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Maryland Heights sues levee district, questions spending, tax collections

Maryland Heights sues levee district, questions spending, tax collections

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Missouri Highway 141 closed

Workers with the city of Maryland Heights and the Levee District lay lines to pump water out of the median on Wednesday, June 19, 2019 on Missouri Highway 141. The highway is closed on both sides from Creve Coeur Airport Road to Creve Coeur Mill Road due to flooding from Creve Coeur Lake. Photo by Colter Peterson, cpeterson@post-dispatch.com

MARYLAND HEIGHTS — Adding to the legal and financial woes of the Howard Bend Levee District, Maryland Heights has sued to recover over $112,000 it paid in 2019 levee taxes and accused the district of “unnecessary and excessive administrative costs.”

The lawsuit is the latest bit of intrigue over the future of a vast, low-lying area along the Missouri River long eyed by developers and protected by a levee district that, some allege, is in financial trouble.

Last year, one of the largest taxpayers in the levee district area, the Hollywood Casino, filed its own lawsuit disputing over $1 million paid in taxes to the district during 2018 and 2019. That lawsuit, which is pending, disputes how the levee district calculated its taxes and accuses the district of using casino payments for costs other than what Hollywood agreed to fund.

The casino says it believes the district has spent in excess of $5 million of Hollywood’s payments for nonpermitted expenses and should reimburse the company. Howard Bend denies the allegations.

Maryland Heights, which owns 13 parcels inside the district and has a representative on the district’s board, paid its 2019 taxes under protest. In its suit, the city alleges the district didn’t “provide a transparent process for the assessment of benefits” and didn’t provide copies of public documents “establishing the revenues and expenditures of the District.”

It also accuses the 8,500-acre levee district of “improper/nonexistent” notice of the levy and says the district lacks a “reasonable and effective means by which property owners within the district may be heard on District business, including construction projects, administrative costs, and the use of public funds.”

In addition, Maryland Heights says the levee district charges taxes that aren’t “uniform” among different property owners and the charges are an “abuse of the district’s taxing power.”

“The assessment of benefits and the levy of taxes by the District is not rationally related to the costs of District improvements needed to protect the properties located within the District, but instead such assessment and levy include unnecessary and excessive administrative costs,” the city said in its petition.

Levee districts are able to charge taxes to any property owner within their boundaries, including tax-exempt entities such as local governments.

Property owners in the Howard Bend area have previously brought up concerns with the district’s finances and the lack of stormwater and pump station infrastructure, which, though protected from the river, floods after heavy rainfall. Maryland Heights Mayor Mike Moeller, among others, has questioned high engineering fees and the hundreds of thousands of dollars in annual legal fees paid to Howard Bend’s longtime lawyer, David Human of Husch Blackwell. Human’s brother, Dan Human, was also on the district’s payroll as director for years, drawing fees of $60,000 a year for a total of at least $400,000.

David Human, who also headed the Monarch-Chesterfield Levee District and worked for more than 40 other flood protection projects throughout the Midwest, did not respond to a request for comment. The levee district’s director, Warren Stemme, also did not respond. A spokesman for Maryland Heights said the city was “protesting the method of assessment” but declined to comment further.

Last year, Maryland Heights proposed taking over management of the district. It asked St. Louis County, which also has a seat on the district board because of the county-owned Creve Coeur Lake Park, to cast its votes to give the city control. But the county declined to go along with the plan.

In January, St. Louis County representatives blocked a city proposal to create a tax increment financing district that could have used as much as $151 million in tax incentives for levee district infrastructure and private development subsidies. Maryland Heights filed a separate lawsuit last month in an attempt to overturn the decision.

The city’s suit against the levee district, filed last week, suggests Howard Bend’s “financial integrity may be at risk” because of potential mismanagement of the district, excessive administrative costs and projects with “doubtful benefit and utility.”

Because Howard Bend “may not have the financial ability and legal capacity to repay protested funds,” Maryland Heights asked that St. Louis County Collector of Revenue Mark DeVore not disperse the city’s protested 2019 taxes to the levee district.

Hollywood Casino won a temporary retraining order in February keeping the county from distributing its 2019 taxes, also paid under protest, to the levee district.

Howard Bend has argued in court it has the financial capability to repay any ordered refunds.

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