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Nebraska Supreme Court Affirms 30-day Window for TIF Challenges

Salem Grain Co., Inc., v. City of Falls City, 302 Nb. 548 (2019).

In 2012, Defendant and Appellee Consolidated Grain and Barge Company ("Consolidated Grain") proposed to construct a new commercial grain receiving, storage, and shipping facility in Falls City, Nebraska. Consolidated Grain applied for tax increment financing ("TIF") for the project. On November 12, 2012, Community Redevelopment Authority of the City of Falls City (the "Authority") entered into a redevelopment contract with Consolidated Grain and issued a TIF bond totaling $3,710,000.

Appellant and Plaintiff Salem Grain Company ("Salem Grain") opposed the redevelopment project and filed a lawsuit against the Authority on October 24, 2012, alleging that the redevelopment project was not planned and adopted in accordance with the Community Development Law. The District Court dismissed the complaint, but gave Salem Grain leave to file an amended complaint.

Salem Grain filed an amended complaint on January 22, 2013, alleging essentially the same causes of action and a cause of action alleging that the Authority held two meetings that violated Nebraska's Open Meeting Act (the "Open Meeting Act"). Specifically, Salem Grain alleged that a meeting occurred where three (3) members of the Authority attended a community dinner that included the mayor, members of the city council and representatives from Consolidated Grain. Salem Grain further alleged that another meeting occurred over email in violation of the Open Meeting Act.

The District Court dismissed the original causes of action, but set a bench trial for the Opening Meeting Act claim. During trial, the District Court found that the two instances did not constitute meetings and therefore were not in violation of the Open Meeting Act, dismissing the action and finding in favor of Consolidated Grain. Salem Grain appealed.

The Nebraska Supreme Court addressed three issues on appeal: (1) The effect conclusive presumption had on Salem Grain's lawsuit under the Community Development Law, (2) whether conclusive presumption is an affirmative defense, and (3) whether the Open Meeting Act claim affected the validity of the redevelopment contract and TIF bond.

1. Conclusive presumption precluded Salem Grain's Lawsuit under the Community Development Law.

Nebraska's Community Development Law provides that when a bond recites in substance that an authority issued the bond to aid in financing a redevelopment project, the project is conclusively presumed to have been planned, located, and carried out in accordance with the purposes and provisions of the Community Development Law.1 A separate provision in the Community Development Law states that any suit or proceeding brought after the lapse of thirty (30) days after the agreement has been formally entered into and the bond has been issued, the project is conclusively presumed to have been carried out in accordance with the Community Development Law so long as the proper recitations are present.2

The Court recognized that the two provisions contradict one another, as one contains no temporal restriction while the other provides for a thirty (30) day window to file a lawsuit. The Court construed the two provisions together, holding that there is an exemption to the conclusive presumption for actions brought within the thirty (30) day window.

The Court further found that the thirty (30) day window begins when the agreement is formalized and the bond is executed. Salem Grain's first complaint, which it filed approximately two (2) weeks before Consolidated Grain and the Authority entered into the agreement, was not within the window and therefore did not negate the conclusive presumption. Further, the amended complaint filed over sixty (60) days after Consolidated Grain and the Authority executed the agreement did not fall within the thirty (30) day window.

The Court therefore found that the Authority's issuance of a TIF bond to Consolidated Grain and the redevelopment contract they entered into was conclusively presumed valid.

2. Conclusive presumption is not an affirmative defense.

The Court rejected Salem Grain's argument that Consolidated Grain failed to raise conclusive presumption as an affirmative defense. The Court found that conclusive presumption is a substantive evidentiary rule that forecloses proof to the contrary.

3. The Open Meeting Act claim did not affect the validity of the redevelopment contract and the TIF bond.

The Court found that the Authority did not violate the Open Meeting Act and therefore the Open Meeting Act did not provide a separate legal basis to void the redevelopment contract and TIF bond. It first found that there was no evidence to support that the purpose of the dinner was for "briefing, discussion of public business, formation of tentative policy, or the taking of any action of the public body"3 and therefore no violation of the Open Meeting Act. It similarly found that the actions the Authority took subsequent to the email conversation were already authorized in a previous meeting that conformed with the Open Meeting Act, and that therefore the email was not in violation of the Open Meeting Act.

For the foregoing reasons, the Court found that all of Salem Grain's challenges to the procedure were foreclosed by conclusive presumption and that there was no violation under the Open Meeting Act.

If you have any questions relating to this case or the Nebraska Community Development Law, please contact David C. Levy or Michael D. Sands.

 

1 Neb. Rev. Stat. § 18-2129.
2 Neb. Rev. Stat. § 18-2142.
3 Page 576.

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