Almost two months after the Duncan Area Economic Development Foundation received a favorable judgment in a case concerning ownership of several properties, the City of Duncan appealed the ruling.
The summary judgment by Jefferson County Associate District Judge Dennis Gay affirmed the Duncan Area Economic Development Foundation’s (DAEDF) ownership of properties purchased using funds provided through contracts for services with the City of Duncan (City) and the Duncan Economic Development Trust Authority (Trust).
The case centered around a series of contracts for services between DAEDF and the City and the Trust, dating back to 2003. These agreements outlined the provision of economic development services by DAEDF, with funding provided by the City and Trust from dedicated sales tax proceeds. The court’s judgment clarified the legal status of funds disbursed to DAEDF under these contracts and, consequently, the ownership of properties acquired by DAEDF.
Key aspects of the court’s Jan. 6 ruling included:
• Validation of contracts: The court upheld the validity and enforceability of the contracts for services between DAEDF and the Trust.
• Ownership of properties: The court explicitly declared that real estate purchased by DAEDF using funds paid by the City or Trust under the contracts for services, and held in DAEDF’s name, is owned by DAEDF. This includes the “Two Properties” (the Haulmark Property and the 48 acres) specifically addressed in the litigation.
The Haulmark Property is 13.49 acres the DAEDF purchased with $2,005,918 the Foundation received from the Trust in September 2008, the court ruling shows. The City and the Trust “were aware that DAEDF would own the Haulmark Property,” Stephens County Associate District Judge Dennis L. Gay wrote.
The 48 acres were purchased by the DAEDF with $245,140 the Trust released to the Foundation in March 2013, the court ruling relates. The City and the Trust “were aware” that the Foundation “would own the 48 Acres,” the judge wrote.
• DAEDF ownership of other properties: The court also confirmed DAEDF’s ownership of the “Four Properties” (3.59 acres, 4.88 acres, 1.91 acres, and 6.7 acres). DAEDF “did not request nor use sales tax proceeds from the Trust to purchase the Four Properties,” the judge pointed out.
• Rejection of counterclaims: The court denied the cross motion of the defendants [Duncan Economic Development Trust Authority and the City of Duncan] for partial summary judgment, effectively rejecting their claims to ownership of the properties.
• Non-public funds: The court determined that funds appropriated and disbursed by the City or Trust to DAEDF for services rendered under the contracts for services ceased to be public funds upon disbursement. This clarifies the status of the funds used to purchase the properties in question.
“Once public funds are appropriated and disbursed to an entity other than a political subdivision of the State of Oklahoma, they cease to be public funds,” Judge Gay wrote. The DAEDF is an Oklahoma not-for-profit corporation and “is not a political subdivision of the State of Oklahoma,” the judge ruled.
13 issues on appeal The dispute “involves six parcels of land purchased by and placed in the name of” the Duncan Area Economic Development Foundation without approval from the City of Duncan or the Duncan Economic Development Trust Authority, John and Margaret Love of Oklahoma City wrote in the petition they filed with the Oklahoma Supreme Court on Feb. 28.
It is undisputed that two of the parcels were acquired solely with $2,251,058 in sales tax revenues; the DAEDF contends that the other four parcels were acquired with internal funds. However, the Loves maintain, the City and the Trust “were not allowed sufficient time to trace the origin of” those internal funds.
Among the 13 issues that will be raised in the appeal are these:
• Whether the trial court erred in holding that “once public funds are appropriated and disbursed under an economic development arrangement between a public entity and a private entity, the funds cease to be considered public funds.”
• Whether the district court erred in finding that “the City and the Trust were aware that the Foundation would be the title owner” of the six disputed parcels of real property “in the absence of any credible admissible evidence indicating that the City Council or the Trustees of the Trust were affirmatively advised that title would be issued in the name of the Foundation.”
• Whether the district court erred in “relying on a hearsay affidavit not subject to cross-examination, in holding that the Foundation used internally generated funds to purchase four of the six parcels of property at issue in this matter.”
• Whether the trial judge erred in ruling that the two undisputed parcels of property which were acquired with sales tax revenue paid to the DAEDF “are owned by the Foundation and neither the City nor the Trust has any property interest” in those two parcels.
The Supreme Court directed the City and the Trust to file an amended petition by March 14.
Court’s ruling was ‘a clear decision’ The DAEDF “firmly believes that the initial court ruling was clear and just, validating the legality of DAEDF’s acquisition of properties through contracted services with the City and Trust,” said Lyle Roggow, president and chief executive officer of the foundation.
“Despite a judge's clear decision, the City has chosen to continue this fight, further expending taxpayer dollars on a matter already resolved. This appeal perpetuates a legal process that DAEDF considers an unnecessary and unproductive use of taxpayer funds.”
The foundation is 'deeply disappointed that the City has chosen to continue this litigation,' Roggow said.
'It's perplexing. Duncan City Council members previously asserted they only wanted to have a judge rule if everything was legal. The district court's ruling unequivocally confirmed DAEDF's rightful ownership. Now, despite a clear judicial decision, they are appealing, demonstrating a disconnect between their stated intentions and their actions. This unwise course diverts valuable taxpayer resources away from critical community needs and economic development initiatives. It is disheartening that the City chooses to expend further taxpayer funds to question how previously allocated tax funds were legally spent, after receiving the answer they claimed to desire.'
Duncan Area EDF is ‘still in business’ The Duncan Area Economic Development Foundation previously received a percentage of Duncan’s sales tax. However, the Foundation’s contract with the City of Duncan ended July 31, 2024, according to President Lyle Roggow.
Furthermore, the ballot title on an election held last year to earmark a portion of the city sales tax to economic development listed the recipient as the “Duncan Area Economic Development Trust Authority.”
Consequently, the DAEDF no longer receives a portion of the city sales tax. Nevertheless, “We’re still in business,” Roggow told Southwest Ledger. “We’re self-sustaining,” surviving on rentals collected on “14 or 15 properties we own, manage and lease.” Buildings the DAEDF has constructed for tenants “are all full,” he said.