The Crestwood Board of Aldermen plans to meet in closed session next month to discuss legal issues surrounding the future of Sappington Square.

Aldermen will conduct a closed meeting either before or after their next regular meeting, which is scheduled for 7 p.m. Tuesday, Jan. 11.

Mayor Roy Robinson called for the closed session during a lengthy and sometimes contentious discussion between some aldermen and Pulaski Bank attorney Kevin King at last week’s regular board meeting.

At issue is the community improvement district, or CID, currently in place at the Watson Road retail center.

Specifically, some aldermen are at odds with Pulaski Bank, the property owner, over whether the board should approve a new development agreement for Sappington Square, or whether the 1 percent CID sales tax collected on purchases made at the center should be repealed.

The original development agreement fell through late last year when the center’s previous developer, Sappington Square LLC, defaulted on a loan it obtained from Pulaski Bank for construction of the roughly $13 million redevelopment project. The bank foreclosed on the property and bought it at public auction in December.

The original agreement allowed the developer to request up to $2.5 million in CID proceeds to reimburse certain project costs. But while the developer completed construction on the property, it missed a July 2008 deadline to request reimbursement, and none of the CID proceeds have been spent on the project. About $45,000 is in the CID account.

King has said Pulaski Bank wants to fill the vacant lots at Sappington Square as quickly as possible and eventually sell the property to a new owner. A new development agreement would help that effort because the bank could use CID proceeds to “incentivize” prospective Sappington Square tenants with lower rent, King has said.

But some board members have indicated they want to dissolve the CID and repeal the sales tax.

While CID attorney Shannon Creighton of Gilmore & Bell has contended that action would require a vote of the property owner — Pulaski Bank — her opinion has been challenged by Ward 3 Aldermen Paul Duchild and Jerry Miguel, who’ve said only a resolution from the CID’s Board of Directors is needed.

City Attorney Rob Golterman indicated at last week’s board meeting that Creighton no longer is the counsel for the Sappington Square CID and that district currently is without legal representation.

He did not elaborate on Creighton’s departure.

Golterman recommended the board discuss the “weighty” question of how the CID can be dissolved, and other legal issues, in closed session.

“There are people up here who are not lawyers who believe one thing, and there are other people up here who are not lawyers who may believe another,” Golterman said. “But the bottom line is there is a legal issue, and there’s a legal answer. I’d certainly prefer to discuss that in closed session to avoid putting the city in a precarious situation in the event that there might be some litigation involved.”

An ad hoc board committee met last month to discuss the benefits and drawbacks of having a new development agreement for Sappington Square. The committee, comprised of Ward 2 Alderman Jeff Schlink and Ward 4 Alderman Deborah Beezley, submitted a list of “pros and cons” to the board last week.

The committee originally was formed in September after aldermen voted 4-3 to reject a proposed development agreement for Sappington Square with Pulaski Bank, the Sappington Square CID and Priority Property Holdings LLC — a wholly owned subsidiary of the bank.

Schlink told the board in October he and the other aldermen who voted “no” on the proposed agreement — Miguel, Duchild and Ward 1 Alderman Darryl Wallach — saw no reason to change their minds. His report drew criticism from aldermen that supported the agreement and King, who said the ad hoc committee never met with the bank.

At one point during last week’s discussion, Duchild contended that, in terms of a negotiating a new development agreement, “the ball is in Pulaski’s court.”

“We told them ‘no’ to their offer. They have not come back … with any counter offers, which tells me they don’t want to negotiate,” Duchild said.

Therefore, the CID Board of Directors should reduce the 1-percent sales tax to zero for the time being, and the city should send a letter to Pulaski Bank officials asking them to “withdraw the CID entirely,” Duchild said.

King later replied he was “insulted” by Duchild’s contention that Pulaski Bank hasn’t been willing to negotiate a new agreement.

“I can’t tell you how many times — and I wish I had a record — that I’ve said to this board Pulaski Bank is willing and ready to negotiate anything with regard to that agreement,” King told the board. “Time after time after time I’ve said that … that we’re willing to come back. Alderman Duchild has said …”

Duchild attempted to interject, but King said, “Wait a second. You had your say. Alderman Duchild has said we weren’t willing to talk. My goodness, the ad hoc committee was formed, we were never asked to appear in front of the ad hoc committee to negotiate …

“We were never asked to do that one single time. Why not, Alderman Duchild? I don’t know. I was ready, willing and able — on the record — to do it. We weren’t asked,” King continued. “I stand here tonight and tell you again: We will negotiate that agreement to try to work out something palatable to the city and to Pulaski Bank and to the CID district … Let’s avoid litigation, because that’s where this is headed … The clear answer is to negotiate a palatable agreement, and I’ve said time and time again we’re willing to do it.

“And I really take exception and am insulted by Alderman Duchild’s suggestion that we haven’t been willing to do that. My goodness, that is absolutely wrong.”

For example, the bank is willing to discuss lowering the $2.5 million maximum CID reimbursement to a figure more in line with what revenues the sales tax actually is producing, King said.

Miguel, however, asked if King would negotiate the sales tax itself.

“Mr. King, you’ve accused this board — at least Alderman Duchild — of being unwilling to negotiate,” Miguel said. “I have a question for you, sir: Are you willing to negotiate the rate, the CID sales tax rate?”

King replied, “I’m not willing to negotiate anything specific right now … I’m not going to sit here and negotiate specific terms of a development agreement in an open meeting.”

Miguel said, “Is that a negotiable item?”

King said, “Alderman Miguel, that is inappropriate …”

“My question is, are you willing to negotiate the rate?” Miguel said.

“I am willing to negotiate the development agreement. I’m not going to answer specific questions,” King said.

Miguel said later that reducing the maximum reimbursement was irrelevant to the Sappington Square negotiations — reducing the sales tax rate is.

“To continue the tax at its current rate and term is really rewarding a failed project,” Miguel said. “This project is delivering about 12 percent of what it was promised to do. To continue the tax under those circumstances, it’s rewarding failure, and I don’t think that’s what this board is about.”

The board in July approved a conditional-use permit for the construction of a Fifth Third Bank at Sappington Square.

The bank asked aldermen last week for a 12-month extension of the permit, citing delays in obtaining approval for the project from water and sewer utilities.

A motion by Miguel to table Fifth Third Bank’s request until January was defeated.

Before making the motion, Miguel noted the bank’s CUP does not expire until the end of January and said the CID dispute may be resolved by then.

The board subsequently approved a nine-month extension of Fifth-Third Bank’s permit, with Duchild and Miguel opposed.

Earlier in the evening, aldermen voted unanimously to approve a liquor license for San Jose Mexican Restaurant, which a representative from the business said could open as early as Dec. 20 in Sappington Square.