Battle over McKee's north St. Louis plan moves to appellate court
This article first appeared in the St. Louis Beacon, Feb. 1, 2012 - As the legal battle over Paul McKee's proposed but delayed $8.1 billion redevelopment in north St. Louis advanced to the Missouri Court of Appeals Wednesday, the arguments on both sides stayed pretty much the same.
McKee's lawyer said that contrary to a lower court ruling that has blocked the plan, the law does not require more detailed specifications before the city can approve tax-increment financing. Lawyers for residents of the area opposed to the plan said it will never gain the needed financing, is based on unrealistic assumptions and will hurt the property values of current residents.
Both sides said the arguments and the questions from a three-judge panel went pretty much as they expected. The appellate court has no timetable by which it needs to issue its ruling.
Any timetable that McKee hoped to follow for his proposal was derailed back in July 2010, when St. Louis Circuit Judge Robert Dierker ruled that it had a "fatal flaw": That while the developer's Northside Regeneration proposal had a plan, it did not include the specific projects he said were required by the tax-increment financing ordinance.
Specifically, Dierker wrote:
"Northside's redevelopment plan sets forth estimated dates of completion of objectives, but without reference to any specific projects as that term must be understood. The plan is not the project. Concepts are not projects. Projects are concrete, not hypothetical or abstract: Sanitary sewers will be constructed in City Block 1000, commencing on such-and-such a date, at an estimated cost of so many dollars."
Those were the words that both sides zeroed in on during arguments at the Old Post Office downtown Wednesday morning. Each side had 20 minutes to convince the appellate judges their view was correct.
Arguing for McKee, attorney Paul Puricelli said that Dierker "has grafted onto the statute" the requirement for specificity to an exacting degree. He said the only way to redevelop the long-neglected hundreds of acres in north St. Louis was with a large-scale redevelopment relying on a TIF from the city.
Calling McKee's proposal such a "visionary project," Puricelli said that Dierker's ruling wrongly disallowed the nearly $200 million TIF approved by the city.
"He created a new definition of a redevelopment project," Puricelli said. "There is no basis for that definition in the statute."
He said the city's aldermen and TIF Commission would not have approved McKee's request if they were not satisfied with the level of detail presented. And, he added, taxpayers would not be out any money at all until McKee completes infrastructure projects needed for the redevelopment to begin.
"He would have to go to the city, receipts in hand, and say to the city, this is what we did," Puricelli said. "This isn't a situation where the risk is placed on the taxpayer."
Attorneys for the residents whose suit has blocked McKee's plans said that Dierker's view of the TIF law, and how this situation falls short, is correct.
Bevis Schock told the judges that the real issues were how property owners like plaintiff Cheryl Nelson, who was sitting in the front row of the gallery of the courtroom, are affected financially by having their property declared blighted.
"My clients say if they want that TIF money and they want to blight those houses," Schock said, "they have to follow the statute."
Schock used the terms "concept" and "aspirational" to characterize the McKee proposal, and he said that no specific project has been brought forth. "All they have is a plan," he said. "Words have to mean something."
He also focused on trial testimony that said a one-page letter from a small bank in Washington, Mo., pledging financing for the redevelopment is hardly enough support for a plan the size of what McKee has proposed.
"We have a one-page letter that says we're excited and it's all subject to review," Schock said, adding later that "the plan is from another universe.... No serious businessman can believe in their numbers."
Sparring in Legal Briefs
The arguments for both sides were amplified in legal briefs filed with the appellate court in advance of Wednesday's session.
In its brief, McKee's side said that Dierker wrongly ruled that the ordinances for the plan lacked the necessary cost-benefit analysis because the TIF law requires such analysis only for the plan as a whole, not for individual projects.
And, the brief argued, Dierker wrongly denied McKee's request for a new trial and should have allowed Northside to present evidence of redevelopment projects approved by the Board of Aldermen that the brief said would have satisfied Dierker's general objections.
In his vigorous rebuttal argument to the judges Wednesday morning, Puricelli said that in the end, it is the aldermen elected by the people who are the best safeguard in making sure that TIF money is used wisely.
"With a project of this magnitude," he said, "at some point citizens have to rely on the aldermen to insure that their money is well spent."
The brief submitted on behalf of the plaintiffs -- written in plainer language that often bordered on being snarky -- reinforced the oral argument that the case was about the people who live in the targeted area, not necessarily Dierker's interpretation of the law.
Not that the law itself is ignored. At one point, the brief says that "many portions of the TIF statute are somewhat opaque," adding in a footnote:
"And of course, it is precisely opaque statutes that sharpies use to their benefit because no one else can figure out what is going on."
And, it said, Northside knew it had a battle on its hands with its large-scale proposal.
"Northside knew this case was going to be all out war -- there were shouting matches at public hearings, squabbles over inadequate room size, anti-McKee graffiti all over the neighborhood, a request for a TRO, contentious depositions ....
"This case does not exist in a vacuum. Real lives and huge sums of money are at stake."
Mckee Appears at Umsl
Start of update: One day after the court hearing, McKee and his wife, Midge, were back on the road plugging the Northside project, this time at a "Breakfast and Business" forum at the University of Missouri-St. Louis.
Their pitch was much the same as it has been at dozens of such presentations since the public push for the project began:
He and Midge were both born in north St. Louis County, bemoan what has happened to the city's north side and want to help bring it back by investing in infrastructure and luring jobs, residents and more to the area.
Noting that he began acquiring property for the project eight years ago, McKee said that the process has been an educational one for him and his family.
"When we started this journey," he told the group, "we thought we'd change things. We're the ones who have been changed."
Quoting the maxim he has used often -- "nothing great happens unless you embrace the tension" -- McKee said that at the same time, when things get tense, as they have often in the Northside process, no one needs to become unpleasant.
"Don't be a jerk about it," he said.
He also talked about the racial aspects of the situation, as a white man trying to redevelop an area that is predominantly African American, and the financial aspect. He disparaged characterizations of the plan having homes only rich people can afford, saying that the average price that is often quoted should more accurately reflect diversity in homes that range from a secretary to a CEO.
"If we can get economically diverse people to bump into each other," McKee said, "they might have something to say to each other."
He also re-emphasized that eminent domain is not a part of the plan, though it would be allowed if aldermen passed an ordinance for it, and he said that he hopes many residents who now live in the plan's footprint would stay.
"We never ever envisioned tearing the whole thing down and starting over again," he said.
On one high-profile but delayed part of the project, the renovation of Clemens House at 1849 Cass Avenue, McKee said the plans for the site have changed as the amount of state tax credits has fallen. He now envisions the site to be home in part to a trade school that could help bring much needed jobs to the area.
He urged everyone in his audience not just to observe the long-running process but to get involved themselves.
"Find your way in," McKee said. " You all have a role just as we have a role in rebuilding this community." End of update.
Links to the court briefs were originally posted by the Riverfront Times.