Mendelsohn gives Collinsville Crossing green light

Steve Korris Apr. 11, 2007, 10:00am

Collinsville may proceed to develop Collinsville Crossing shopping center, Madison County Associate Judge Ralph Mendelsohn decided April 5.

He ruled that Wal-Mart foe Diane Tettaton of Collinsville lacked standing to sue the city and its developer, Collinsville Acquisitions.

Ten months earlier he had denied a challenge to her standing, but a four-day trial in December changed his mind.

Mendelsohn ruled that Tettaton was not harmed by the development district, agreements behind it, or notes behind the agreements.

"Plaintiff has not established any injury in fact to a legally cognizable interest," he wrote.

"…she will not pay any taxes imposed in the project area or pay any of the costs associated with the development project."

Although Tettaton challenged the entire retail district, the trial showed that she objected to a single retailer - Wal-Mart.

She testified that a union representative on her job at Shop 'n Save in Granite City asked her to sue the city.

She said she probably would not have sued if the developer had included a union grocery store.

She said she did not select her attorney, John Myers of Springfield.

And, she said she paid no legal costs and did not intend to pay any.

After trial the city's attorney, Steve Giacoletto of Collinsville, wrote that Tettaton's sole basis for suing was that she disliked Wal-Mart.

"This lawsuit, filed more than four years into the city's development process, is a baseless attempt to further a political agenda," Giacoletto wrote.

For Tettaton, Myers practically confirmed that narrow view. His post trial brief declared that fear clearly drove the city council.

"…[T]he driving force was Wal-Mart's threat to close its existing store in Collinsville and to move that store to another town…," Myers wrote.

Mendelsohn, however, found the city's agreements valid and binding.

The district covers 53 acres southwest of the Interstate 55/70 interchange on Illinois Route 157.

The city council created the district under state law allowing extra sales taxes in business redevelopment districts.

The council planned to borrow about $19 million on behalf of Collinsville Acquisitions and repay the loan with sales taxes.

The council created three tax rates in Collinsville Crossing. At all but two retail outlets, customers would pay an extra penny.

At a home improvement store they would pay an extra half penny.

At Wal-Mart they would pay the normal tax, with nothing extra.

Tettaton sued in March 2006. She sought an order declaring the project illegal and prohibiting city spending on it.

She claimed that three tax rates violated a uniform taxation requirement in the Illinois Constitution. She also claimed the city declared blight without satisfying requirements in state law for declaring blight.

Collinsville Acquisitions challenged Tettaton's standing.

Caroline Hermeling of Clayton, Mo. wrote that Illinois courts do not allow taxpayer suits over actions that result in no loss to general funds.

She wrote that the development agreement explicitly prevented general corporate funds from liability for replenishment of the extra sales taxes.

Myers responded that it was sufficient to show that the city proposed to spend tax money improperly.

"…[I]f the new tax money were to be retained by the city instead of being paid to the developer, such would reduce the amount of other taxes the plaintiff has to pay," he wrote.

Mendelsohn chose to let Tettaton proceed.

At trial, Hermeling asked Tettaton if she took action to oppose the project in 2003. Tettaton said no.

Hermeling asked if she took action to oppose it in 2004. Tettaton said no.

Hermeling asked if she took action to oppose it in 2005. Tettaton said no.

Hermeling said, "It was not until March of 2006 when Steve Malloch, your union rep, called you at work at your Shop 'n Save and asked you to be a plaintiff in this case?"

Tettaton said, "He explained the situation to me and I agreed that I don't like the way things went down, and then I agreed to be a party."

Hermeling asked if she ever talked to a city official about the project. Tettaton said no.

Hermeling asked if she called the mayor, council member or city manager to discuss it. Tettaton said no.

Hermeling asked if she attended public hearings or council meetings in the four years while the development took place. Tettaton said no.

Hermeling said, "At your deposition you testified that you probably would not have filed this lawsuit if this development included a Shop 'n Save or a union grocery store, is that correct?" Tettaton said, "That is correct."

Mendelsohn received post trial briefs Jan. 30.

Myers told Mendelsohn the different tax rates showed that, "Wal-Mart has more power to drive a hard bargain than Home Depot, which in turn has more power to drive a hard bargain than Walgreens…"

Hermeling told Mendelsohn the suit prevented the city from securing tax exempt bonds and the city paid higher interest rates as a result.

"While the plaintiff intends to hurt Wal-Mart, the city and the developer are the parties that suffer," Hermeling wrote.

She wrote that state law specifically contemplates multiple tax rates.

In a separate brief Giacoletto renewed the challenge to Tettaton's standing.

He wrote that she failed to show any effect on the city's general funds.

"These are not funds available to the public," he wrote. "Neither the city nor its taxpayers have any ownership interest in these funds."

Mendelsohn, after thinking it over for a couple months, agreed.

He wrote that Tettaton "has not identified any potential liability of the city's general fund to pay or replenish any debts or liabilities created by this redevelopment project."

"The notes issued in connection with the project are payable solely from revenues derived from the project," Mendelsohn wrote.

He wrote that the city was indemnified from liability for development costs or liabilities arising from the development.

He taxed costs of the suit against Tettaton.

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