RIVER CAMPUS HELD UP BY RULING IN DRURY SUIT

Southeast Missouri State University leaders' dreams of a River Campus are in limbo and the city must delay some projects until a lawsuit over Cape Girardeau's hotel-motel and restaurant tax is settled completely.

Money for all of it is being held in an escrow account until a final ruling has been issued in the lawsuit filed by Jim Drury and his MidAmerica Hotels Corp., yet the city will continue to collect its tax.

Associate Circuit Judge Robert C. Stillwell of Fredericktown, Mo., ruled in the suit on Wednesday, striking down the Cape Girardeau hotel-motel and restaurant tax ordinance for being too vague in explaining why the city needed to expand and extend its collection. And while Stillwell ruled in favor of the city on six of the suit's seven counts, Drury is crowing because the one ruling in his favor keeps the money from being spent.

"We shouldn't stand still and let them trample over us," he said. "After two years, the taxpayers said no and the judge said no. What part of that doesn't the city understand?"

The city has 40 days to file an appeal and is expected to do so. If the city decides not to appeal, the tax measure could again be placed on the ballot. Until an appeal is settled, any decision about an election is irrelevant, said City Attorney Eric Cunningham.

"We could still win on appeal and nothing would have changed," he said.

The tax ordinance was a key part of a funding package for development of the proposed River Campus arts school in a former Catholic seminary overlooking the Mississippi River. The city would pay $8.9 million toward the $36 million university project.

While the lawsuit is appealed, the city is putting other projects funded by the tax including renovation of the Convention and Visitors Bureau building on hold.

The Missouri Legislature set aside $16.55 million for the River Campus, but that money is contingent on the university and city paying their portions of the cost.

Drury said it isn't that he opposes the idea of a performing arts school. "We just don't want it to be a money grab."

Drury filed his lawsuit last year, and the case was shifted from circuit court to federal court and back to circuit court. He argued that the city misled voters when officials said that both a tax measure and a bond issue had to pass for the River Campus project to proceed.

Voters approved a tax measure, which continued a 3 percent tax on gross receipts of motels and a 1 percent tax on restaurant receipts, in November 1998. A measure authorizing the city to issue revenue bonds for the project received 53 percent approval, but the measure failed to secure the four-sevenths majority needed for passage.

The university made an agreement for the Missouri Health and Educational Facilities Authority -- a state agency -- to issue the bonds, but they haven't been issued.

When the city and university attempt to circumvent the decision of voters, issues of credibility and integrity are on the line, Drury said. He said that the restaurant tax collection would have a greater effect on local residents who frequent city restaurants and would have to pay the tax.

Mayor Al Spradling III said the city simply carried out the will of the people.

"The voters approved the project. The voters did not approve the city issuing bonds," he said. "That means that we ourselves couldn't be a bond agency."

Southeast President Dr. Ken Dobbins was disappointed in Wednesday's ruling because it means that an "outstanding project" for the city and region is delayed.

The university's Board of Regents entered two contracts for the River Campus in August. Both contracts were contingent upon funding.

The university isn't able to proceed with the $3.87 million architectural and engineering contract with Sverdrup/CRSS of St. Louis and a $1.33 million construction management contract with BSI Inc. of St. Louis. However, a possibility for renegotiation exists, Dobbins said.

University officials suggested the project still could go forward with a state agency issuing the bonds. The city would then have to pay off the bonds, a move that would require the use of motel-restaurant tax money.

Drury said he would welcome a better plan and would be willing to negotiate the details with city officials. He said he wants a plan that would be "clean and straightforward" with voters.

ljohnston@semissourian.com

335-6611, extension 126