Settlement proposes to extend maturities of Missouri's Zona Rosa bonds

The long legal trail triggered by a 2018 default on bonds issued to support a Missouri shipping center may be nearing a conclusion.

Trustee UMB filed notice on April 17 of a settlement of a circuit court lawsuit that would extend the maturity of the Zona Rosa bonds by 30 years.

The settlement would impact bondholders and the pair of transportation development districts that sold the Zona Rosa retail development bonds through the Industrial Development Authority of Platte County.

The Platte County government is not a party to the circuit court lawsuit. But Platte County won a lawsuit in 2020 over whether it would have to help repay the outstanding debt for the Zona Rosa Shopping Center project in the event of project revenue shortfalls.

The county's decision not to honor an appropriation pledge for the underperforming shopping center bonds led Moody's Ratings in 2018 to cut the county's issuer rating eight notches to speculative grade, where it remains.

Developer payments and sales tax collected in the shopping center in the Kansas City suburbs go to repay debt, but results failed to cover debt service.

The Missouri Court of Appeals for the Western District also ruled in the county's favor, and the state Supreme Court declined to overturn that ruling.

The opinion from the Missouri Court of Appeals said the county government was obligated to consider paying shortfalls, but not to actually pay them. Every year, the county board of commissioners publicly notes that it considered but declined to pay any shortfalls.

The $32.2 million of Series 2007 transportation refunding and improvement bonds are currently the subject of a circuit court lawsuit filed by UMB against property owner Monarchs Sub, LLC and Platte County, Missouri, South Transportation Development Districts I and II. 

The most recent filing in that case is a Tuesday motion from UMB seeking to extend time pending compliance with discovery obligations. Court documents show the judge issued an order granting an extension of time on April 3, and there have been multiple filings since then.

But a notice posted by UMB on the Municipal Securities Rulemaking Board's EMMA website says the parties reached a settlement agreement on April 3.

"The Trustee, Monarchs, and the Districts entered into a settlement agreement dated as of April 3, 2025," the notice reads. It claims the settlement discharges all claims and defenses that have been or could have been asserted by the trustee, Monarchs and the districts in the lawsuit.

"The settlement agreement provides for an extension of the maturity of the outstanding bonds for a period of 30 years from the effective date as provided by the settlement agreement and an extension of the sales tax revenue for a period of up to 40 years from the effective date of the extension of the maturity of the bonds," the notice reads.

It says the trustee and the issuer will execute a supplemental indenture, and the TDDs and the city of Kansas City will enter into a fifth amendment to intergovernmental cooperative agreement to effectuate the aforementioned extensions.

UMB also wrote that the purpose of the notice was to advise bondholders that "a trust instruction proceeding (TIP) has been initiated in the TIP Court of Hennepin County, Minnesota to, among other things, facilitate approval of the settlement agreement as discussed below."

The Series 2007 bonds were rated AA-minus at issuance by S&P Global Ratings, based on the county government's pledge of support. In September 2018, after that support didn't materialize, S&P cut the Zona Rosa bonds to junk, ultimately moving them to D, for default, that December.