March 2017 MML Review

REVIEW

A U N I T E D VO I C E FO R M I SS O U R I M U N I C I PA L L E AG U E CO M M U N I T I E S

THE MISSOURI MUNICIPAL

March/April 2017

Growing For The Future: City of Wentzville

Third-Party Contracts • Liability Claim Tips • Supreme Court Midterm Review

Missouri Securities Investment Program A Cash Management Program for School Districts, Counties, Municipalities and Other Political Subdivisions

The Missouri Securities Investment Program (MOSIP) is a comprehensive cash management program for school districts, counties, municipalities, and other political subdivisions. MOSIP was created in 1991 by the Missouri School Boards Association.

MOSIP offers its investors a professionally managed portfolio with competitive money market rates. MOSIP stresses maintaining safety, liquidity and yield as the primary investment objectives.

Relationship Managers

William T. Sullivan, Jr. 631.806.9470 cell sullivanw@pfm.com

Maria Lawlor 314.815.5481 direct lawlorm@pfm.com

Administered by: PFM Asset Management LLC Sponsored by: Missouri School Boards Association • Missouri Association of School Administrators Missouri Association of School Business Officials • Missouri Association of Counties • Missouri Municipal League

Analyst

Mary Dix 314.815.5483 direct dixm@pfm.com

Client Services Group (CSG) • 1-877-696-6747, Option 3

Amber Cannegieter Key Account Manager cannegietera@pfm.com

Joshua Groff Client Consultant grofj@pfm.com

Scott Bilheimer Client Consultant bilheimers@pfm.com

Melissa Rodgers Client Service Representative rodgersm@pfm.com

77 West Port Plaza Drive • Suite 220 • St. Louis, MO 63146 • 1.800.891.7910 • www.mosip.org This information is for institutional investor use only, not for further distribution to retail investors, and does not represent an offer to sell or a solicitation of an offer to buy or sell any fund or other security. Investors should consider the investment objectives, risks, charges and expenses before investing in any of the Missouri Securities Investment Program’s portfolios. This and other information about the Program’s portfolios is available in the Program’s current Information Statement, which should be read carefully before investing. A copy of the Information Statement may be obtained by calling 1-877-MY-MOSIP or is available on the Program’s website at www.mosip.org. While the MOSIP Liquid Series seeks to maintain a stable net asset value of $1.00 per share and the MOSIP Term portfolio seeks to achieve a net asset value of $1.00 per share at the stated maturity, it is possible to lose money investing in the Program. An investment in the Program is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Shares of the Program’s portfolios are distributed by PFM Fund Distributors, Inc., member Financial Industry Regulatory Authority (FINRA) (www.finra.org) and Securities Investor Protection Corporation (SIPC) (www.sipc.org). PFM Fund Distributors, Inc. is a wholly owned subsidiary of PFM Asset Management LLC.

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REVIEW

THE MISSOURI MUNICIPAL

March/April 2017; Volume 82, No. 2

CONTENTS

Cover Review 4 City Of Wentzville: A Crossroads Of The Nation

by Kara Roberson

Wentzville offers a unique quality of life, with convenient proximity to the St. Louis metropolitan area and the benefits of a family-oriented community.

Features 8 The Reality Of Risk In Third-Party Contract Relationships

by Ron Steinkamp

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11 Liability Claims:

10 Tips And Reminders

by Glenn Price

14

It's Your Deal: Understanding Roles And Responsibilities When Issuing Municipal Bonds

by Lynnette Kelly

16 Supreme Court Midterm Review For Local Governments

by Lisa Soronen

8

18 City Rights In An Era Of Preemption

by Lisa Soronen

Departments 20 FAQ: What Is A Use Tax? 23 Getting To Know You: Mayor Falkner and Mayor Glantz

24 MML Legislative Conference Photos 26 News From The Bench: Improvement Plans

by Ken Heinz

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29 Professional Directory 30 Calendar And Member News Cover: Peruque Valley Park, Wentzville, Missouri

MISSOURI MUNICIPAL LEAGUE BOARD OF DIRECTORS President: Mayor Kathy Rose, Riverside; Vice President: Mayor Matthew G. Robinson, Hazelwood; Immediate Past President: Mayor Randall Rhoads, Lee's Summit; Eric Berlin, City Administrator, North Kansas City; Sally Faith, Mayor, St. Charles; Bill Falkner, Mayor, St. Joseph; Stephen Galliher, Mayor, Sedalia; DJ Gehrt, City Administrator, Platte City; Barry Glantz, Mayor, Creve Coeur; Tim Grenke, Mayor, Centralia; Debra Hickey, Mayor, Battlefield; *Bill Kolas, Mayor, Higginsville; Donald Krank, Council Member, Black Jack; Chris Lievsay, Council Member, Blue Springs; Paul Martin, Attorney, Olivette; *Norman McCourt, Mayor, Black Jack; Marcella McCoy, Finance Director, Harrisonville; Susan McVey, Council Member, Poplar Bluff; *Carson Ross, Mayor, Blue Springs; Robert Stephens, Mayor, Springfield; Scott Wagner, Council Member, Kansas City; Eileen Weir, Mayor, Independence; *Gerry Welch, Mayor, Webster Groves; Nici Wilson, City Administrator, Odessa *Past President AFFILIATE GROUPS Missouri City Management Association; City Clerks and Finance Officers Association; Government Finance Officers Association of Missouri; Missouri Municipal Attorneys Association; Missouri Park and Recreation Association; Missouri Chapter of the National Association of Telecommunications Officers and Advisors; Missouri Chapter of the American Public Works Association; Missouri Association of Fire Chiefs EDITORIAL Laura Holloway / Editor Lholloway@mocities.com Dan Ross, Richard Sheets, Lori Noe Contributing Editors The Review March/April 2017; Volume 82, No. 2 The Missouri Municipal Review (ISSN 0026-6647) is the official publication of the Missouri Municipal League state association of cities, towns and villages, and other municipal corporations of Missouri.

Publication office is maintained at 1727 Southridge Drive, Jefferson City, MO 65109.

Subscriptions: $30 per year. Single copies: $5 prepaid. Advertising rates on request.

Published bi-monthly. Periodicals postage paid at Jefferson City, Missouri.

Postmaster: Send form 3579 to 1727 Southridge Drive, Jefferson City, MO 65109.

To contact the League Office call 573-635-9134, fax 573-635-9009 or email the League at info@mocities.com.

Website: www.mocities.com. www.mocities.com

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FEATURE Review

by Kara Roberson

Wentzville, Missouri: The Crossroads Of The Nation

Peruque Valley Park

Wentzville offers a unique quality of life, with convenient proximity to the St. Louis metropolitan area and the benefits of a family-oriented community. Exceptional city services and safety forces, paired with an excellent school system, scenic parks and recreation facilities all ensure that Wentzville is a great place to live, work and explore.

Wentzville was founded in 1855 when the great movement of pioneers across the country, coupled with the expansion of the railroad, was reaching its peak. This movement prompted William M. Allen, a prominent landowner in western St. Charles County, to donate a tract of land along the railroad right of way to establish a train station to serve the community. The railroad construction pushed through Wentzville in 1856 and the first train arrived in 1857. The construction and building of the line was supervised by Erasmus Wentz. Wentz and Allen worked together to survey the town’s lots and streets. Later, Allen honored his good friend Mr. Wentz by naming the town after him. As the City expanded, the growth centered around the new railroad tracks that are still ever-present in historic downtown Wentzville. Wentzville was incorporated as a fourth-class city in 1872. Its present-day government is composed of an elected mayor and six aldermen, with an appointed city administrator.

In the heart of downtown, along the railroad tracks, is the City’s oldest standing residential building called the Dula House. The house, built in the mid-1800s, sits on the last lot

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of the original 1855 platted Village of Wentzville. Outside the Dula house, two wood carvings pay tribute to Wentzville’s rich history. The pipe carving honors Wentzville residents Robert and Caleb Dula, who operated two tobacco factories in Wentzville in the mid-to-late 1800s. The second carving honors Wentzville resident and six-term mayor J.C. Brown.

Brown also once occupied the Dula house.

Another point of pride in Wentzville’s history is that it is home to the nation’s very first Vietnam War Memorial.

The memorial was dedicated in December 1967 and is a fixture of the community. 2017 marks the memorial’s 50th anniversary and the site will receive an extensive makeover.

The memorial expansion will provide the site with the recognition it deserves and denotes it as a place to honor and remember those who served.

In the past 25 years, the population has grown from 4,700 to almost 40,000 residents. This super-charged residential growth has also meant a surge in businesses – including restaurants, hotels, retail establishments and more.

“Population growth has been met with a conscious

effort on the part of the City to invest in infrastructure, transportation needs, and the expansion of programs and services,” says City Administrator David Gipson. Adding new residents, in turn, has also spurred growth for the Wentzville Fire Protection District, the Wentzville School District and the St. Charles County Ambulance District.

While growth is certainly a key feature in present-day Wentzville, it is not the only thing that makes this community stand out. In fact, Wentzville residents rated several top-notch things about Wentzville in a 2016 Citizen Satisfaction survey.

As part of Wentzville’s ongoing effort to involve residents in its long-range planning process, the City retained ETC Institute of Olathe, Kansas, to administer the survey and gather input from residents about the quality of city services.

Eighty-two percent of the residents surveyed rated the overall quality of services provided by the City as “excellent” or “good.” This is significantly higher than the regional average of 54 percent and the national average of 56 percent.

Additionally, 85 percent of the residents surveyed also rated the overall quality of life in Wentzville as “excellent” or “good.”

Furthermore, residents rated safety in Wentzville very high.

Overall, 99 percent of residents feel “very safe” or “safe” walking alone in their neighborhoods during the day, and 98 percent feel safe walking alone in business areas during the day or in their neighborhoods in general. Perhaps the most telling, when asked about the most important reasons they chose to live in Wentzville, residents indicated these topthree choices: quality of public schools, safety and security, and quality of housing.

“We’re the fastest-growing city in the state right now for a number of reasons, and we also have the lowest unemployment rate,” notes Wentzville Mayor Nickolas Guccione. “Wentzville’s continued growth,” the Mayor says, “can be attributed to a dedicated and visionary city government and staff, coupled with involved community members and vibrant businesses who are working together

A train heads through Wentzville at sunrise.

to prepare Wentzville for the future.” New businesses around town have visually marked this continued growth, as well as a new City Hall site, new medical buildings, new parks, new schools, new fire stations and much more.

Parks And Recreation New single-family home construction permits issued in 2016 totaled 663. Coupled with Wentzville’s median age of 35.2, this equates to many young families who make up this vibrant community. Wentzville has made a concerted effort to embrace these young families and residents of all ages, through its parks and recreation programs and events.

One of the City’s newest parks is Heartland Park, featuring several synthetic and non-synthetic soccer/football fields, two miles of trail, and the newly added Storybook Walk. This new amenity is a partnership between the City, the Friends of the Wentzville Parks, and the St. Charles County Library District that brings a storybook to life along the trail.

The City is currently working with Unlimited Play to design an all-inclusive playground at Heartland Park. The design, a miniature replica of Busch Stadium in St. Louis, was approved earlier this year, with construction expected in 2018.

2017 will mark the official opening of a new park in Wentzville – Peruque Valley Park. This scenic park, along the banks of Peruque Creek, features a baseball and softball complex and a two-mile trail.

A feasibility study for a multi-generational recreation facility has been approved and will be conducted later this year. Additionally, the parks and recreation department recently finalized its master plan. The plan will serve as a blueprint as the City strives to meet the needs and wishes of Wentzville residents over the next 10 years. The recommendations outlined in this master plan include both immediate needs of the City and long-term visionary actions.

Wood carvings near the Dula house in downtown Wentzville pay tribute to the City's rich history.

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Top left: Jakes Field of Dreams, Unlimited Play all-inclusive playground. Photo courtesy Unlimited Play.

Bottom left: A new City Hall building is under construction.

to benefit the community. The City is strategically located at the intersection of Interstate 70 and Highway 61 for companies desiring optimum access to rail, roadways and air transportation.

The mayor and board of aldermen have made downtown revitalization a strategic priority. There is a major effort to improve the infrastructure in the City’s historic downtown.

These infrastructure improvements have included new water and sewer lines, roadway improvements and lighting. The area has also received new landscaping, and a mural program is actively underway. The City has implemented a façadeimprovement grant program that provides matching funds to help improve the building exterior of historic structures.

The business community has responded with several new businesses locating recently within the downtown corridor.

Comprehensive Planning

High Quality Development City parks are not the only place changing in Wentzville.

Additional growth includes the opening of the second-largest building in St. Charles County, the Wentzville Logistics Center, that will add 400 net new jobs to the community.

Wentzville already houses the largest building in St. Charles County, the General Motors Wentzville Assembly Center, that is also the City’s largest employer, with approximately 5,000 employees.

“We’re not just developing to be developing,” said Economic Development Director Dan Lang. “I think it’s important to recognize that the City is on track to produce high-quality development in the coming years.”

Quality development is paramount as the City continues to expand with new homes and businesses, additional infrastructure and transportation improvements, and new parks and recreation facilities. The City has plans in place to make sure it will continue to be a great place to live.

In addition to the parks master plan, the City has recently finalized an economic development strategic plan. This plan is a targeted approach to economic development efforts in the city of Wentzville. The approach is designed to attract and retain specific businesses and industries, and promote strategies to optimize economic development opportunities

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A long-range outlook is also a key strategy in the City’s growth plan. The community development department is updating to the City’s comprehensive plan, last updated in 2013. The comprehensive plan is a long-range plan to help the City prepare and manage expected population and employment growth, as well as plan for and coordinate major public investments. It accomplishes these goals by providing direction for City decisions on land use, transportation, parks, sewer and water systems, economic development, and other topics. Periodic updates to the plan are needed to ensure it effectively represents the City’s goals and vision. Community development staff expects to complete this update by November 2017.

Wentzville is a vibrant city whose charm is exceeded only by the remarkable people who call it home. While times have changed, the friendliness and hospitality that recall a simpler era have not. In Wentzville, residents enjoy a way of life that contains not only the charming characteristics of a small town, but all of the amenities of a dynamic suburban environment.

Kara Roberson serves as the communications manager for the city of Wentzville. She has more than 16 years of professional marketing and communications experience, including nine years in municipal government. Learn more about the City at www.wentzvillemo.org.

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FEATURE Review

by Ron Steinkamp

The Reality Of Risk In Third-Party Contract Relationships Government organizations rely on outside third parties to provide the goods and services needed to operate effectively. Contracting with an outside third party can expose these organizations to significant risks.

Picture these scenarios: • A contractor prepared and submitted inflated i nvoi c e s an d f a l s e change orders for labor and materials on a project to build a water treatment plant for an agency, resulting in overbilling of $4.8 million.

• A municip a l gover nment contracted with a fire safety company to annually inspect and resize firefighter safety equipment.

However, the company failed to perform this critical function, putting the safety of firefighters in jeopardy.

• A freight merchant submitted false fuel and weight claims to the U.S. Government totaling $13 million for oversized air shipments when the standard load was actually delivered via ground transport.

Scenarios like these are just a few of the many risks affecting organizations that work with third-party vendors. As government organizations continue to rely on outside suppliers or service providers, potential exposure to risk and fraud increases.

What measures can an organization take to prevent and detect these

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scenarios? If you are unsure how to tackle this question, you are not alone. For many organizations, there is uncertainty regarding what actions to take to mitigate risk. A 2014 national study1 showed that while more than 65 percent of organizations rely heavily on third-party relationships, a large majority fail to allocate resources to assess potential associated risks.

7 Common Risks Of ThirdParty Relationships Navigating a third-party relationship is complicated for organizations in any industry, but especially in government.

Risks connected with third-party contracts pose a significant challenge to organizations of all types and sizes.

Every organization should be aware of and actively manage some of the most common third-party contract risks: • Reputation—Thirdparty contractor damages t h e r e p u t at i o n o f t h e organization through their actions or lack thereof.

• Performance—Thirdparty contractor fails to meet timelines and/or fails to perform in accordance with terms of the contract.

• Compliance—Thirdparty contractor fails to comply with laws and regulations governing the performance of the contract.

• Non-Conforming Goods—Thirdparty contractor delivers goods or services not conforming to contract specifications.

• Change Order Abuse—Third-party contractor increases the price, or extends and expands the contract scope, through the use of multiple change orders.

• Cost Mischarging—Third-party contractor charges the organization for costs (material or labor) not allowable, reasonable or allocable to the contract.

• Data Breaches—Third-par ty contractor, either intentionally or through the ineffectiveness of its information technology security and controls, mismanages critical organization or customer data.

How To Manage The Risks T h e h a r s h re a l i t y i s m a ny organizations do not have the necessary processes or safeguards in place to address key third-party contract risks. Establishing comprehensive procedures within an organization to ensure compliance of the contractor or supplier against the contract terms and conditions does not happen overnight.

To avoid paying the price down the road, start managing third-party contract relationships before signing on the dotted line. It is critical to take the following actions to protect your organization: 1. Include a “right-to-audit” clause – Make sure ever y contract signed has a right-toaudit clause included in the terms and conditions. The rightto-audit clause not only provides you with the contractual and legal right to conduct an audit of the outside parties’ compliance with the contract, but also puts them on notice that their records are subject to an audit and acts as a preventative control. The Association of Certified Fraud Examiners (ACFE) provides a sample right-to-audit clause that could be used as a starting point for developing your own.

2. E d u c a t e a n d e m p o w e r employees – Employees who play a role in your third-party contract relationships should be educated on the critical terms and conditions of each contract and empowered to ask questions. Provide them with an understanding of the risks, as well as the knowledge and ability to review and question invoices, change orders and good/service delivery.

3. Review internal controls – Ensure your internal checks and balances have been designed and are operating effectively to protect your organization from errors or potential wrongdoing by outside third parties. Some key controls include making sure

there is a formal process with proper segregation of duties for reviewing and approving: • Contracts; • Change orders; • Invoices/payment applications; • Receipt/acceptance of goods and services.

4. Assign a contract monitor – An employee or employees (depending on number of contracts) should be assigned the role of contract monitor.

Duties of the contract monitor should include: • Identifying critical terms, compliance requirements, scope, timelines and deliverables; • Assessing and monitoring the risks in the contract; • Establishing processes and internal controls to manage the risks; • Tracking and monitoring contract compliance, progress and timelines; and • Ensuring goods/services are

delivered in accordance with the contract.

5. Conduct periodic contract audits – Exercise the rightto-audit clause and include contract audit responsibilities within the scope of your internal audit function, or periodically contract with professional auditors to audit contracts for compliance and performance.

4 Key Steps To Conducting A Successful Contract Audit If you currently rely on third-party contractors or recently signed a contract, it is not too late for your team to conduct a contract audit. Proper risk management through a contract audit is critical to reign in risk, especially with organizations facing a myriad of security breaches in today’s evolving technological environment. With the right approach, you can keep your organization out of harm’s way. Here are four key steps to conducting a successful contract audit: 1. C ontract assessment and prioritization—Identify all key third-party contracts and

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Graphic courtesy of Brown Smith Wallace

risk factors. Assess each contract based on risk and prioritize.

Based on the prioritization, determine which of the higherrisk contracts you would like to audit and develop an audit schedule.

2. Contract audit planning— Review the contract and identify s cop e of work, ter ms and conditions, applicable laws and regulations, and payment terms.

Develop an audit plan focused on compliance, p ayments, performance and change orders.

3. Audit execution • Compliance review—Review contractor compliance with terms and conditions as well as applicable 10 theReview March/April 2017

laws and regulations. Examples include insurance, prevailing wage, diversity, bonding, lien waivers, permits and taxes.

• P a y m e n t r e v i e w — R e v i e w contractor invoices/payments for the following: • Compliance with contract terms; •

Appropriateness of labor, material, equipment, insurance, taxes, markups and other changes;

•

Adequacy, accuracy and completeness of support;

•

Duplicate and/or inappropriate charges;

•

I n t e g r i t y, a c c u r a c y and appropr i ate ne ss of subcontractor invoices;

•

Proper and timely payments to subcontractors; and

•

Appropriateness of retainage (if applicable).

• Performance review—Review key performance criteria based on contract specifications and deliverables including material specifications, level/expertise of labor, quality of deliverables, and delivery timelines.

• Change order review—Review change orders for compliance with contract terms and accuracy, including change orders that are appropriate, priced correctly and not duplicative.

4. Reporting—Report back to management on issues and make recommendations to resolve them.

How c on f i d e nt are you w it h your organization’s third-party risk management processes and controls?

To avoid harmful risks, confidence in your organization’s efforts is key to stay in front of potential errors and fraud.

Take the lead now in order to equip your organization with the right tools to monitor contracts. Ultimately, mistakes can happen, but your organization can save face and dollars by consistently monitoring third-party relationships to avoid potential errors.

Ron Steinkamp, CPA, CIA, CFE, CRMA, CGMA, CCA, CCP, serves as the partner in charge for Public Sector Advisory Services at Brown Smith Wallace. Contact him at 314-983-1238 or rsteinkamp@bswllc.com.

Endnote The Institute of Internal Auditors. “Managing Third-Party Risks.” Tone at the Top, Issue 67 (2014)

1

FEATURE Review

by Glenn Price

Liability Claims: 10 Tips And Reminders Insurance is not a city’s first language, and it should not be. Most communities rely on insurance professionals to provide accurate, up-to-date information so local officials and employees can address their primary jobs of running the city.

Liability claims for city operations can be frustrating, and they can run the gamut from workers’ compensation claims to bodily injury claims to errors and omissions on behalf of elected or appointed officials (and let’s not forget about those employment practices claims). All of these claims have different nuances and different laws that apply. Regardless of the line of coverage, there are some intrinsic reminders to keep in mind regarding your city’s approach to its exposures.

Whether your city is self-insured, belongs to a self-insurance pool or purchases coverage from a commercial insurer, many of the following points apply.

10)

Report all claims promptly – Even if you think the claim lacks merit, turning in a claim promptly can help ensure the adjuster is able to reach individuals involved before memories fade or facts change.

9) Documentation of risk management is key – Simply

saying that inspections or maintenance was done is not enough in today’s litigation. Being able to show that certain inspections or maintenance was performed on a certain date/time is crucial for the defense of claims.

8)

Liability claims are not paid at replacement cost value (RCV) – This might seem simple, but many claimants (and some insureds) believe that making the claimant whole is fully replacing their damaged property.

However, making the claimant whole means paying for the value of the damaged item at the time of the loss.

7)

A denial of liability is not a denial of coverage – Liability denial means the insurance provider does not believe the insured is legally liable for the damages caused in an accident. A coverage denial means that a particular accident has not triggered a condition of the insurance coverage by which a claim should be considered.

6) Videos and other recordings are priceless – Always maintain copies of any kind of recording (audio, visual, pictorial, etc.) for the claims or litigation process.

5)

Just because an injury occurs at work, does not automatically make it a compensable injury covered by workers’ compensation – The injury must arise out of and in the course and scope of employment.

4) Secure physical evidence to mitigate future

claims – Sometimes evidence is crucial for proving a claim. Securing the evidence in an enclosed, locked area and maintaining a chain of custody can prevent headaches from accusations of spoliation down the road.

3) Be aware of the publicity of certain claims – It

might be necessary to hire a PR firm in order to quell negative sentiment in your area. The city should always have an individual appointed as a spokesperson so that a single, approved message is disseminated from the city.

2)

E+R=O – If you’ve read Jack Canfield’s leadership materials, you recognize this formula. The formula stands for Events + Response = Outcome. Our response to incidents can have a dramatic effect on how a claim flows. Generally speaking, if city personnel respond well to an incident, from beginning to end, then the claim goes well. If city personnel respond poorly to an incident, then the claim does not go as well.

1) Know your coverage –

Be extremely aware of underlying excess or reinsurance conditions, guidelines and exclusions. Understanding your coverages will help you make the most of your protection and will provide a focus for the direction of your risk management efforts.

Glenn Price is the claims and litigation director for MIRMA. Contact him at gprice@mirma.org. Learn more at www.mirma.org.

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ATTENTION: MIRMA MEMBERS Contact MIRMA for more info: 573.817.2554

12 theReview March/April 2017

9:00 a.m.

REGISTRATION

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WELCOME - Brian Treece, Mayor, Columbia OVERVIEW MUNICIPAL GOVERNMENT - Allen Garner, Attorney, Allen Garner Law LLC

11:00 a.m.

CONDUCTING CITY BUSINESS - John Young, Attorney, Hamilton and Weber LLC

12:00 p.m.

LUNCH

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BUDGETS - DJ Gehrt, City Administrator, Platte City

2:15 p.m.

SUNSHINE LAW - Erin Seele, Attorney, Cunningham, Vogel & Rost

3:30 p.m.

LIABILITY AND RISK - Christine Bushyhead, Attorney, Bushyhead LLC

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COMMUNICATING THE VALUE OF PUBLIC SERVICE - Robert Wilson, Assistant Executive Secretary/Member Services, LAGERs

4:45 p.m.

ADJOURN

5:30 p.m.

RECEPTION

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BREAKFAST

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KEYNOTE: “WHY EVERYTHING RISES OR FALLS WITH LEADERSHIP” Dr. Mike Mowery, President of Servant Leadership Implementation, Strategic Government Resources

9:15 a.m.

LOCAL REVENUE SOURCES - Eric Creach, Attorney, Gilmore and Bell

10:30 a.m.

ECONOMIC DEVELOPMENT - Sallie Hemenway, Director, Business and Community Service, Missouri Department of Economic Development

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ADJOURN

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13

LOCAL GOV Review

by Lynnette Kelly

It's Your Deal: Understanding The Roles And Responsibilities When Issuing Municipal Bonds Financing a public project with municipal bonds is a team effort where many professionals work together to achieve the goals of a municipality. However, as government officials consider issuing municipal bonds in 2017, keep in mind that it is your deal.

You are the stewards of taxpayer dollars, and you make the decision to borrow. You decide whether to hire a municipal advisor to act as your fiduciary and you select the underwriter through the process, competitive or negotiated, of your choice. Throughout the life of any municipal bond, you assume responsibility for providing investors with information that is timely, accurate and complete.

While the issuance of municipal bonds is your deal, municipalities have an important ally in the Municipal Securities Rulemaking Board (MSRB), the national regulator responsible for promoting a fair and efficient municipal securities market. Protecting municipal bond issuers is a central aspect of the MSRB’s mission. The MSRB does not regulate state or local governments; its rules are designed to make sure you are treated fairly by the underwriters and with the utmost good faith by municipal advisors you hire.

The MSRB also operates a public platform called the Electronic Municipal Market Access (EMMA®), website that is your key to accessing important information about the municipal market and communicating information to investors. Additionally, the MSRB provides free, objective educational materials for municipal issuers.

Since issuing bonds may be an occasional event for certain communities, it is helpful to understand how the MSRB can support you when you decide to issue bonds.

The Decision To Borrow The decision to access capital from the $3.8 trillion municipal securities market is always handled at the state and local level. Government officials have a responsibility

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to their taxpayers to make informed decisions about how to finance a public project. Understanding conditions in the municipal securities market and evaluating your locality’s existing bonds are important steps in the decision to borrow.

The MSRB’s EMMA website provides free access to information and data about the municipal market and nearly all existing municipal bonds. Before deciding to issue bonds, visit EMMA’s Tools and Resources page to see what issues are scheduled to come to market and how they are priced, monitor the trade activity of your locality’s existing bonds and view upcoming federal economic reports or other events that can have an impact on the municipal bond market.

Working With Financial Professionals Once a municipality has decided to issue bonds, an important step is assembling a team that may include municipal advisors and underwriters. Check the MSRB’s website at www.msrb.org to ensure that any firm you are considering is properly registered with the MSRB and that individual professionals have passed the appropriate professional qualification examinations. Working with unregistered or unqualified financial professionals puts a municipality at risk.

MSRB rules and professional qualification requirements are designed to ensure the advice you receive from a municipal advisor is in the municipality’s best interest. MSRB rules require underwriters working with a municipality to deal fairly, disclose potential conflicts of interest and honor your wishes about some of the ways bonds are marketed and distributed to investors. You can read more about protections for municipal bond issuers in the Education Center on the MSRB’s website. If at any time you suspect a municipal finance professional of violating MSRB rules or acting unfairly, report it to the MSRB by phone at (202) 838-1330 or by email to complaints@msrb.org. The MSRB will forward your complaint to the appropriate enforcement authority.

Continuing Disclosure

Professionals Involved in a Negotiated

Once a municipality’s bonds have Municipal Bond Transaction been issued, it is the municipality’s responsibility to provide investors with required, ongoing material Municipal Underwriting i n for m at i on i n a t i m e l y an d Selling Group Other Advisor(s) Syndicate Underwriter(s) Members* Counsel* complete manner. Annual financial Member and operating information, notices State and of major events that may affect Underwriter’s Feasibility Auditor Trustee Local Deal Table Counsel Consultant* bondholders, and other information Governments is essential to helping investors make fully informed decisions about buying, Credit Rating Disclosure Enhancer* Agencies Counsel* Bond selling or holding a municipality’s Counsel bonds. The MSRB’s EMMA website serves as the official platform to disclose this information to investors.

This chart illustrates the various professionals involved in a negotiated municipal bond financing transaction. * The type, size and feature of the bond transaction will determine the participation of these professionals.

Municipalities can schedule free email reminders from the MSRB More information about issuing municipal bonds and making continuing to alert key individuals of upcoming disclosures is available in the MSRB Education Center at MSRB.org. filing deadlines. The MSRB also offers free phone support, how-to videos and educational resources to support state and local governments advantage of these tools and resources to help you make with understanding and fulfilling their continuing disclosure informed decisions about issuing municipal bonds and obligations. communicating with investors.

Whenever a municipality decides to issue bonds, Lynnette Kelly is the executive director for Municipal Securities remember – it’s your deal, and the rules and resources of Rulemaking Board. Learn more at www.msrb.org. the MSRB are there to help ensure the process is fair. Take

Experts in Municipal Bond Financing Carl Ramey | (314) 342-2242 | rameyc@stifel.com Martin Ghafoori | (314) 342-8467 | ghafoorim@stifel.com Brittany Pullen | (314) 342-2936 | pullenb@stifel.com 501 North Broadway | St. Louis, Missouri 63102 Stifel, Nicolaus & Company, Incorporated | Member SIPC & NYSE | www.stifel.com/publicfinance

www.mocities.com

15

LOCAL GOV Review

by Lisa Soronen

Supreme Court Midterm Review For Local Governments This article covers cases of interest to local governments that the Court accepted after Sept. 15, 2016, and agreed to hear this term. The Court is still down one Justice, but has accepted as many cases as usual (about 75) on its 2016-2017 docket. In theory, all the cases discussed below will be decided by June 30, 2017.

Provocation In Los Angeles County v. Mendez,* the Supreme Court must decide whether to accept or reject the Ninth Circuit’s “provocation” rule. Per this rule, “where an officer intentionally or recklessly provokes a violent confrontation, if the provocation is an independent Fourth Amendment violation, he may be held liable for his otherwise defensive use of deadly force.”

It is undisputed that police officers used reasonable force when they shot Angel Mendez. As officers entered unannounced, the shack where Mendez was living, they saw a silhouette of Mendez pointing what looked like a rifle at them. Yet the Ninth Circuit awarded him and his wife damages because the officers didn’t have a warrant to search the shack, thereby “provoking” Mendez.

The Mendezes also argue that, putting the provocation theory aside, the officers are liable in this case because their unconstitutional entry “proximately caused” them to shoot Mendez. Many Americans own guns, so the Court argued it is reasonably foreseeable that, if officers barge into a shack unannounced, the person in the shack may be holding a gun.

Qualified Immunity United States Border Patrol Agent Jesus Mesa, Jr., shot and killed Sergio Adrian Hernandez Guereca, a 15-yearold Mexican national, who was standing

16 theReview March/April 2017

on the Mexico side of the U.S.-Mexico border. At the time of the shooting, Agent Mesa didn’t know that Hernandez was a Mexican citizen.

One question in Mesa v. Hernandez is whether qualified immunity may be granted or denied based on facts unknown to the officer at the time of the incident, such as the victim’s legal status. The Fifth Circuit granted Agent Mesa qualified immunity based on the fact that Hernandez was a Mexican citizen even though Agent Mesa didn’t know that at the time of the shooting.

Given the rapid pace of police work, it is not unusual for officers to learn a variety of information after they have used force that supports their qualified immunity claim (i.e. the person they shot had a gun, had threatened another officer or citizen, etc.). Considering this kind of after-the-fact information in the qualified immunity analysis would be favorable to officers.

However, the question in this case is whether qualified immunity may be granted or denied based on facts discovered later. In some cases, officers may learn after-the-fact information that undermines their claim for qualified immunity (i.e. the person they shot stated he had a weapon but did not, had been mistakenly perceived to have threatened another officer or citizen, etc.). Considering this kind of after-the-fact information in the qualified immunity analysis would be unfavorable to officers.

Free Speech During the fall, the Supreme Court accepted three First Amendment free speech cases. This is not good news for local governments, as the Supreme Court routinely and sometimes unanimously votes against states and local governments in First Amendment free speech cases.

Packingham v. North Carolina* is probably the First Amendment case of most interest to local governments as the Supreme Court is likely to discuss whether the statute at issue in the case is content-based or content-neutral.

The issue in this case is whether a North Carolina law prohibiting registered sex offenders from accessing commercial, social networking websites, where the registered sex offender knows minors can create or maintain a profile, violates the First Amendment.

Lester Packingham was charged with violating the North Carolina statute because he accessed Facebook.

In the posting that got him in trouble, Packingham thanked God for the dismissal of a ticket.

If a statute limits speech based on content, it is subject to strict (nearly always fatal) scrutiny. In Reed v. Town of Gilbert, Arizona (2015), the Supreme Court held that the definition of content-based is very broad.

The North Carolina Supreme Court concluded that the statute is a “contentneutral” regulation because it “imposed

a ban on accessing certain defined commercial, social networking websites without regard to any content or message conveyed on those sites.”

Waters Of The U.S. The Supreme Court has agreed to decide whether federal courts of appeals versus federal district courts have the authority to rule whether the “Waters of the United States” (WOTUS) regulations are lawful in National Association of Manufacturers v.

Department of Defense.

Per the Clean Water Act, a number of decisions by the Environmental Protection Agency (EPA) Administrator must be heard directly in federal courts of appeals, including agency actions “in issuing or denying any permit.”

A definitional regulation like the WOTUS regulation does not involve the issuing or denying of a permit.

Nevertheless, the Sixth Circuit Court of Appeals concluded that it has jurisdiction to decide whether the WOTUS regulations are lawful.

ROAD & BRIDGE

DESIGN

TRAFFIC

Judge McKeague, writing for the court, relied on a 2009 Sixth Circuit decision National Cotton Council v. EPA, holding that this provision encompasses “not only … actions issuing or denying particular permits, but also … regulations governing the issuance of permits.” The definition of WOTUS impacts permitting requirements.

… And More The work of the Supreme Court never ends. The Court has already accepted one case for next term involving a local government. In District of Columbia v. Wesby, the Supreme Court will decide whether, when the owner of a vacant house informs police he has not authorized entry, an officer assessing probable cause to arrest those inside for trespassing may discredit the suspects’ claims of an innocent mental state. *Indicates a case where the SLLC has filed or will file an amicus brief.

ENGINEERING

TRANSPORTATION

PLANNING

WATER

RESOURCES

LAND

ACQUISITION

411 N 10th Street, Suite 200 St. Louis, Missouri 63101 5650 Mexico Road, Suite 2 St. Peters, Missouri 63376

Lisa Soronen is the executive director of the State and Local Legal Center (SLLC), that files Supreme Court amicus curiae briefs on behalf of the Big Seven national organizations representing state and local governments.

She is a regular contributor to CitiesSpeak, the blog for the National League of Cities.

www.lochgroup.com

This article reprinted with permission from the author. Find a link to the full post on the CitiesSpeak blog at https://citiesspeak. org/2017/02/23/supreme-court-midtermreview-for-local-governments-2017/.

www.mocities.com

17

LOCAL GOV Review

by National League of Cities

City Rights In An Era of Preemption: New Report Examines Seven Critical Policy Areas In February 2017, National League of Cities (NLC), in partnership with the state municipal leagues, released a new report entitled, “City Rights in an Era of Preemption.” The report examines the prevalence of state preemption across the country in seven key policy areas: minimum wage, paid leave, antidiscrimination, home sharing, ride sharing, municipal broadband, and tax and expenditure limitations (TELs).

“Preemption efforts – where state law nullifies a municipal ordinance or authority – lead to a loss of local control and can have far-reaching economic and social impacts in our communities,” said NLC’s CEO and Executive Director Clarence E. Anthony. “Local leaders should

be empowered to adapt policies to meet the needs of their residents, ensuring cities have the tools they need to build stronger economies, promote innovation and move the country forward.”

In recent years, the report finds that state legislatures have gotten more aggressive with preemption efforts. Preemption bills often concern politically divisive issues and rely on single party dominance to pass through state legislatures.

As of the 2016 election cycle, Republicans have 25 government trifectas, meaning they control both legislative chambers and the governor’s office, while Democrats have trifectas in six states and control a larger portion of city halls.

States can preempt cities from legislating on issues either by statutory or constitutional law, and in some cases, court rulings.

“Our research points to the complex, and sometimes tenuous,

THE REPORT FINDS: • 24 states preempt local minimum wage ordinances; • 17 states preempt local paid leave ordinances; • 3 states explicitly preempt local anti-discrimination ordinances; • 37 states limit local authority to regulate ride sharing; • 3 states limit local authority to regulate home sharing; • 17 states preempt localities from establishing municipal broadband service; • 42 states limit local fiscal authority through tax and expenditure limitations (TELs).

18 theReview March/April 2017

"

Local leaders should be empowered to adapt policies to meet the needs of their residents, ensuring cities have the tools they need to build stronger economies, promote innovation and move the country forward. ~NLC CEO and Executive Director

"

Clarence Anthony

relationship between cities and state legislatures,” said NLC’s Senior Executive and Director of the Center for City Solutions and report coauthor Brooks Rainwater. “People who live in cities want control over their own destinies and when states seek blanket policies that run counter to the values of its municipalities, local leaders do not stand down. We see many instances where state-level politicians work to usurp the will of people in cities both through preemption and Dillon’s Rule provisions. As a result, the work of city leaders and the mandate of the people is undermined.”

NLC recommends that cities facing preemption challenges should engage in active communication with their state legislatures, choose preemption battles wisely, and address the preemption narrative directly.

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Find the full report at nlc.org/ preemption.

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www.mocities.com

19

FAQ: What Is A Use Tax?

by League Staff

Every workday your Missouri Municipal League staff answers dozens of questions on municipal issues. This column provides an opportunity to share some of the most frequently asked questions. The recent announcement by Amazon that it will collect Missouri taxes has resulted in a deluge of calls to League headquarters about the use tax. In this issue, the FAQ will focus on the use tax, as well as local sales tax on the titling of motor vehicles. Some of the information in the column comes from the information available on the Missouri Department of Revenue’s website. As with all legal matters, municipal officials are urged to consult their city attorney for guidance for the specific challenges faced by their municipality. Answers provided in this column should serve only as a general reference.

What Is A Use Tax?

In the simplest terms, a use tax is a sales tax imposed on the purchase of goods by Missouri residents from outof-state vendors. The use tax is applied to the same type of products subject to traditional sales tax. The difference is where the goods are purchased and shipped. When individuals make purchases at retail stores in Missouri, they pay the sales tax that is applicable at that location. On the other hand, purchases by Missouri residents from out-of-state vendors that are shipped to Missouri are subject to a use tax. The state use tax rate is 4.225 percent, the same as the sales tax rate. Cities and counties may impose an additional local use tax. The amount of use tax due on a transaction depends on the combined (local and state) use tax rate in effect at the Missouri location where the tangible personal property is delivered. While the sales tax rate is based on the point of sale, the use tax rate is determined based on the point of delivery.

What Is The Rate Of The Use Tax?

The state of Missouri imposes a use tax at 4.225 percent, the same as the state retail sales tax. Local jurisdictions that have the power to impose a sales tax also may impose a use tax. The local use tax rate is imposed at the same rate as the total of the jurisdiction’s local option sales taxes. If a local sales tax sunsets or is repealed, the use tax would decrease in an amount equal to the sales tax that

20 theReview March/April 2017

repealed. Likewise, if the voters of a city approve a new sales tax the use tax would go up by the amount of the new local sales tax.

What If I Buy Something From A Missouri Retailer Using The Internet; Will The Use Tax Apply?

No. The use tax does not apply to purchases made by Missouri residents from a Missouri retailer. The use tax applies to purchases from out-of-state vendors only. If a Missouri resident buys a product from a Missouri vendor over the Internet, the sales tax based on the vendor’s location would apply to the purchase.

Will The Use Tax Apply To Every Purchase Made From Out-OfState Vendors?

Yes. If the goods purchased are subject to a sales tax when purchased at retail, the use tax applies. That being said, the collection of the tax is not universal.

The Missouri Department of Revenue requires out-of-state vendors that have “nexus” in Missouri to collect and remit use tax. Nexus may include having any of the following in Missouri: an office; an employee present more than two days a year; goods in a warehouse; ownership of real or personal property; or delivery of goods to Missouri via vehicles owned by the taxpayer. Out-of-state vendors who do not fall into those categories often do not collect the use tax. If an out-of-state seller does not collect use tax from the

purchaser, the purchaser is responsible for remitting the use tax.

Now That Amazon Has Announced It Will Collect Missouri Tax, Won’t Our City Revenue Increase?

Only cities that have passed the local optional use tax can expect a revenue increase from Amazon sales.

Would Passage Of The Federal Marketplace Fairness Act Make Passage Of A Local Use Tax Unnecessary?

No. The Marketplace Fairness Act is federal legislation that would require vendors across the nation to collect the use tax on behalf of their consumer’s state of residence. Only cities that have passed the use tax would benefit from such federal legislation. Even if the federal government passes Marketplace Fairness, state-level action will be needed to standardize Missouri’s state and local sales taxes. Issues such as product exemptions, sales tax holidays, and domestic utilities will likely need to be resolved.

What About Vehicle Purchases?

Are They Treated Differently Than Other Purchases?

Yes. The purchase of vehicles, trailers, boats and outboard motors are treated differently than other retail purchases.

The sales tax on these purchases is

assessed based on the location the item is registered. When Missouri residents purchase a car at an auto dealership, no sales tax is paid on the purchase at that time. When the resident goes to license the vehicle, trailer, boat or outboard motor with the Missouri Department of Revenue, the local sales tax will be imposed based on the address of the registrant.

What Was The Street Decision?

On Jan. 31, 2012, the Missouri Supreme Court ruled in Street vs. Director of Revenue, 361 S.W.3d 355, that purchases of vehicles, boats, trailers and outboard motors from out-of-state vendors should be exempt from the local sales tax. The Court ignored the special legislation that had been built around vehicle purchases to insure that all cities shared in the sales distribution on vehicle sales instead of only those with dealerships. The Court found that only residents of cities with a local use tax could collect local sales tax on vehicles purchased from out of state. Purchases from Missouri auto dealerships were still subject to the local sales tax. The Missouri Department of Revenue estimated that approximately 20 percent of vehicle (and trailers, boats and outboard motors) sales occur from out-of-state vendors or person-to-person sales, and this would result in a loss in revenue to local jurisdictions of approximately $20.5 million. The Missouri Department of Revenue provided data showing the estimated loss to each city. A copy of this document is on the League’s website.

What Was The Response To The Street Decision?

In response to this momentous court decision, the Missouri Municipal League (MML) sought relief from the Missouri Legislature. In 2013, the Legislature passed SB 182. This legislation reimposed the local sales tax on vehicle sales (and person-to-person sales).

Initially, the legislation required that cities that did not have a use tax in place prior to August of 2013 must receive voter approval to continue this administrative fee by November of 2016.

Legislation that passed in 2016 extended this deadline to November 2018. Cities that do not gain voter approval to continue the tax by November 2018 will lose the revenue stream after that date.

RESPONSIVE TO YOU. DEDICATED TO YOUR COMMUNITY.

816-525-7881 www.laubermunicipallaw.com

The choice of a lawyer is an important decision and should not be based solely on advertisements.

What Does Our City Need To Do To Plug the Street Decision Loophole?

It appears there are two options; a use tax or the continuation of the sales tax of licensing of vehicles. Both measures require passage of an ordinance calling for the issue to be brought before the voters. (MML has sample ordinances.)

Legislation passed in 2016 appears to provide that a new use tax will capture out-of-state vehicle sales revenue. Prior to this legislation, the belief was that because SB 182 (passed in 2013) referred to municipalities “in which voters have previously approved a local use tax,” a newly passed use tax would not capture the out-of-state vehicle sales. The 2016 legislation deleted the word “previously” from this clause (32.087.5 (2) RSMo).

Municipal leaders considering their options for closing the Street decision loophole are strongly encouraged to consult with their city attorney regarding the appropriate action to take.

What Has the Missouri Municipal League Done To Address The Street Decision Loophole?

League staff, together with the Missouri Automobile Dealers’ Association and municipal officials across the state worked tirelessly to see SB 182 passed.

This legislation has prevented the loss

of approximately $40 million in muchneeded revenue for Missouri cities.

How Much Revenue Will A Use Tax Generate?

The Missouri Department of Revenue’s website includes a Public information Report page (http://dor.mo.gov/ publicreports/#pubtax ). Here users may download a report of the annual gross sales by city and year that were subject to the use tax (sales tax data is also available). Multiplying this gross sales number by the municipalities local sales tax rate will provide a rough estimate of how much revenue the use tax can provide. MML has done this calculation for all cities with a sales tax for 2015 and this worksheet is available on the MML use tax webpage.

Where Can We Get Ballot Language Or Sample Ordinances For The Motor Vehicle Sales Tax?

The Missouri Municipal League has prepared model ordinances for both the use tax and the vehicles sales tax. These ordinances are available on the League’s website at www.mocities.com; or you may contact League headquarters at (573) 635-9134 and request a copy.

www.mocities.com

21

Missouri LAGERS

You work hard for your community.

We work hard for YOU.

@mocities www.facebook.com/mocities www.linkedin.com/company/mocities www.mocities.com (573) 635-9134

LAGERS members work hard. And each month of hard work helps them get a little closer to a dignified, secure retirement. LAGERS members are thousands of police officers, firefighters, librarians, utility & maintenance workers, and other public servants located in every corner of Missouri, serving their communities everyday.

Visit www.molagers.org to learn more.

1-800-447-4334 Missouri Local Government Employees Retirement System

NEW! REGISTER TODAY FOR MML WEBINARS!

"I learned so much that broadened my perspective as a city councilperson and some areas where we need to improve."

~Deanna Guy, City Council, Richmond

Coming Up! April 5, 2017: Personnel Law, David Davis, Davis Law, LLC April 19, 2017: Use Tax Explained, Stuart Haynes, MML Policy and Membership Associate May 11, 2017: The Need For Servant Leadership, Dr. Mike Mowery, Strategic Government Resources Both the April 5 and May 11 webinars will satisfy and provide credit needed for the Municipal Governance Institute (MGI) certification. Missed a webinar? Previous webinars are available to watch. Registration cost is $10 per webinar. Learn more at www.mocities.com/webinars.

22 theReview March/April 2017

GETTING TO KNOW YOU In this issue, St. Joseph Mayor Bill Falkner and Creve Coeur Mayor Barry Glantz share some thoughts about their local government service.

Both have recently been elected to the MML Board of Directors.

Mayor Bill Falkner St. Joseph, Missouri

What Sparked Your Interest In Local Government?

Falkner: I didn’t agree with the way things were being done for the construction trades.

Glantz: I've always felt that it is important to "give back" to the community - whether professionally, civically or charitably. It is important to balance individual success with the ability to give to others.

Mayor Barry Glantz Creve Coeur, Missouri

sustainable municipal government depends on engaged people willing to respectfully discuss numerous issues affecting the quality of life. We need deliberate, thoughtful people involved to help make informed decisions.

medical institutions, and a flourishing plant science/agricultural industry that is home to some of the top companies from around the world.

In Your Opinion, What Are The Most Important Issues Facing Local Government Today?

Falkner: Family (grandsons), church, business golf.

Falkner: Federal mandates and lack of funding.

What Has Been The Toughest Lesson You Have Learned During Your Career In Local Government?

Glantz: Local control versus federal and state mandates. Government works best when it is closest to the people it serves.

Falkner: It has been tough dealing with how slow the process can be to get things done.

How Would You Describe Your City To Someone Who Has Never Visited?

Glantz: As much as we try at times - it is very difficult to make everyone happy.

Falkner: St. Joseph has a great park system, historic architecture and small town feel.

What Advice Would You Offer To Someone Considering Services As A Local Government Official In Their Community?

Falkner: Start serving on boards and attend work sessions and meetings to see if it is something you might like to do.

Glantz: Whether people agree or disagree on various issues, good,

Glantz: Creve Coeur is strategically located in the near west suburbs of St. Louis - 15 minutes from everywhere! We are fortunate to have a terrific balance between our wonderful residential neighborhoods and a vibrant, thriving business community. In addition, we are home to terrific parks and recreational facilities, top-rated schools, premier

What Are Your Interests Outside Of Local Government?

Glantz: Golf, tennis, photography and travel.

Where Would You Most Like To Travel, And Why? Falkner: Hawaii. I would like to relax, enjoy the scenery and golf.

Glantz: I've been so fortunate to travel extensively throughout the nation and expanding across the globe. I would like to visit Peru / Machu Picchu / the GalĂĄpagos Islands.

MML would like to learn more about your local government career! If you would be interested in participating with the Review's "Getting To Know You" feature, contact Laura Holloway at Lholloway@mocities.com.

www.mocities.com

23

MML 47th Annual Legislative Conference Hundreds of Missouri local municipal officials gathered for the 47th MML Legislative Conference at Capitol Plaza Hotel and Convention Center in Jefferson City, Missouri, Feb. 14-15, 2017. This is an important conference each year where local officials learn about current legislation affecting local government and lobbying efforts.

State officials and policy experts spoke about the Missouri Study Commission on Tax Policy, internet Sales Tax, economic development and more. Attendees took time to visit their legislators at the Missouri State Capitol Building to share municipal needs and concerns with their representative and senator.

24 theReview March/April 2017

www.mocities.com

25

NEWS From The Bench

by Kenneth Heinz

Municipalities Must Be Careful With Improvement Plans Mu n i c ip a l it i e s i n t h e s t ate of In the second point on appeal, the court Missouri that are engaged in municipal addressed the issue of what evidence needs improvement programs need to be ...municipalities would to be provided to establish damages with aware of the recent decision in Penzel reasonable certainty. The court examined be well advised to take Construction Company, Inc. v. Jackson two proposed methods of determining R-2 School District, E.D.103878 (Feb. damages, the total-cost method and the additional steps, such as 14, 2017). This case was decided by modified total-cost method. Under the new contract language, to the Missouri Court of Appeals Eastern total-cost method, the contractor would District. calculate his damages by subtracting his protect themselves with bid from the total costs he incurred to fulfill In an exhaustive 42-page opinion, the building contracts against the contractual obligations. The modified court concluded that a Spearin claim is total-cost approach operates in a similar claims based on implied an acceptable vehicle for bringing a cause manner but it reduces any additional costs of action in Missouri. The court also warranties. attributable to the plaintiff ’s own errors. approved the modified, total cost method The court favored the modified total-cost for damages in this case. method as compared to the rigid all-orThe claim was made by a construction nothing approach of the total-cost method. The court noted, contractor against the school district based on a breach of however, that even under the modified total-cost method, the implied warranty for furnishing “deficient and inadequate calculation of damages is merely a starting point subject to plans with specifications” for a construction project. The adjustments. The court found that the plaintiffs had produced plaintiff claimed that the school district impliedly warranted sufficient evidence for a jury to determine the fact of damages that the plans furnished were adequate for completing the and the amount of damages. The court again rejected the trial project and that the district breached the implied contract; court’s determination regarding summary judgment. thereby, causing damages to plaintiff. The court relied on a As is the case in many other situations involving U.S. Supreme Court Case entitled U.S. v. Spearin, 248 U.S. 132 (1918), wherein the U.S. Supreme Court found the municipalities, a governmental entity is no longer solely government offered a warranty implied by law to a contractor governed by its express contract as stated by Section 432.070 that the plans it rendered were adequate for him to perform RSMo. Without legislative guidance, courts have expanded the work. The trial court granted summary judgment in favor the concept of implied agreements for municipalities leading of the defendant’s district. The court discussed the Spearin to more exposure for litigation. The decision is still subject case and concluded that it is in accordance with the principles to rehearing or transfer to the Missouri Supreme Court that established by Missouri precedent. The court also concluded may choose to hear the matter and if so, may adopt or reject that the plaintiffs presented sufficient evidence to show that the decision of the Missouri Court of Appeals. In any event, the plans were “defective” within the meaning of Spearin. The municipalities would be well advised to take additional court pointed out that the Spearin doctrine places a risk of steps, such as new contract language, to protect themselves loss stemming from defective plans with specification on the with building contracts against claims based on implied owner who provides the plans to the contractor. The owner warranties. is in a better position to assess the plans and to prevent losses NOTE: In an update to a matter previously reported in this column, from occurring. The court noted that the owner could bring the Missouri Court of Appeals Eastern District upheld the trial court’s a claim against architects or subcontractors if the owner rejection of an attempt by the County Executive of St. Louis County to sustains damages due to their negligence or breach of contract. assert control over municipal law enforcement. See City of Olivette vs. St. The court noted in a footnote that the contractor would Louis County, E.D. 104432 (1/10/17), the County of St. Louis has decided have a duty to inquire as to inconsistent specifications and not to litigate the matter any further. ambiguities if the plan includes obvious glaring defects. The Kenneth J. Heinz is a principal with Curtis, Heinz, Garrett & O'Keefe, court concluded that the plaintiff had satisfied its burden as to evidence presented and that summary judgment should not P.C. Heinz serves as general counsel for several communities. Contact the firm at 314-725-8788 or www.chgolaw.com. have been granted to the defendant’s district.

"

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26 theReview March/April 2017

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MEMBERS' Notes

Blue Springs Mayor Carson Ross Recognized At Missouri State Capitol

MML Calendar of Events March 20-24 ����� Missouri General Assembly Spring Break

April 4 ����� Municipal Election Day 5 ����� MML Webinar: Personnel Law 12 ����� Missouri Partners In Governance Conference, Columbia, Missouri 19 ����� MML Webinar: The Missouri Use Tax 30-May 6 �� Missouri Local Government Week

May 1-3 ����� Main Street Now, Pittsburgh, Pennsylvania 3-5 ����� MCMA Annual Spring Conference, Lake Ozark, Missouri 8 ����� Harry S Truman's Birthday: MML Offices Closed 11 ����� MML Webinar: The Need For Servant Leadership 9-12 ����� MoGFOA Budget Boot Camp, Lake Ozark, Missouri 21-28 ����� National Public Works Week

June 8-9 ����� MML Elected Officials Training Conference, Columbia, Missouri 22 ����� MML Policy Committee Meetings, Columbia, Missouri

July

10 ����� MML Innovation Awards Deadline 14-16 ����� Missouri Municipal Attorneys Association Summer Seminar

22 ����� MML Resolution Committee Meeting, Jefferson City, Missouri

20 ����� MML West Gate Civic Leadership Banquet, Blue Springs, Missouri

Find more details on www.mocities.com and in the MML monthly e-newsletter.

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The Latest News section features the latest updates and achievements from member cities. If you have something to submit, please email Lori Noe at Lnoe@ mocities.com!

30 theReview March/April 2017

On Feb. 15, 2017, in recognition of Black History Month, Mayor Carson Ross was presented with a resolution by Missouri House Representatives Dan Stacy and Jeanie Lauer for being a Distinguished African-American who has made a difference through his work.

St. Louis To Raise Minimum Wage After Court Decision St. Louis will be able to raise its minimum wage to $11 by 2018, after the Missouri Supreme Court ruled Feb. 28, 2017, that the City acted within its charter authority when it approved the raise. The decision reverses a circuit court judge who struck down the increase in 2015, hours before it was set to take effect.

Great Places In Missouri Downtown Kirkwood, Tower Grove Park in St. Louis, and the 4th Street Corridor in Maryville have been chosen as “Great Places in Missouri” by the American Planning Association (APA) for 2017. The Great Places in Missouri program was started in 2014 to recognize neighborhoods, streets, and public spaces throughout Missouri that demonstrate exceptional character, quality, and planning attributes that enrich communities; facilitate economic growth; and inspire residents and visitors alike. The Great Places in Missouri program was modeled after APA’s Great Places in America Program that has recognized 260 neighborhoods, streets, and public spaces around the country since 2007.

Grandview Named Highly Accurate Forecaster When it comes to revenue forecasting, it appears Grandview gets it right.

Government Finance Officers Association (GFOA) named Grandview among nine cities it calls "Highly Accurate Forecasters" in a new guide for city economists.

"Informed Decision-Making Through Forecasting: A Practitioner's Guide to Government Revenue Analysis" examines the importance of economic forecasting in Government. GFOA also asked Grandview Finance Director Cemal Umut Gungor to contribute to the book.

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32 theReview March/April 2017