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Government, Politics & Issues

Analysis: Judge in McKee trial must weigh heated words, cold facts

This article first appeared in the St. Louis Beacon, March 3, 2010 - Compared to the two sides that are doing battle in court over Paul McKee's $8.1 billion plan to remake much of north St. Louis, David and Goliath may look like an even match.

McKee is a longtime local developer, with projects like WingHaven in St. Charles County and North Park near Lambert Airport to his credit. For a long time before he went public with his plans for what is called NorthSide Regeneration, he quietly bought up many parcels of land in the area, investing his own money where few have done so in the past.

Challenging McKee -- and the way the city has granted him redevelopment rights and $390 million in tax-increment financing to redo streets, sewers and other infrastructure -- are homeowners who say the designation of blight that goes along with the TIF has hurt their property values. They say McKee has failed to make two points: that he has the financial backing to follow through on his plans and that the development couldn’t be done without tax breaks. (Click here to see opponents' website.)

Both sides made their points -- sometimes in contentious fashion -- during the trial in St. Louis Circuit Court that wrapped up on Thursday. Judge Robert H. Dierker Jr. gave attorneys time to file additional arguments, then will rule, but depending on what he has to say and why, appeals are likely.

Even as he ponders the case, action proceeds on other fronts. An April 1 deadline looms for additional legislation to activate the TIFs, though the date could be extended. McKee is pursuing a number of other government subsidies to help the project make financial sense.

During the trial, Dierker used his typical no-nonsense demeanor to hold theatrics to a minimum. His stern rules extended to spectators as well. Several times, he reminded the dozen or so people who gathered every day that as far as he is concerned, in his courtroom it is still the 19th century. No one could wear a hat; on one occasion, he ordered a woman to take her feet off the bench; on another, he told someone else to turn off his laptop computer.

At one point on Wednesday, when two of the lawyers -- Eric Vickers for the plaintiffs and Paul Puricelli, an attorney for McKee -- had a heated exchange over the volatile issues of eminent domain and blight, Dierker's exasperation boiled over.

"Wait a minute!" he said sharply. "We're going to have a question and we're going to have an answer."

Despite that atmosphere of strict scrutiny, and even without a jury to play to, lawyers managed to use an element of stagecraft to bolster their viewpoints. Vickers in particular used props -- maps, plans, pictures -- as well as theatrical gestures to try to prove his side's case. Puricelli often threw up his hands and cast his eyes to the ceiling as he registered objection after objection to the way the plaintiffs were presenting their arguments.

Over and over, the attorneys clashed over four basic issues: blight, eminent domain, finances and how much residents of the area trust that McKee's vision is grounded in reality.

BLIGHT

From the start, the plaintiffs and their lawyers have complained that by designating the entire 1,500-acre footprint of the North Side project as blighted, the city has wrongly cut the value of their property.

Cheryl Nelson and Isaiah Hair Jr., two of the homeowners who brought the suit against McKee, got their own tax breaks when they built their homes, but those abatements have expired now.

Nelson, who lives at 1519 N. 18th Street, said her home has lost up to 30 percent of its value -- estimated at up to $130,000. Hair said, who lives at 1601 Hogan Street, said that because of the new construction that has gone up in the area over the past 10-15 years, the neighborhood should never have been part of the redevelopment area to begin with.

One of the most frequent exhibits to be examined by the witnesses was a series of photographs of new buildings in the area. A video introduced late on the first day of the trial showed that if you start with a photo of an abandoned lot in the redevelopment area, then pan to either side, recent construction gives a different view of the neighborhood than the original picture did.

To others, though, the blight designation was not directed at any particular parcel of land or any particular building. Instead, it is a mechanism that the city needed to use to get development started in an area that had been ignored for far too long.

Alderwoman Kacie Starr Triplett of the 6th Ward said she considered the blight declaration simply a procedural tool, not something that residents should take to mean their homes were considered a social or an economic liability.

Alderwoman April Ford-Griffin, whose 5th Ward makes up much of the project area, testified that the area is obviously blighted, a view that was echoed by Barbara Geisman, deputy mayor for development. Asked why the city did not bring in an outside consultant to determine whether the project area met the terms needed for the TIF to be approved, she replied:

"I think it would have been a waste of money, because it was clear to anyone who looks at the area that it was blighted."

EMINENT DOMAIN

Almost as emotional as the testimony over blight was the continued wrangling over the issue of eminent domain -- whether the developer would or could take private property for the project if it could not be acquired through negotiation.

From the time that McKee went public with his plans last summer, he has insisted that no owner-occupied properties and no churches would be subject to eminent domain. That point was hammered home in presentations to the TIF Commission and the Board of Aldermen as they considered the application for tax breaks and the legislation giving McKee the right to redevelop the area.

But those skeptical of such assurances point to the fact that that the presentations also said that if eminent domain was needed at all, it would have to be accomplished with additional legislation. Time and again, attorney Vickers asked witnesses where in the redevelopment plan or the redevelopment ordinance it says that eminent domain will not be used for owner-occupied homes or churches.

The response by Ford-Griffin and others -- that because eminent domain was not planned for those areas, such a prohibition did not need to be included -- did not satisfy those who are challenging McKee's plan.

Vickers insisted that the line of questioning was relevant because "it is misrepresentation and it goes to the issue of bad faith."

Dierker said in response:

"As far as I'm concerned, the issue of whether eminent domain can or cannot be used is an issue of law, not an issue of bad faith."

FINANCES

The first witness called by the plaintiffs may have been the most memorable -- Michele Boldrin, chairman of the economics department at Washington University. In four hours on the stand, he repeatedly ridiculed the financial terms in the proposal submitted by McKee, using phrases like "pie in the sky" and "plainly impossible."

Any graduate student who had brought such a plan to him, Boldrin said, would have been thrown out of his office.

In particular, Boldrin -- who was hired by the plaintiffs at $500 an hour to analyze the plan -- criticized the area as being too large, too heterogeneous and too irregularly shaped. He also said he did not see any assurance that if the homes, schools, parks and other features that the project envisions materialize, people would necessarily flock to live and work there.

For the project to make sense after 20 years, he added, it would have to generate between 80,000 and 100,000 new jobs -- a number he found unrealistic.

Opponents also cast doubt on the ability of the Bank of Washington, Mo., to serve as the lead lender for such a large project, given its size. But McKee's side emphasized repeatedly that the bank is set to finance only a small part of the project, and that other developers with other financing are expected to take responsibility for much of the rest.

SUSPICION LINGERS

In the end, the case brought against the McKee project appears to stem in large part from the mistrust that the developer generated during the many months that he was buying up land in the redevelopment area in secret, without acknowledging what he was doing.

He has defended that approach as necessary if he wanted to keep land acquisition costs reasonable, and he insists that since he went public last summer and began holding meetings with a number of neighborhood groups, he has been able to allay such suspicions about his motives. The plaintiffs, he said, are in the minority.

McKee's attorneys frequently made the point that the tax-increment financing granted by the city is for the infrastructure costs alone -- estimated at more than $1 billion for streets, sewers, sidewalks and the like -- and that McKee is not going to profit from those. Even if the project fails, the city would be left with improvements that are sorely needed.

But such assurances have not been able to overcome the opposition of those who feel their homes and their lives will be hurt by a project they say is going ahead without their input or their blessing. They say the city and the developer are working together against them, and they want the project to be stopped in its tracks.

Now they have to wait to see if their slingshot is powerful enough to do the job.

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