A judge ruled last week that several Kansas City, Mo. business owners behind a lawsuit challenging the legality of the funding mechanism for the city’s proposed $102 million, two-mile downtown streetcar line don’t have to file a bond to proceed with their appeal.

The city had asked the appeals court to require the plaintiffs to post a $20 million bond before their appeal could proceed. The city has argued that the project’s delay could drive up costs and risks an increase in interest rates on planning borrowing.

The court rejected the bond posting, but it did grant the city’s request for an expedited appeal and set a schedule that calls for initial briefs to be due by the end of the month.

The initial complaint was filed by KCAF Investors LLC in Jackson County Circuit Court against the Kansas City Downtown Streetcar Transportation Development District in January. It sought a declaratory judgment voiding a special parking and property tax assessment and a 1% sales tax.

The circuit court in March granted the district’s request for a dismissal after concluding that the deadline for filing a challenge had passed. The business owners’ attorney, Mark Bredemeier, last month filed in the Missouri Court of Appeals for the Western District.

The appeal asks the court to reverse the dismissal and remand the case back to the circuit court “so that we can obtain a decision on the merits of this lawsuit, which we believe will determine that these funding mechanisms which places the burden on a relatively small number of property owners, most of whom were not allowed to vote, is illegal,” Bredemeier said.

The taxes would be collected within the boundaries of the special district that houses 4,000 parcels. The streetcar line relies on as much as $73 million in bond financing repaid with revenues from those sources.

Registered voters in the district approved the measures in December through a mail-in ballot. The project has the backing of Mayor Sly James and the City Council. A vote earlier in 2012 established the special downtown taxing district.

The city will construct and own the system. It will be operated under an agreement with a streetcar authority made up downtown business leaders and residents and city appointees. The city would put an annual appropriation pledge behind bonds issued for the project.

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