A municipality which owns a manufacturing or industrial facility developed under Section 71.790 to 71.850, RSMo 1963 Cum. Supp., may not require a tenant thereof, as part of the leasing agreement, to pay monies in lieu of taxes to another taxing body.

INDUSTRIAL DEVELOPMENT: MUNICIPALITIES: CITIES: A municipality which owns a manu- facturing or industrial facility developed under Section 71.790 to 71.850, RSMo 1963 Cum. Supp., may not require a tenant thereof, as part of the leasing agreement, to pay monies in lieu of taxes TAXATION: to another taxing body. OPINION NO. 12 (1964) June 22, 1964 Mr. Lawrence A. Schneider, Director Commerce and Industrial Development Division Eighth Floor, Jefferson Building Jefferson City, Missouri Dear Mr. Schneider: Ft LED / ;2_ This is in response to your request for an opinion as follows : "Can a manufacturer agree to pay (or give) a regular amount of money [in lieu of taxes] to a municipality, or county government, or school district? If so, can this regular gift be previously agreed to by a written contract or agreement?" You indicate that the opinion request was prompted be- cause House Bill No. 576, which would have specifically covered this situation and permitted it, failed of passage in the 72nd General Assembly. The subject matter of your request pertains to those facilities constructed and leased by municipalities for the purposes of attracting manufacturing and industrial concerns under Section 71.790 to 71.850, RSMo 1963 Cum. Supp. (The Industrial Development Act), When a municipality cohstructs industrial facilities, the real estate is not taxable by any political entity, hence if agreements could be made for the lessee of the industrial plant to pay to the city a sum of money which could be paid by the city to other taxing authorities or could be paid directly by the lessee to other taxing authorities this would relieve some of the tax burden of those entities because of the removal of the real estate from the tax rolla. There are goo4 arguments for so doing. The problem is - does the law authorize such arrangements or agreements. The general language of the Industrial Development Act does not contain any express statutory grant or authority tor the city to enter into an agreement by which municipal funds are to be given to various other taxing authorities. Section 432.070, RSMO 1959, states that contracts by cities may only be made when authorized by law. This section reads as follows: "No county, city, town, village, school township, school district or other munici- pal corporation shall make any contract, unless the same shall be within the scope of its powers or be expressly authorized by law, nor unless such contract be made upon a consideration wholly to be per- formed or executed subsequent to the making of the contract; and suoh contract, in- cluding the consideration, shall be in writing and dated when made, and shall be subscribed by the parties thereto, or ~eir agents authorized by law and duly appointed and authorized in writing ." While there is no case directly in ~oint, that or Arbyrd Compress Co. v. City of Arbyrd, App., 246 s.w. (24) 104, holds that an agreement to pay a certain amount. yearly tor t~es and assessments was void because of the lack or authority on the part or the officers or the city to make s~ch a contract. In that ca~e, i the plaintiff's property was excluded. rrom the. limi ta or · 1:he · def.en~ant ci t't .•by tlie. o~unt7 c~urt. Therea.rt~r, the city brought an a9tion to ~ev~'w the judgme~t. UpQn the completion or a~ agreement by the p~aintit't' to pay a ·· cer1iain amount year~y tor ~axes and asa.essments to the city it his land was excluded from the limits or the city, the cit7 dis- miaaed its action and consented bo ~he jud;ment. The contraot was round to ·be violative or Section 432.070, RSMo 1949. • I • The~e being no express legislative authorization as re- quired by Section 432.070, a municipalit7 does not have the power tp enter into a contract providing tor the payment or municipal funds derived from tne lease or industrial develop- ment projects to other taxins authorities. This view is buttressed by the failure ot the 72nd General Assembly to pass House Bill No . 576, which would have authorized such practices. -2- Mr. Lawrence A. Schneider -3- ~heretore, a •unicipalit7 which owns a •anutacturing or industrial facility developed under Section 71.790 to 71.850, RSJlo 1963 Cua . Supp., •&7 not require a tenant thereot, aa part ot the leasing agree•ent, to pa7 •oniea in lieu or taxes to another taxing body. The toregoing opinion, which I hereby approve, has been prepared bT •1. aaa1atant, Tho•a• B. Kicbhorat. Very t:rul7 7oura,