Dislike of Wal-Mart prompts union worker's suit to block development

What's the difference between a union protest against Wal-Mart and a taxpayer lawsuit against the city of Collinsville?

There is no difference.

Shop 'n Save meat clerk Diane Tettaton of Collinsville, who sued in Madison County circuit court to block city financing of the Collinsville Crossing retail district, testified at trial in December that her union representative asked her to sue the city.

Tettaton testified that she probably would not have sued if the developer had included a union grocery store.

She also testified that she did not select her attorney, John Myers of Springfield. She paid no legal costs and did not intend to pay any, according to her testimony.

Attorneys for the city and the developer wrote in a summary of the trial that Tettaton's sole basis for suing was that she dislikes Wal-Mart.

Associate Judge Ralph Mendelsohn must decide whether to block city support for the developer, Collinsville Acquisitions.

He received post trial briefs from both sides Jan. 30.

Mendelsohn held trial without jury on four December days. It slipped by quietly on the miscellaneous remedies docket, which unelected associate judges handle.

Before and after Christmas, in an otherwise sleepy courthouse, Mendelsohn tackled a case involving a law so new that he must blaze a trail.

At Collinsville Crossing, on Route 157 at Interstate 55/70, the city did not follow the normal course of tax increment financing.

Instead Collinsville applied the Business District Act, which legislators amended in 2004 so cities could create business redevelopment districts with extra sales taxes.

The city planned to borrow about $19 million on behalf of Collinsville Acquisitions. Sales tax receipts would pay off the bonds.

At a proposed Wal-Mart, customers would pay the normal sales tax.

At a proposed home improvement store, they would pay an extra half cent.

In the rest of the district, customers would pay an extra cent.

Tettaton sued last March. She asked the court to declare the development agreement illegal and prohibit the city from expending public funds to carry it out.

She claimed creation of three tax rates violated a requirement in the Illinois Constitution for uniform taxation.

Tettaton argued that the city declared the area blighted without satisfying requirements in state law for declaring an area blighted.

Patrick Buffa signed on as second plaintiff, but he dropped out in April because he did not reside in Collinsville.

In May the developer challenged Tettaton's standing. Attorney Caroline Hermeling of Clayton, Mo., wrote that Illinois courts do not allow taxpayers to sue governments over actions that result in no loss to the government's general funds.

In June Mendelsohn denied the challenge to Tettaton's standing.

Trial began Dec. 18. Tettaton took the stand.

Mendelsohn said the parties agreed that the defense would start direct examination.

Direct examination

Hermeling asked Tettaton if the agreement said that no funds to pay off the notes would come from the city's general corporate funds. Tettaton said yes.

"If there are no sales in that area, no sales taxes, then you agree that the city has no obligation then to fund the notes, correct?" Hermeling asked.

Tettaton said yes.

Hermeling asked three times if she took action to oppose the project in 2003, 2004, or 2005.

Tettaton answered no each time.

"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 as plaintiff in this case?" Hermeling asked.

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 Malloch represented to her that she would not have to pay any costs associated with the litigation.

Tettaton said, "Correct."

"You have not paid any costs with respect to pursuing this litigation, correct?" Hermeling asked.

Tettaton said, "Correct."

"You have no intention of paying any costs in the future relating to this litigation, correct?" Hermeling asked. Tettaton said, "Correct."

"You did not select (Springfield attorney) Mr. Myers, did you?" Hermeling asked.

Tettaton said no.

"You just sat with Mr. Myers and Mr. Malloch at an Applebee's, as I understand it, right before this lawsuit was filed, and you agreed to be a plaintiff with Mr. Myers, correct?" Hermeling asked.

Tettaton said, "Correct."

Hermeling asked if she ever talked to a city official -- the mayor, council member or city manager -- or ever attended public hearings or council meetings in the four years while the development took place. Tettaton said no.

Tettaton said no.

Hermeling said that in a deposition Tettaton stated she filed the suit because Malloch asked her to file it. Hermeling asked if that was correct.

"That is not the only reason," Tettalon answered.

Hermeling said, "Was the other reason that you are a Shop 'n Save employee, which is a union position, and Wal-Mart is going to have a grocery store at this location and employ nonunion employees, is that correct?"

"That is not the only reason either," she answered.

Hermeling said, "Is that one of the reasons that you filed this lawsuit?"

Tettaton said yes.

Hermeling asked if she testified in her deposition that she filed the suit to make sure Wal-Mart did not get a tax break.

"Wal-Mart and Coleman Properties," Tettalon said.

Hermeling said, "You didn't mention Coleman Properties at your deposition."

"I forgot," she said.

Hermeling said, "Are you aware that Wal-Mart is not getting a tax break in this project?"

"No, I am not aware of that," she said.

Hermeling said, "You are still under the impression that somehow Wal-Mart is getting a tax break?"

Tettaton said yes.

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."

Cross X

Dan Schuering, a Springfield attorney testifying as Tettaton's expert on blight, said the area did not meet standards in state law for declaring blight.

On cross examination Hermeling asked Schuering if he visited the north district. He said the area had been demolished by the time he visited.

Hermeling said, "You have no firsthand knowledge of the conditions of the north business district prior to the city council making a finding of blight, correct?"

"That's true, only what I read in the plan," Schuering said.

Hermeling asked if he visited the south district twice. He said he visited it in November 2004 and February 2005.

Hermeling asked what he did in November. Schuering said he drove through the area to get acquainted with it.

Hermeling asked if he spent a couple of hours on his February visit. Schuering said it was substantially more than that.

"Was it a day?" Hermeling asked.

"It was not an entire day," Schuering said. "It was about a half to three quarters of a day."

Heremeling said, "Are you familiar with the fact that an adult bookstore - a porn shop – was going to move in on the north business district area?"

Schuering said yes.

Hermeling asked if he was working on three lawsuits with Myers.

Schuering said that was correct.

Hermeling asked if he attended a city council meeting on the project or talked to any city official about it.

Schuering said no.

The city then presented testimony from economic development director Paul Mann, police chief Scott Williams, consultant John Brancaglione and others.

At the close of trial Mendelsohn gave both sides two weeks to submit post trial briefs. He later granted another two weeks. Briefs arrived Jan. 30.

Briefs

For Tettaton, Myers argued that the city failed to show blight.

"…[b]y and large, the businesses of the area were functional; they were generating almost eight percent of the sales tax revenue of the city...," Myers wrote.

Myers wrote that Brancaglione designated 100 mobile homes as deteriorating buildings.

"This was clearly misleading…a mobile home is simply not a building," he wrote.

The Business District Act requires showing that a district would not be redeveloped without adoption of a city plan.

"…[t]his project would have developed even without the Business District," Myers wrote.

A city study showed that $47 million in sales taxes would be available to pay the $19 million loan, Myers wrote.

"Clearly, the city council was driven by fear," he wrote. "…[t]he driving force was Wal-Mart's threat to close its existing store in Collinsville and to move that store to another town…"

He said the three sales 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 submitted her brief in concert with Steve Giacoletto of Collinsville, representing the city.

They wrote that the suit prevents the city from securing tax exempt bonds. They wrote that as a result the city has paid higher interest rates.

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

The Business District Act specifically contemplates multiple districts with varying tax rates, they added.

In a separate brief Hermeling and Giacoletto again challenged Tettaton's standing.

"Plaintiff failed to show that the development project has any effect on the general corporate funds of the city," they wrote.

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

Mendelsohn will consider the testimony and the briefs before reaching a decision.