision is dated June 3, 2011.

The appellate decision is based on the City of Branson’s argument that the trial court made a serious mistake by allowing the jury to enter a verdict affecting the property interests of the City of Branson (and others) who did not participate in the trial.  The appellate court accepted the City’s argument that “plain error review” would be appropriate, because the court’s error was “so egregious as to ‘weaken the very foundation of the process’ and ‘seriously undermine confidence in the outcome of the case.’ ” Empire’s appellate arguments were not addressed in the decision, according to a footnote, since the court’s acceptance of the City’s arguments was sufficient to warrant reversal.

The City of Branson did not participate in the trial held in January 2010, though the City’s attorney was present in the gallery of the court room for much of the trial. In an earlier phase of the case, which took place in 2004, the City had won its effort of affirm its title to the west portion of the peninsula shared with North Beach Park. Thereafter, the City was in a monitoring mode, not aware that title to the City’s land, leased to Branson Landing, would be the subject of the trial.

The appellate court tied its decision to the words of Coverdell’s attorney, spoken to the jury, who told the jury in the January 2010 trial that the dispute with Empire concerned only the east part of the North Park Beach peninsula. Coverdell’s attorney is also quoted as telling the jury that the City “has nothing to do with this dispute between Empire and [Coverdell and Coverdell Enterprises.]”

However, the judgment that Coverdell’s attorneys submitted to the trial judge after the juy verdict included 27 acres that included the Belk store and parking lot at the between North Beach Park and the Belk store, as well as some of the area south and west of the Belk store. The trial court’s mistake was to cloud the title of the City and others who were did not participate in the 2010 trial. The owners of much of the 27 acres were not parties to the suit, which appears to be the fundamental reason for reversal of the trial court’s judgment. The appellate opinion refers to City’s statement that the City “as well as numerous other third parties, have interests in that southern tract of land such that Branson was aggrieved by the 2010 judgment.”

The appellate decision gives the City and Empire the right to amend their claims and face Coverdell in a new trial.

Can a city’s utility charges be a tax? It’s a tough case to prove.

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The City of Hermann provides water, sewer, natural gas, electricity and trash pickup to its residents, allowing them no choice of providers. When the City jacked up the rates and transferred the “profits” to other City accounts, some residents resented the City’s flexing of its monopoly power. They sued, claiming that the City’s governing board had sidestepped Missouri’s constitutional requirement (Article X, sections 16- 24, known as the Hancock Amendment) that tax increases be approved by voters. The court had to decide whether a utility rate increase was a disguised tax.

Here’s an overview of the Missouri Supreme Court’s 26-page opinion in Arbor Investtment Company LLC v. City of Hermann, released May 31, 2011, in which the court determined that the  City of Hermann’s utility fees were not taxes.

The Five (or Six or Seven) Factors

The Missouri Supreme Court identified five factors in the 1991 case Keller v. Marion County Ambulance District which may be applied to distinguish user fees (not requiring a vote of the people) from a tax (which requires a vote). These factors, the court pointed out, are not exhaustive, but provide a framework for analysis:

  1. When is the fee paid?
  2. Who pays the fee?
  3. Is the amount of the fee affected by the level of the service that it is for?
  4. Is the fee for a good or a service?
  5. Is the good or service one that has been historically provided by the government?

The City of Hermann’s utility charges are paid in response to monthly billing, after the services have been metered. This resembles a user charge, rather than a tax that is paid annually. Of course, it also resembles a sales tax that is paid upon a sale.

The City’s utility charges are assessed only against utility customers, unlike some kinds of taxes, which are charged without reference to who is using government services. For example, sales taxes are charged to non-resident and residents alike.

The amount of the City’s utility charges, at least above minimums and flat charges, is related directly to use, other than for Hermann’s “communications fee,” which is used to support the 911 network.

The City’s utility charges fees are imposed for goods or services, rather than being a general tax to be used however the City government chooses. This factor was not at issue in this challenge, though the plaintiffs claimed that the amount of the fees were in excess of the reasonable capital and operating costs incurred in providing the services.

The Supreme Court found the fifth factor in favor of a finding of a tax, though the City of Hermann has a long history of providing these services in Hermann. The court indicated that the City’s prohibition of any other provider offering these goods and services supports a finding that the utility charges are a tax, without explaining why, other than to state that the lack of alternatives was a part (a sixth factor?) of the analysis. Even so, a finding that the utility charges resembled a tax on this point was not enough to overcome the opposite findings on the other factors.

Borrowing from its opinion in Beatty v. Metropolitan St. Louis Sewer District, the court looked at a sixth factor, whether the payment was enforceable by imposition of a lien on the user’s property or merely by disconnection or discontinuance of the service. Without taking judicial notice of the fact that many if not most private and municipal utilities have the right to impose liens for non-payment of utility charges–in addition to disconnection– the court considered that a tax, such as a property tax, is secured by a lien, while utility providers have the right to disconnect the services to enforce payment.

The court upheld the City of Hermann’s utility rates, stating, “There simply has been no showing that the amount charged is so excessive as to not constitute the provision of a service or good in return for the amount paid.”

Municipal rates are unregulated, but does this lead to excessive rate levels?

We should be concerned with the quality of the facilities for providing our water supply, treatment and management of wastewater and stormwater, and delivery of electricity and telecommunications services. The infrastructure for these essential things was constructed in the 19th and 20th centuries. Repairing, replacing and upgrading them is enormously expensive and in many cases has been deferred.

But private and governmental providers face stiff resistance in raising revenues to confront these challenges. For many private providers, utility commissions determine the extent to which rate increases are allowed. For other providers, such as cooperatives, homeowner associations and local governments, rate increases are within the discretion of elected officials, who have wide discretion and motivations that may extend beyond the provision of utility services.

In my experience, local governments, looking at water and sewer rates, generally look around to neighboring communities and communities of the same size elsewhere in the state, hoping to stay somewhere below the top. While this strategy may be effective for helping elected officials to remain in office, it may not produce sufficient revenue for maintaining utility systems.

 

The Corps of Engineers can only release water, not solve problems

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As a lawyer, I first encountered the economic ruin and heartache from controlled discharge from a Corps’ reservoir about 25 years ago. The Corps had opened the gates at the Keystone reservoir west of Tulsa, filling the entire floodplain from Mannford, through Sand Springs and Tulsa. My client packaged fresh salads in a building on the edge of the floodplain that was not known to have ever flooded.

The Small Business Administration offered disaster loans to businesses, and my client’s only hope for survival was to accept a loan.

Unfortunately, the six-month interruption of my client’s business resulted in a loss of market share and employees. The SBA loan and insurance didn’t cover nearly all the losses. There was no revenue to cover the regular bills due in the weeks after the flood. The business had been marginally profitable, only because it had little debt. The SBA loan required the owner to sign a personal guarantee. The eventual result of the SBA loan was that my client became bankrupt (at age 70), since the business couldn’t generate enough money to service the debt and pay its other expenses.

I could find no legal basis for challenging the Corps’ management of the Keystone dam and the Arkansas River basin. The Corps operates under broad statutory authority that has many competing goals, the least of which seems to be protecting homes and businesses built in floodplains below the dams.

The Corps has no control over rainfall. In responding to rainfall, or lack of it, the Corps must respond to those who have statutory claims on impounded water for drinking, power generation, irrigation, recreation, and maintenance of the depth of water in navigation channels. The Corps is constrained by the design of its dams and the storage capacity of its reservoirs. To meet all its goals, the Corps has only one tool: controlling the rate of release of water.

Even if the Corps didn’t have governmental immunity from liability for many of its actions, persuading a judge or jury that the Corps made bad decisions would be an enormously expensive and difficult task.

The lesson is that the economic benefits and protection provided by federal and state projects are extremely uneven in application. We should make decisions based on our own situations.

If you’re a beneficiary of a specific federal program, you can probably count on whatever protection that offers, but only for now. If we expect federal, state and local governments to protect us from weather, we end up in the situation we’re already in.

Glaize Creek Sewer District blows condemnation case, but gets new chance


At a condemnation trial, Glaize Creek Sewer District (in Jefferson County, Missouri, just south of St. Louis), didn’t put on any admissible evidence of damages to the Gorhams’ property. The Gorhams put on proper evidence of damages, showing that the value of their property after the sewer line was installed declined by $29,000. The Missouri Court of Appeals reversed the jury verdict of zero damages (based on an appraiser‘s unsubstantiated opinion testimony), and sent the case back for a new trial.

Two things are unusual about this case: Read the rest of this entry

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