JUDGE OVERTURNS RULING ON PERRYVILLE STREET FEES

PERRYVILLE -- The city of Perryville has won a three-year court battle that challenged the city's practice of requiring property owners to pay for portions of city street improvements.

The case was won on appeal. City Administrator Craig Lindsley said Wednesday the ruling represents a major victory for the residents of Perryville and other towns across Missouri that utilize the same method of payment for street work.

It was the first time such a policy had been challenged in court.

"It would have been a monumental disaster statewide" had the court not overturned the circuit court's ruling, Lindsley said. "It would have adversely affected every city, county and political subdivision in the state."

In 1988, Perryville resident and former city alderman Clarence L. Zahner filed suit against the city, claiming its policy of levying special assessments for street improvement without voter approval violated the state's Hancock Amendment.

Zahner's attorney, Tom O'Loughlin of Cape Girardeau, could not be reached Wednesday. Zahner said he wasn't yet aware of the ruling and referred calls to O'Loughlin. Attorney Kathy Wolz of Cape Girardeau, who had handled Zahner's case originally, also could not be reached Wednesday.

The amendment, which gained voter approval in 1980, requires cities and other political subdivisions to obtain voter approval to levy new fees or taxes.

Perry County Circuit Judge Kenneth W. Pratte ruled in September that the city violated the amendment when it charged property owners for "improvements, maintenance or upkeep of existing paved streets, including asphalt overlay and/or installation of curbs and gutters" without voter approval.

Pratte said the special assessments "are obviously a pecuniary charge imposed by the city of Perryville for improvements to public roadways."

But the Tuesday decision of the Missouri Supreme Court states that charges assessed by the city did not constitute a tax because they were "generally understood to be related either to a specific property or a specific purpose."

The ruling further states that Perryville's street policy "recognized a special benefit to property owners as a result of street improvements," and said the original ruling was overturned because "it rests upon the mistaken premise that the assessment at issue is a tax."

Lindsley said in most cases the cost of the improvements were split by the city and the property owner, with each paying for 50 percent of the work. He said for work on unpaved roads, on average about 70 percent of the cost was paid by the property owner and 30 percent by the city.

Zahner and his attorneys contended in the suit that the assessments were a tax and the work did not constitute a special benefit to property owners.

The original ruling ordered the city to pay Zahner and two other Perryville residents close to $5,000 in assessment refunds. It also ordered the city to pay Zahner's attorney fees of $11,000.

Although the verdict was overturned, Lindsley said, the city has spent just over $25,000 defending its policy.

In addition, an injunction has prohibited the city from completing any street work since September. The ruling has pushed back a $1.5 million downtown redevelopment project that had been slated to begin last spring.

The project will widen streets and add new sidewalks, landscaping, street lights, water, gas and sewer lines to the 12-block downtown business district.

The project will now likely begin next spring, Lindsley said. "Everything was contingent on this case," he said.

Lindsley said the city policy allows property owners to share in the cost of street improvements with taxpayers.

"Special assessments provide an element of fairness," he said. "The property owner who receives a direct benefit from the work pays for some of the work rather than the general taxpayer having to pay for all of it."

He said since the suit was filed, city officials have felt they were "on solid ground" with the policy.

"Special assessments as a method of paying for capital improvements has been tried and tested in every state in the nation," he said. "But the entire credit for this victory goes to (mayor) Robert Miget and the Board of Aldermen of the city. They stuck with it and were willing to see it through even after we lost at the circuit level."

Lindsley said the indirect costs of the suit statewide have been "staggering." He said not only Perryville, but other Missouri cities have delayed street work awaiting a final ruling.

"I've had numerous calls from people in other communities wanting more information about this case," he said. "All this delayed work is going to be more expensive because of inflation."