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A judge has ruled in favor of Bass Pro Outdoor World, leaving the city of Independence on the hook for a fee outlined in Bass Pro’s Independence lease agreement, plus legal fees.
On Feb. 15, more than two months after the case went to bench trial, Jackson County Circuit Court Judge Michael Manners said the city is responsible for the new construction license surcharge fee on the Bass Pro retail store, which opened in the spring of 2008.
The city must pay Bass Pro a principal amount of $421,620, plus attorney fees and expenses totaling $38,899. Bass Pro, Manners ruled, is entitled to withhold rent up to the amount of judgment, plus 12 percent interest per year, until the city meets its payment obligations.
Although Bass Pro constructed the retail store at the corner of interstates 70 and 470, the city paid for the construction, owns the building and has a 20-year lease with the retailer.
“We agree with the court’s decision, and we look forward to continuing our partnership with the city,” said Bass Pro’s attorney, Bryan Wade with Husch Blackwell LLP, by telephone Tuesday.
City Manager Robert Heacock said the city hasn’t made a decision on whether it plans to appeal the ruling.
“The important aspects are that the intention was not for an abatement of the excise tax,” Heacock said. “I understand where the judge is coming from in the ruling. The funds are set aside so when and if they are appropriated, they would not negatively impact any projected approved by the (City Council).”
In August 2010, Bass Pro Outdoor World LLC – separate from the private developer responsible for the Bass Pro-anchored The Falls at Crackerneck Creek project – filed suit against the city, claiming the city should be held responsible for license surcharge fees associated with the development.
The city said the license surcharge fee is tied to new development and that Bass Pro should have to pay it.
Because the city acted as the developer and the landlord in bringing Bass Pro Shops to Independence, it should be responsible for the license surcharge fee, Bass Pro officials argued in December. Construction of the facility was Bass Pro’s only responsibility under the lease agreement.
The city chose to pay the license surcharge fee out of its allowances to allow Bass Pro to open as scheduled, rather than delaying the store’s February 2008 opening, Assistant City Manager Larry Kaufman testified in December.
A judge has ruled in favor of Bass Pro Outdoor World, leaving the city of Independence on the hook for a fee outlined in Bass Pro’s Independence lease agreement, plus legal fees.
On Feb. 15, more than two months after the case went to bench trial, Jackson County Circuit Court Judge Michael Manners said the city is responsible for the new construction license surcharge fee on the Bass Pro retail store, which opened in the spring of 2008.
The city must pay Bass Pro a principal amount of $421,620, plus attorney fees and expenses totaling $38,899. Bass Pro, Manners ruled, is entitled to withhold rent up to the amount of judgment, plus 12 percent interest per year, until the city meets its payment obligations.
Although Bass Pro constructed the retail store at the corner of interstates 70 and 470, the city paid for the construction, owns the building and has a 20-year lease with the retailer.
“We agree with the court’s decision, and we look forward to continuing our partnership with the city,” said Bass Pro’s attorney, Bryan Wade with Husch Blackwell LLP, by telephone Tuesday.
City Manager Robert Heacock said the city hasn’t made a decision on whether it plans to appeal the ruling.
“The important aspects are that the intention was not for an abatement of the excise tax,” Heacock said. “I understand where the judge is coming from in the ruling. The funds are set aside so when and if they are appropriated, they would not negatively impact any projected approved by the (City Council).”
In August 2010, Bass Pro Outdoor World LLC – separate from the private developer responsible for the Bass Pro-anchored The Falls at Crackerneck Creek project – filed suit against the city, claiming the city should be held responsible for license surcharge fees associated with the development.
The city said the license surcharge fee is tied to new development and that Bass Pro should have to pay it.
Because the city acted as the developer and the landlord in bringing Bass Pro Shops to Independence, it should be responsible for the license surcharge fee, Bass Pro officials argued in December. Construction of the facility was Bass Pro’s only responsibility under the lease agreement.
The city chose to pay the license surcharge fee out of its allowances to allow Bass Pro to open as scheduled, rather than delaying the store’s February 2008 opening, Assistant City Manager Larry Kaufman testified in December.
Upon the store’s opening, Bass Pro officials understood that the city had paid the license surcharge fee without any problems or objections, Bass Pro Shops President Chuck Hagale testified last year. The city requires payment of a license surcharge fee before the certification of occupancy is issued.
“… Both Hagale and Kaufman agreed that the (license surcharge fee) is a kind of development fee,” Manners wrote in his judgment. “The lease clearly and unequivocally imposes the duty to pay development fees on the city.”
Manners also rejected the city’s argument that payment of the license surcharge fee was part of Bass Pro’s work defined in the lease.
As part of the lease signed in 2004, the city gave Bass Pro a $25 million allowance for construction of the building, and in return for its investment, the city receives 2 percent of all gross sales at the store, but not less than $1 million a year.
In August 2008, the city withheld allowance funds as compensation for a 2007 rent disagreement, claiming Bass Pro owed the full rent for 2007 instead of from June 30 through Dec. 31 of that year.
At trial in December, Kaufman testified that the city agrees it should have not withheld $493,150 and that it was owed to Bass Pro. That payment was filed on Jan. 9 and came from the Crackerneck Creek special allocation fund.
Revenue sources for that fund include economic activity taxes (or EATs), payments in lieu of taxes (or PILOTs) and interest income. Funds also are transferred from other sources, such as the Crackerneck Creek transportation development district and the general fund/committed fund balance for TIF obligations, said Jim Harlow, the city’s director of finance and administration.
The City Council approved that transfer of funds Tuesday night as part of an omnibus appropriations ordinance.
