ARGUMENTS HEARD ON DRURY CHALLENGE; ATTORNEYS BATTLE IN APPEALS COURT OVER RIVER CAMPUS PROJECT

CLAYTON, Mo. -- Attorneys for the city of Cape Girardeau and businessman Jim Drury sparred in a state appeals court Tuesday over the legality of the city's efforts to help fund Southeast Missouri State University's River Campus project.

The three-judge panel of the Missouri Court of Appeals Eastern District listened to more than 30 minutes of oral arguments in a small, crowded courtroom in the St. Louis suburb of Clayton before taking the case under advisement. The judges were William Crandall Jr., Clifford Ahrens and James Dowd.

The judges may rule soon, Walter S. Drusch, Drury's Cape Girardeau attorney, said after the hearing. Whatever the ruling, it could be appealed to the Missouri Supreme Court.

Cape Girardeau Mayor Al Spradling III, who didn't attend the hearing, said Tuesday evening that the appeals court may not rule for 45 to 90 days.

"Hopefully, it is favorable and then the enthusiasm can return," the mayor said.

Drury has other views. He said the city shouldn't be involved in the River Campus project. "They are not catering to taxpayers' wants and needs," he said.

"They railroaded this thing," said Drury, who didn't attend the hearing. "It's just dirty pool."

Drury's lawsuit, filed in April 1999, blocked the city from using motel and restaurant tax money to fund its $8.9 million share of the $36 million River Campus project. The university project would involve renovations and new construction to turn a former Catholic seminary in Cape Girardeau into a school for the visual and performing arts.

In October, Associate Circuit Judge Robert C. Stillwell of Fredericktown , Mo., ruled in favor of the city on several counts. But the judge also struck down a Cape Girdeau city law that provided for the expansion and extension of a motel-restaurant tax to fund the city's share of the River Campus project.

In his ruling, Stillwell agreed with Drury that the title of the city ordinance was too vague and didn't adequately explain how the money would be used. The ruling, coupled with state funding problems, has bottled up the project.

Both sides appealed

The two sides appealed different points of Stillwell's ruling. The city appealed the ordinance title issue while Drury's appeal argued that it was illegal for the city to participate with the university in a plan to issue bonds through a state authority without voter approval.

Drury's lawsuit centers around a November 1998 election in which city voters approved a measure hiking the motel tax and extending the life of the motel and restaurant tax to Dec. 31, 2030. But a companion bond issue for the River Campus project, which would have been retired with money from the tax, failed to secure the 57 percent approval needed for passage.

University and city officials then revised their plan, insisting that bonds could be issued through the Missouri Health and Educational Facilities Authority and motel-restaurant tax money could be used to retire them.

Vote at issue

That angered Drury, who felt the city couldn't proceed without voter approval of such a financing plan. Stillwell ruled in favor of the city on that point, concluding the city didn't have to hold another election.

In Tuesday's appeals court proceedings, Drusch reiterated his argument that the revised plan was tantamount to the city issuing bonds without voter approval. He said the city would incur debt since it promised to pay off the bonds.

"They don't intend to have an election and we think they should," he said.

St. Louis attorney James Mello, representing the city of Cape Girardeau, disagreed with Drusch's interpretation.

Mello told the court that the revised agreement between the city and university is legal because it stipulates any city payments on bonds would be "subject to annual appropriation" by the city council.

The attorneys argued over the legality of the city's 1998 tax ordinance.

Judge Dowd said the ordinance title doesn't explain the purpose of the motel-restaurant tax measure. "Nothing about the cultural center is mentioned in the title," he said.

But Mello said an ordinance title doesn't have to list every detail in the document. Mello said the body of the ordinance states that the motel-restaurant tax money would be used for the River Campus project. "Here, the city council is making a covenant with the people," he told the court.