DRURYS PROTEST TAXES OVER RIVER CAMPUS

A tax protest filed this week could pose a financial problem for Cape Girardeau, Mayor Al Spradling III said Thursday.

Cape Girardeau businessmen Jim, Robert and Charles Drury paid their motel and restaurant taxes under protest this week.

The protest covered taxes paid by Hampton Inn, Drury Suites, Drury Lodge, Pear Tree Inn, Holiday Inn, Burger King and Victorian Inn.

The Jim Drury-led protest centers on Drury's opposition to the River Campus project. Drury said they will continue to pay their taxes under protest as they challenge the legality of the motel and restaurant taxes.

Some of that tax money would be used to help fund construction of Southeast Missouri State University's proposed River Campus. The university wants to spend $35.6 million to turn a former Catholic seminary in Cape Girardeau into a school for the visual and performing arts.

The legal challenge by the Drurys forces the city to place in escrow about $40,000 a month.

Spradling said it could take at least a year before the tax protest is resolved in court. That could tie up about $480,000 or nearly half of the approximately $1 million the city collects each year from motel and restaurant taxes.

The mayor said nearly all of the $1 million is budgeted to operate the Convention and Visitors Bureau and retire bonds issued for construction of the Show Me Center, the Osage Community Centre and the Shawnee Park complex.

Spradling said the city may have to cut the $300,000 CVB budget or use other city funds to make ends meet while the tax protest proceeds.

The mayor said the City Council would take whatever steps necessary to avoid defaulting on the bonds.

Spradling said a previous tax protest by Jim and Bob Drury took four years to resolve. In 1993, the Drurys entered into a settlement agreement. As part of the agreement, the "Jim Drury interests" agreed not to protest the payment of motel and restaurant taxes until the bonds for the Osage Community Centre and Shawnee Park complex had been retired or the existing taxes had expired. At that time the taxes were set to expire in 2004.

Last November voters raised the motel tax from 3 to 4 percent and extended both the motel and restaurant taxes to Dec. 31, 2030.

Spradling said he doesn't understand how the Drurys could file another tax protest over the original tax ordinance in violation of their settlement agreement.

"Nothing is settled, even if it is settled," the mayor said. "It is just so frustrating."

Jim Drury said the original ordinance dealing with the restaurant and motel taxes and the November tax increase and extension measure are tied together.

The university wants to use motel and restaurant tax money to help retire $8.9 million in bonds that would be issued through a state authority to help fund the River Campus.

Drury opposes the idea. "We want the money to go to the city and not a state institution where we have no claim on it."

Drury recently sued the city in an effort to block the use of motel and other city tax money for the River Campus project. He said the tax protest is another step in his efforts to keep city funds out of the project.

Voters last November failed to approve a local bond issue that would have helped fund the River Campus project. The companion measure to raise the motel tax and extend both taxes was approved.

But Drury argues that failure to pass the local bond issue nullifies the tax measure too. Drury also argues that the city's tax ordinances governing the motel and restaurant taxes are illegal.

Drury said he understands that his tax protest could pose financial difficulties for the city. "We are throwing a monkey wrench in the machinery," he said.

Unless the city severs any funding ties with the River Campus project or resubmits the local bond issue to voters, Drury said he will continue to pay his taxes under protest.