The opinion
SUPREME COURT OF MISSOURI
en banc
THE KANSAS CITY CHIEFS ) Opinion issued June 2, 2020
FOOTBALL CLUB, INC., )
)
Appellant, )
)
and )
)
JACKSON COUNTY SPORTS )
COMPLEX AUTHORITY, )
)
Intervenor-Appellant, )
)
v. ) SC97730
)
DIRECTOR OF REVENUE, )
)
Respondent. )
Petition for Review of a Decision of the Administrative Hearing Commission
The Honorable Sreenivasa Rao (Sreenu) Dandamudi, Commissioner
The Kansas City Chiefs Football Club, Inc., (the team) petitions this Court for
review of the decision of the Administrative Hearing Commission (AHC) holding it was
the “purchaser,” as that term is used in Missouri’s sales and use tax statutes, 1 of certain
items used in the renovation of Arrowhead Stadium and its related facilities and was,
therefore, liable for sales and use tax on those items. For the reasons set forth below, the
1
§ 144.605(6), RSMo 2000 (use tax); § 144.010.1(7), RSMo Supp. 2008 (sales tax).
AHC erred in determining the team was the purchaser of the contested items. The AHC’s
decision is reversed. 2
I. FACTUAL AND PROCEDURAL BACKGROUND
The team is a professional football club and member of the National Football
League. The team plays its home games at Arrowhead Stadium, part of the Harry S.
Truman Sports Complex located in Jackson County, Missouri. The county, a political
subdivision of the State, owns the complex and leases it to the Jackson County Sports
Complex Authority, itself a political subdivision of the State established by the county.
The legislature has given first-class counties such as Jackson County the power to create
sports complex authorities for the purpose of, inter alia, acquiring, constructing, operating,
and leasing sports complexes. See §§ 64.920, 64.940, RSMo 2000. The authority subleases
to the team portions of the sports complex, including Arrowhead, adjacent administrative
offices, and a separate training facility. By agreement, the team, as tenant, manages and
operates its subleased portion of the property. Other portions of the complex are leased to
the Kansas City Royals Baseball Corporation.
In 2006, the county, the authority, and the team forged an agreement that the county
would renovate Arrowhead and its related facilities. In consideration for the county’s
renovation, the team agreed to a 25-year extension of its sublease of Arrowhead and its
2
As the items were not taxable to the team in the first instance, this Court does not reach
the issue of ownership of the contested items or the applicability of the exemptions claimed
by the team for some or all of the items.
2
related facilities. 3 In undertaking the renovation, the county, the authority, and the team
worked hand-in-hand with the Missouri Development Finance Board (finance board), as
did the Kansas City Royals baseball team for the renovation of Kaufmann Stadium that
occurred at the same time. Generally speaking, the finance board exists to “promote the
economic development” of the State. § 100.270(3), RSMo 2000. The statutes governing
the finance board provide it with special tax credit and other funding mechanisms for
projects that economically benefit Missouri communities. See Missouri Development
Finance Board Act, § 100.250 et seq., RSMo 2000.
Pursuant to the renovation plan, the team executed the sublease extension, and the
county and the authority entered into a development agreement with the team for the
purpose of carrying out the “Arrowhead Stadium Expansion and Renovation Project” (the
project). The county then executed a trust indenture, which, in relevant part, created a
“project fund,” and the parties executed a tax credit agreement with the finance board
(collectively, the governing agreements). These governing agreements controlled the
ownership, operation, and funding for the project.
As to ownership, the development agreement specifically provided: “the County
shall own the Project for public purposes as provided herein.” § 4.01(a), Development
Agreement. The team as tenant was required to “manage and oversee the planning, design,
3
The 2006 sublease agreement amended an earlier sublease agreement executed in 1990.
The effectiveness of the 2006 sublease amendment depended on securing the funding for
the renovation. Specifically, it depended on the passage of a 3/8-cent county sales tax and
a commitment that the authority would receive “Missouri State Tax Credit revenues.”
§ 1.3, 2006 Sublease Amendment. Funding for the project is discussed further infra.
3
development, construction, completion and making operational of the Project in
accordance with the [governing agreements].” § 4.01(b), Development Agreement.
As for funding, the development agreement required both the team as tenant and the
authority/county as landlord/owner to make contributions to help fund, or to secure funding
for, the project. 4 The authority/county were to make their contributions through the use of
voter-approved taxes and the county’s sale of bonds. 5 The team agreed to make its
contributions through cash donations to the finance board in return for tax credits issued
by the finance board pursuant to section 100.286.6; 6 the finance board in turn agreed to
grant the cash donations to the project, and the team agreed to let the county sell the tax
credits issued by the finance board and make an additional donation of all proceeds from
the sale to the county for use in the project. The finance board agreed to this plan – to issue
tax credits and provide the donations to the project – based on its finding that the project
4
In this regard, the development agreement treated the authority and the county as the same
entity, stating: “Landlord/County intends to provide the funds for the Landlord/County’s
Capped Contribution ….” § 6.05(b)(i), Development Agreement. It further provides
“Landlord [the authority] and the County, with a financial contribution from Tenant [the
team], wish to complete [the project].” Recital E, Development Agreement.
5
The county issued special obligation bonds to raise money for the project. Jackson
County voters approved a 3/8 cent county-wide sales tax, which provided most of the
revenue needed to repay the bonds.
6
Section 100.286.6, RSMo 2000, provides, in relevant part:
Any taxpayer shall be entitled to a tax credit against any tax otherwise due
under the provisions of chapter 143, RSMo, excluding withholding tax
imposed by sections 143.191 to 143.261, RSMo, chapter 147, RSMo, or
chapter 148, RSMo, in the amount of fifty percent of any amount contributed
in money or property by the taxpayer to the development and reserve fund,
the infrastructure development fund or the export finance fund during the
taxpayer’s tax year [.]
4
provided substantial economic benefits to Kansas City, Jackson County, and the whole
State. 7
The project fund was an indentured trust account created between the county and
Wells Fargo Bank as trustee. The team was not a party to the indenture, which specifically
provided the monies in the project fund were county monies:
The following funds of the County are hereby created and established with
the Trustee:
….
(4) Project Fund, which shall contain a Chiefs Account (within the Chiefs
Account a Bond Proceeds Subaccount, a Non-Bond Proceeds Subaccount
and an Investment Earnings Subaccount) ….
§ 401(a)(4), Trust Indenture (emphasis added). 8
The governing agreements required disbursements for the renovation of Arrowhead
to be made from this project fund, which could be used for no purpose other than the
project. The trust indenture that created the project fund authorized only the trustee to
make disbursements from the fund, and the trustee was authorized to do so only after
7
The finance board found “[t]he benefits to be derived by the State of Missouri are
projected to exceed the benefits provided by the Board by this Agreement” by:
(i) enhancing tourism in Jackson County and the State of Missouri, (ii)
creating and retaining temporary and permanent jobs; (iii) retaining existing
jobs; (iv) increasing local and state tax revenues; (v) extending the useful life
of public facilities the voters of the County have determined to be of vital
importance to the County, and (vi) eliminating the risk of the Tenant
canceling the Amended Lease as a result of a failure of the Landlord to
provide or make available funds to adequately maintain Arrowhead Stadium.
§ 2.1, Tax Credit Agreement.
8
The team was a third-party beneficiary of the disbursement procedures established within
the trust indenture. § 6.05(d)(i), Development Agreement.
5
receiving the approval of the county and the authority. § 404, Trust Indenture.
The parties acted in accordance with the plan set forth in the governing agreements:
the team made cash donations to the finance board and received tax credits, which initially
were placed into the project fund created by the trust indenture. The county then sold the
tax credits to unrelated third parties. Proceeds from the sale, which the team donated to
the county for use in the project, were placed in the project fund by the project fund trustee.
After issuing the tax credits, the finance board disbursed the cash donations it received to
the project, and those funds were likewise deposited into the project fund. The tax credits,
in the hands of unrelated third parties, played no further role and were not a part of the
project fund when the contested items were purchased.
Although the development agreement delegated to the team, as tenant, the
operational responsibility for the renovation, both it and the trust indenture required the
team to follow a specified procedure and provide verifying documentation to obtain the
permission and approval of the authority as landlord and the county as owner for
disbursement or reimbursement of funds needed to acquire approved project items.
§ 6.06(c), Development Agreement; § 404, Trust Indenture; Ex. G, Development
Agreement. Many of the planned improvements to Arrowhead and its related facilities,
such as replacing the existing scoreboards with state-of-the-art scoreboards, were identified
as “minimum required project elements” and, therefore, had to be completed during the
project.
Before the renovation began, the team obtained a tax exemption certificate and
6
presented it to each vendor when ordering items for the project 9 and, therefore, did not pay
tax on project items. After completion of the project, the Director of Revenue conducted
a sales and use tax audit 10 and, in November 2014, determined the team was liable for sales
and use tax on the following categories of contested items purchased from the nine vendors
at issue in this appeal (as well as on certain additional items from these and other vendors
that are no longer in issue):
1) video equipment linking the new scoreboards and sound systems;
2) LED end-zone scoreboards and ribbon scoreboards circling the middle level of
the stadium;
3) wayfinding signs;
4) televisions for throughout the stadium, including in the concourses, near
concessions stands, and in suites;
5) a statue of Lamar Hunt and the clay molds used to create it;
6) business furniture, including desks, chairs, and more; and
7) furniture for the club level, private suites, and concourses.
The team appealed to the AHC, which in January 2019 found the team liable for
sales tax of $252,775.39 and use tax of $677,171.55 on the contested items, plus statutory
interest. The team sought this Court’s review. This Court has exclusive appellate
jurisdiction in all cases involving the construction of Missouri’s revenue laws. Mo. Const.
art. V, § 3. “A ‘revenue law’ is one that imposes, amends, or abolishes a tax or fee,” and
9
The authority and the county are tax-exempt entities under section 144.062, RSMo Supp.
2007.
10
The audit covered the following tax periods: 1) sales tax for February 1, 2008, through
January 31, 2011; and 2) use tax for January 1, 2008, through December 31, 2010.
7
includes this State’s sales and use tax laws at issue here. Armstrong-Trotwood, LLC v.
State Tax Comm’n, 516 S.W.3d 830, 834 (Mo. banc 2017).
II. STANDARD OF REVIEW
“This Court will affirm a decision of the AHC if it: (1) is authorized by law; (2) is
supported by competent and substantial evidence on the whole record; (3) does not violate
mandatory procedural safeguards; and (4) is not clearly contrary to the General Assembly’s
reasonable expectations.” Bus. Aviation, LLC v. Dir. of Revenue, 579 S.W.3d 212, 215
(Mo. banc 2019); § 621.193, RSMo 2016; Mo. Const. art. V, § 18. This Court does not
uphold a decision of the AHC if it is “arbitrary, capricious, unreasonable, unlawful, or in
excess of jurisdiction.” Myron Green Corp. v. Dir. of Revenue, 567 S.W.3d 161, 164 (Mo.
banc 2019). This Court reviews the AHC’s legal decisions de novo. Id. “This Court is
not bound by the [AHC]’s interpretation and application of the law.” Gervich v. Condaire,
Inc., 370 S.W.3d 617, 620 (Mo. banc 2012).
“While it is the taxpayer’s burden to establish the right to an exemption, it is the
Director’s burden to show a tax liability.” Six Flags Theme Parks, Inc. v. Dir. of Revenue,
102 S.W.3d 526, 529 (Mo. banc 2003); see also § 136.300.1, RSMo Supp. 2014. In
determining tax liability, sales and use tax statutes are strictly construed against the
Director. § 136.300.1, RSMo Supp. 2014; Becker Elec Co. v. Dir. of Revenue, 749 S.W.2d
403, 406 (Mo. banc 1988). “[T]he question of exemption will arise only if we find that
appellant was the purchaser of the [items] and was thus subject to sales and use taxes.
Therefore, in determining whether appellant was the purchaser, the sales and use tax laws
will be strictly construed against respondent.” Becker Elec., 749 S.W.2d at 406.
8
III. TAXATION REQUIRES BOTH CONSIDERATION AND OWNERSHIP
The AHC found the team both: (1) gave consideration for the contested items under
the applicable sales and use tax statutes, and (2) acquired ownership of those items. The
AHC concluded the team was, therefore, liable for the applicable sales or use tax on those
items. The team asserts it neither gave consideration nor owned the contested items; the
Director contests both assertions. Because the team did not provide valuable consideration
in exchange for the contested items, this Court finds the team was not the purchaser of the
items under the Missouri sales and use tax statutes.
A. To Be a “Purchaser” Subject to Tax Under the Sales and Use Tax Statutes
Requires Both Providing a Valuable Consideration and Title or Ownership
A use tax “is imposed for the privilege of storing, using or consuming within this
state any article of tangible personal property purchased.” § 144.610.1, RSMo 2000. For
use tax purposes, “purchaser” means “any person who is the recipient for a valuable
consideration of any sale of tangible personal property ….” § 144.605(6), RSMo 2000. A
“purchase” is “the acquisition of the ownership of, or title to, tangible personal property,
through a sale, as defined herein ….” § 144.605(5), RSMo 2000. “Sale” is defined “herein”
as “any transfer … of the title or ownership … for a consideration paid or to be paid.”
§ 144.605(7), RSMo 2000.
Sales taxes are imposed “[u]pon every retail sale in this state of tangible personal
property.” § 144.020, RSMo Supp. 2006. The sales tax statutes similarly define a sale as
the transfer “of the ownership of, or title to, tangible personal property to the purchaser, for
use or consumption and not for resale in any form as tangible personal property, for a
9
valuable consideration.” § 144.010(10), RSMo Supp. 2006. 11
Therefore, under both the sales and use tax statutes, a taxpayer is a “purchaser” that
has engaged in a taxable transaction if the taxpayer (1) provides a valuable consideration
(2) in exchange for the acquisition of title or ownership over the property. Becker Elec.,
749 S.W.2d at 407. Conversely, a taxpayer is not a purchaser, and has not engaged in a
taxable transaction, if the taxpayer does not both (1) provide a valuable consideration and
(2) thereby acquire title or ownership rights in the property. Id.
While “purchaser” is, therefore, a two-part inquiry, there is no need to reach the
issue of title or ownership in this case because, unless the Director showed the team
provided a valuable consideration in exchange for the contested items, the team is not a
“purchaser” subject to tax as a matter of law. 12 In other words, “ownership” alone does
not determine the identity of the “purchaser” subject to sales and use taxes. Absent a
purchase to which sales tax applies, even were the team the “owner” of the items, the team
11
“Purchaser” for sales tax purposes means “a person who purchases tangible personal
property or to whom are rendered services, receipts from which are taxable under sections
144.010 to 144.525.” § 144.010.1(7), RSMo Supp. 2006. “Purchasers” are responsible for
paying to the seller the amount of sales tax due, § 144.060, RSMo 2000, and the seller of
tangible personal property is generally responsible for collecting sales tax from the
purchaser and remitting the tax collected to the Director. See § 144.080, RSMo 2000;
§ 144.021.1, RSMo 2000; § 144.285, RSMo 2000. Sales tax can be collected directly from
a purchaser, however, if the purchaser claimed a tax exemption at the time of sale which is
later found to be improper. § 144.210.1, RSMo 2000.
12
This Court notes, however, that the basis on which the AHC determined the team was
the owner of all of the contested items was that the team was listed as “owner” on certain
purchase agreements. The AHC failed to note, however, that the team was listed as owner
on purchase orders with only three of the nine vendors at issue in this appeal (and on
purchase orders with only six of the 12 vendors at issue before the AHC). Even were the
AHC’s reasoning logical, therefore, it does not resolve the question of ownership as to the
six vendors still at issue in this appeal with whom the team was not listed as owner.
10
would not owe tax on someone else’s purchase. Id. at 408 (holding, even were the
appellant considered the owner of items, the “[a]ppellant did not part with valuable
consideration and [wa]s not the purchaser”). In particular, if the county rather than the
team provided the consideration for the purchases of the contested items, then the team is
not the purchaser for sales or use tax purposes and does not owe sales or use tax on the
items. See id.
The Director claims the team must be the “purchaser” in this case because it made
advance payments to three of the nine vendors at issue in this appeal. The AHC did not
adopt this argument, and this Court is not persuaded either. First, the team did not make
advance payments to the other six vendors at issue, yet the Director treated all purchases
the same. Second, the governing agreements contained specific contractual language
contemplating the team might, at times, give advance payments for items acquired for the
county-owned project and providing that, in each case, the team would be reimbursed from
the project fund following completion of the requisite paperwork and approval process.
There is no allegation the team failed to follow the procedure for reimbursement. To the
contrary, the team was reimbursed in each instance in accordance with the agreements so
that consideration for each contested item came from the project fund.
The AHC found, and this Court agrees, the real issue relevant to the identity of the
purchaser is not whether the fund paid for the items before or after a particular purchase
but whether the monies in the project fund belonged to the team or, instead, to the
county/authority. It is to this question this Court now turns.
B. The Tax Credits Were Not in the Fund Used to Purchase Contested Items
11
The first step in determining who owned the monies in the project fund is to clarify
what monies that fund contained. As the AHC recognized, the county provided certain
monies in the project fund from the sale of bonds. As the AHC also recognized, the tax
credits were placed only briefly in the project fund by the project fund trustee. As the AHC
in its statement of facts expressly recognized, prior to the purchases in question, the tax
credits then were sold to unrelated third parties. The AHC further recognized that it was
the proceeds of these sales – not the tax credits – that were left in the fund, stating, “The
tax credits were negotiable and sold, with proceeds from this sale remaining in the
[relevant] subaccount.”
Nonetheless, the AHC concluded the team retained an interest in the project fund
because of the tax credits. In relevant part, the AHC said:
Under § 100.286.6 and .7, the taxpayer (in this case, the Team) was able to
carry forward the tax credits for up to five years, or “sell, assign, exchange,
convey or otherwise transfer tax credits allowed in subsection 6 of this
section.” Hence, the Team’s contribution to the MDFB and the tax credits
never became the funds of the County.
Therefore, based upon the analysis above, the funds from the NBP
subaccount were not the funds of the County or the Authority. Rather, the
funds placed in the NBP subaccount were the Team’s funds.
(Emphasis added.) The AHC’s legal analysis on which it based its conclusion that the tax
credits remained the funds of the team in the project fund was in error. Having transferred
the tax credits, the statutory scheme plainly took from the team any legal right it otherwise
would have had to carry forward any of the tax credits and bestowed it on the third-party
purchasers as assignees of those credits:
12
Notwithstanding any provision of law to the contrary, any taxpayer may sell,
assign, exchange, convey or otherwise transfer tax credits allowed in
subsection 6 of this section under the terms and conditions prescribed in
subdivisions (1) and (2) of this subsection. Such taxpayer, hereinafter the
assignor for the purpose of this subsection, may sell, assign, exchange or
otherwise transfer earned tax credits:
(1) For no less than seventy-five percent of the par value of such credits; and
(2) In an amount not to exceed one hundred percent of annual earned credits.
The taxpayer acquiring earned credits, hereinafter the assignee for the
purpose of this subsection, may use the acquired credits to offset up to one
hundred percent of the tax liabilities otherwise imposed by chapter 143,
RSMo, excluding withholding tax imposed by sections 143.191 to 143.261,
RSMo, chapter 147, RSMo, or chapter 148, RSMo. Unused credits in the
hands of the assignee may be carried forward for up to five years….
§ 100.286.7, RSMo 2000 (emphasis added). Under this section, having transferred the tax
credits to unrelated third parties, the team legally had no right to use the tax credits as the
statute unequivocally provides that transferred tax credits no longer belonged to the
assignor – here, the team – but to the assignees – here, the third-party purchasers – and
only the assignees may carry them over.
In other words, the AHC based its decision that the team owned certain monies used
to purchase the contested items on its mistaken belief the tax laws gave the team a
continuing legal interest in the tax credits. This was wrong. And the AHC itself recognized
the tax credits themselves were no longer in the project fund. The tax credits, which were
in the hands of unrelated third parties and could not be carried forward by the team, are not
a legal basis on which to conclude the team owned monies in the project fund.
While the AHC correctly recognized that proceeds of the sale of the tax credits were
in the project fund, those proceeds did not belong to the team either. By contract, those
13
proceeds were donated by the team to the trustee to place in the project fund and, therefore,
were beyond the team’s ownership and control. In fact, the governing agreements
specifically provide that the tax credit proceeds were part of the authority/county’s
contribution to the project, not the team’s. § 6.05(b)(i), Development Agreement
(“Landlord/County intends to provide the funds for the Landlord/County's Capped
Contribution by issuing tax-exempt bonds based on the New County Sales Tax … and
approximately $37,500,000 from the Missouri State Tax Credit Revenues” (emphasis
added)). Likewise, the tax credit agreement provided “the Landlord [the authority] has
requested that the [finance board] accept contributions from the Tenant [the team] pursuant
to the Tax Credit Statute and make the proceeds of such contributions available to the
Landlord [the authority] for the purpose of paying a portion of the cost of the project.” It
further provided the team “shall not benefit from the Tax Credits,” except for any incidental
benefit as a result of the county’s renovation. § 3.7, Tax Credit Agreement. The third-party
proceeds from the sale of the tax credits belonged not to the team, but to the
county/authority for use in the county-owned project. To the extent the AHC concluded
otherwise, it had no legal basis for doing so.
C. Monies the Finance Board Gifted to the Project Belonged to the Project, Not
the Team
The AHC also erred in determining that money the finance board granted to the
county for use in the project belonged to the team. The AHC found “the Team’s
contribution to the [finance board]… never became funds of the County.” It never explains
why, however, and its legal conclusion is also legally incorrect. The AHC recognized the
14
team donated the money to the finance board to fund the project in return for the tax credits.
The burden was on the Director to show the money in the project fund belonged to the
team. The Director did not allege, and the AHC did not find, that the donation did not
occur or was not properly made, nor did it find for any reason the donation was invalid. In
the absence of such findings, there is no legal basis for the AHC’s conclusion that money
the finance board granted in the project fund granted the finance board remained the team’s
property. 13
Indeed, the validity of the mechanism the team used is recognized in the statutes
themselves. Section 100.286.6, RSMo 2000, permits the finance board to issue tax credits
to a taxpayer who makes a contribution – that is, a donation – to the finance board. Here,
the team donated money and received in return tax credits the finance board could authorize
only once a donation was made. Once the team donated the money to the finance board,
then, like any donation, it no longer belonged to the team but to the donee. 14 The statutes
13
The Director also urges this Court to hold the project trust account funds in the
subaccount used to purchase most of the contested items belonged to the team because,
under the development agreement, any remaining balance in the project fund was to be
refunded to the team, along with the county and authority according to each entity’s “cost
contribution ratio.” The later-executed trust indenture provided for a different allocation
of unspent funds. Further, the governing agreements unequivocally provide the project
fund contained county funds. In any event, no funds, in fact, remained, so any contingent
future interest the team might have had in any excess funds remained inchoate.
14
Sometimes donors retain an interest in donations, but that is not provided for in Chapter
100. RSMo, and did not occur here. Section 100.263, RSMo 2000, provides that “[t]he
infrastructure development fund shall be administered by the board under the provisions of
sections 100.250 to 100.297.” Once monies are contributed to the finance board, it is the
board that “shall have the power to … [d]irect disbursements from … the infrastructure
development fund … as provided in sections 100.250 to 100.297.” § 100.270(6), RSMo
Supp. 2006.
15
were specifically passed to allow donations of this kind, which help the finance board fund
projects of economic benefit to the State. See, e.g., § 100.270(8), RSMo Supp. 2006 (“The
board shall have the power to … accept gifts, grants, appropriations, loans or contributions
to … the infrastructure development fund … from any source, public or private, and enter
into contracts or other transactions with any … private organization, or any other source in
furtherance of the purposes of sections 100.250 to 100.297[.]”). It is the finance board that
controls the disbursement of funds in its infrastructure development fund under
section 100.263, RSMo 2000. 15 There is no dispute the cash donations from the team to
the finance board were placed in that fund.
In other words, chapter 100 gives the finance board the legal authority to control the
infrastructure development fund, and the team and other donors retain no control over it.
For these reasons, there was no basis for the AHC’s legal conclusion that funds donated by
the team to the finance board, which held those funds in its own infrastructure development
fund and in turn granted them to the project, somehow still belonged to the team.
These errors regarding ownership of the project fund constituted legal error. The
Director, nonetheless, argues that, even though the team followed the tax statutes and no
longer controlled the money it had legally donated to another, to recognize the team parted
15
“An ‘Infrastructure Development Fund’ shall be established from which moneys shall
be used to make … grants to local political subdivisions.” § 100.263, RSMo 2000.
“[L]oans, loan guarantees, or grants shall only be made upon approval of the board.”
§ 100.270(24), RSMo Supp. 2006. “Within the discretion of the board … the infrastructure
development fund ... may be pledged to secure the payment of any bonds or notes issued
by the board.” § 100.286.1, RSMo 2000. “The board shall have the power to … [m]ake
all expenditures which are incident and necessary to carry out its purposes and powers.”
§ 100.270(19), RSMo 2000.
16
with the money would ignore the “economic realities” of the team’s contribution. In other
words, the Director basically argues that, because the team once owned the monies and
credits it donated and stood to benefit from the renovation of Arrowhead stadium, this
Court should ignore the fact that the project funds were not actually the team’s when the
purchases were made.
This Court is not free to simply ignore the laws governing donations and the relevant
tax statutes because the Director does not like the fact that the team ultimately benefited
from the project the team helped fund. 16 This Court cannot substitute its judgment for that
of the legislature that such projects serve an overarching public purpose. Indeed, in
approving similar statutes this Court has long held that, when a public purpose is “apparent,
it is unimportant that incidental benefits may accrue to private interests.” State ex inf.
Danforth ex rel. Farmers’ Elec. Co-op., Inc. v. State Envtl. Improvement Auth., 518 S.W.2d
68, 74 (Mo. banc 1975).
This principle was specifically applied in 2006 in approving another sports stadium
improvement financing plan. St. Louis County had entered into a series of transactions
with the finance board to finance construction of what it anticipated would be the home
16
In the cases discussing looking at the “economic realities” of a situation, Loren Cook
Co. v. Director of Revenue, 414 S.W.3d 451, 454 (Mo. banc 2013), and Great Southern
Bank v. Director of Revenue, 269 S.W.3d 22, 25 (Mo. banc 2008), this Court rejected the
argument taxpayers met the “trade-in exemption” when the economic realities showed the
taxpayers had engaged in two separate transactions rather than a true “trade-in.” Here, in
contrast, there is no question about what transactions took place. Tangible personal
property was purchased for use in a county-owned renovation project. The question in this
case, rather, is who is the purchaser under the sales and use tax statutes?
17
stadium of the St. Louis Cardinals baseball team. Moschenross v. St. Louis Cty., 188
S.W.3d 13, 17 (Mo. App. 2006). In determining the constitutional validity of the financing
scheme, the court had to consider whether the project was for a public or private purpose.
Id. at 121-22. It concluded that, “[a]lthough the team owners w[ould] incidentally benefit
from the development of the ballpark itself,” the project was for a public purpose because,
by adding jobs and generating direct and indirect economic impacts as more money was
going to be spent throughout the region, the “primary purpose of the development at issue
… [was] to increase convention and sports activity in the county and city, thereby resulting
in economic benefits to the public.” Id. at 22.
These principles apply here as well. The finance board found “[t]he benefits to be
derived by the State of Missouri are projected to exceed the benefits provided by the Board
by this Agreement.” See supra note 7. The agreements specifically provide that the
authority, the county, the team, and, most importantly, the finance board, believe those
myriad economic benefits outweigh any benefit to the team and indeed include the “joint
agreement by the commissioner of administration, the director of the department of
economic development, and the director of the department of revenue that such action is
essential to ensure retention or attraction of investment in Missouri.” § 100.286.6, RSMo
2000 (emphasis added). 17
17
Section 100.286.6, RSMo 2000, in fact, required the approval of these officials given
the size of the tax credit transaction, and these officials did approve the transaction. That
section provides, in relevant part:
18
“It is well established that the right of the taxing authority to levy a particular tax
must be clearly authorized by the statute.” State ex rel. Ford Motor Co. v. Gehner, 27
S.W.2d 1, 3 (Mo. banc 1930). The applicable sales and use tax statutes permit taxation
against “purchasers” upon “sales at retail” in the state, or for the privilege of using within
this state any tangible property “purchased.” § 144.020, RSMo Supp. 2006; § 144.610.1,
RSMo 2000. It was the Director’s burden to show the team was the purchaser of the items
purchased with the monies in the fund. The Director did not do so, and could not do so in
this case, as the monies in the fund belonged to the county. The lawful execution of a tax
credit transaction as authorized by statute does not provide a legal basis for finding the
team was the purchaser in this case. Nor do the tax statutes permit taxation of the team
simply because the items procured for the county-owned project would benefit the team
during its tenure at Arrowhead. While some may second-guess the wisdom of enacting tax
credit statutes, or their use in sports stadium projects, the wisdom of such legislative policy
is not relevant to this Court’s duty, which is to determine whether the AHC properly
concluded the team was the purchaser in this case. Any complaints about the policy
embodied in the tax credit statutes should be directed to the legislature.
IV. CONCLUSION
[T]otal tax credits awarded in any calendar year beginning after January 1,
1994, shall not be the greater of ten million dollars or five percent of the
average growth in general revenue receipts in the preceding three fiscal
years. This limit may be exceeded only upon joint agreement by the
commissioner of administration, the director of the department of economic
development, and the director of the department of revenue that such action
is essential to ensure retention or attraction of investment in Missouri.
19
For the reasons set out above, the AHC’s decision was not authorized by law. The
team was not the source of the consideration for the contested items and, therefore, was not
the purchaser of the items for sales and use tax purposes. The AHC’s decision is reversed,
and judgment is entered in the team’s favor. Rule 84.14.
______________________________
LAURA DENVIR STITH, JUDGE
All concur.
20