Attorneys for Paul McKee’s $8-billion Northside redevelopment plan and the City of St. Louis made a plea before the Missouri Supreme Court last week to defend their $390 million tax-increment-finance agreement, which a lower court shot down in 2010.
Basically, the Supreme Court judges focused their questions – to both sides – around: What is a redevelopment project? And did the redevelopment agreement between Northside and the city meet the requirements of the state’s TIF legislation?
In 2010, St. Louis Circuit Court Judge Robert Dierker ruled that the two TIF ordinances passed by the St. Louis Board of Aldermen were “arbitrary and beyond the powers of defendant City under the TIF Act.” He also ruled that the redevelopment projects within the plan must be “shovel-ready” – using a term not stated in the TIF Act.
Paul Puricelli, attorney for Northside, said the TIF statute is not specific about what a redevelopment project has to be, especially not at the outset. In the case of the Northside agreement, Puricelli argued, the infrastructural improvements that the TIF would fund are needed before corporate tenants can be enticed.
“Where is the project?” Puricelli said in court on Nov. 28. “The projects and the plan can be one and the same, often are and are here. If we don’t have streets, if we don’t have sewers, we can’t go to Home Depot and say, ‘Come in guys.’ We have to have that first.”
Attorney Gerard Carmody, representing the city, said Dierker introduced confusion into what a redevelopment project is when he introduced terms such as “shovel-ready project” into his ruling.
“This case is about a trial judge who created his own definition of a statutory term of a redevelopment project and utilized that new term he created as the basis to invalidate two city ordinances whose objectives were to eliminate blight and to transform a large portion of the city of St. Louis,” Carmody argued before the court.
The court is considering an appeal to Dierker’s ruling on a suit that was joined by a second suit. Initially, two residents filed action against the city of St. Louis and then-named Northside Regeneration, claiming the redevelopment plan did not comply with the law, among other things. They were joined by two other residents, represented by a different set of lawyers. Both suits were considered jointly in the appeal.
Dierker rejected all the pleadings of the original and intervening plaintiffs. But he ruled that the city’s agreement with Northside did not meet the requirements for a TIF because it lacked defined “shovel-ready” redevelopment projects, a complaint Dierker introduced (or, as he wrote, “detected”) himself in his ruling.
As lawyers for Northside argued in briefs to the Missouri Supreme Court, attorneys for the plaintiffs stressed Dierker’s point in their briefs to the higher court, though the issue was not stated in their original filings.
“The heart of this case and 90 percent of the arguments focus on whether a project means a specific building that has a door, a roof, a purpose, or not,” W. Bevis Schock, attorney for the interveners who joined the original plaintiffs, said to reporters after the oral arguments on Nov. 28.
Different from Shelbina?
Missouri Supreme Court Judge George W. Draper III specifically asked Northside attorneys how this case is different from another Missouri case, City of Shelbina vs Shelby County. In that Supreme Court case, the court shot down two TIF ordinances because the city did not specifically define a redevelopment project in its plan. Under the TIF law, a project must be adopted before any TIF ordinances can be passed.
Carmody responded to Draper saying, “The city of Shelbina did not have a developer who had invested $27 million in the project area. It did not have a developer that had purchased 880 parcels of property that nobody in private enterprise would touch or has touched in decades.”
Judge Laura Denvir Stith was tireless with her questions for the plaintiffs’ attorneys.
“Clearly the definition of redevelopment project does not include use ‘shovel ready’ specifically, such as used in the opinion. How specific does it have to be?” she asked.
Schock responded that the redevelopment project is different than the redevelopment plan, unlike what the Northside attorneys argued. In addition, plaintiff attorney D.B. Amon said, “Infrastructure cannot be a project.”
Northside attorneys argued that the plan defined projects to demolish buildings and build streets, sewers, and other infrastructure, which all qualify as “redevelopment projects.” For clarification Stith recited their argument to Amon.
“A lot of the buildings are in bad shape,” she said, and they plan to demolish them by a certain date – and that is the project.
“You are saying, ‘No,’ you have to be more specific?” she asked. “What do you think has to be more specific?”
Amon responded, “You have to identify where that project is going to be and how much it’s going to cost and how to finance it, and that’s to be put into the cost-benefit analysis.”
“The cost-benefit analysis is for the plan, not the project,” she said.
McKee, owner of McEagle Properties, is leading the 1,560-acre project and proposes to construct four commercial centers totaling over four million square feet of new retail/office space, 10,000 new homes, parks and a trolley line.
Carmody said Dierker, like many others, may have been skeptical of whether or not the large-scale project would succeed.
“The fact of the matter is, his skepticism has no place in the analysis of whether or not the statutory requirements necessary to go forward with this have been met,” Carmody said in court.