|Eric Vickers (right), an attorney for north St. Louis resident Cheryl Nelson (left), courtesy of St. Louis Business Journal|
St. Louis Circuit Judge Robert Dierker ruled in favor of city residents who allege in a lawsuit filed last fall that the Board of Aldermen did not comply with state law when it approved a tax increment financing (TIF) package for McKee’s massive project.
In his 51-page ruling, Dierker raises questions about the development's economic projections, the city's approval process, city officials' reliance on market studies provided by the developer and McKee's ability to pull off the project and deliver on his promises to transform north St. Louis. "The record is bereft of evidence that anyone, anywhere has accomplished the feat of attracting new residents to core urban areas on a scale envisaged by defendants," Dierker writes.
North St. Louis residents Bonzella Smith, Cheryl Nelson and Isaiah Hair sued the city of St. Louis, St. Louis Board of Aldermen and NorthSide Regeneration, an affiliate of McKee’s O’Fallon, Mo.-based McEagle Properties in October 2009,claiming that the area and their homes were improperly designated as blighted to make way for the project’s requested tax breaks. The Board of Aldermen approved nearly $200 million in TIF for the first phase of the project in October 2009. For the entire project, McKee wants the largest TIF in the city’s history, $390 million. TIF allows municipalities to promote economic development by earmarking property tax revenue from increases in assessed values within a designated TIF district. It is used to finance debt issued to pay for a development project.
On the courthouse steps Friday, north St. Louis residents and their lawyers hugged, shook hands, smiled and clapped in celebration of the verdict. Eric Vickers, one of the plaintiffs' attorneys, declared the redevelopment plan "dead." "It was never alive to begin with in my opinion," he said. "It always was a fantastic ruse to tap into public financing.
Another lawyer for the plaintiffs, W. Bevis Schock, said: "We just saved the city of St. Louis $450 million." He was referring to the TIF, as well as state incentives and other aid for the project. "We hope Mr. McKee develops property," Schock said. "He just needs to do it through private transactions."
McKee's lawyer, Paul Puricelli of Stone, Leyton & Gershman, said he planned to file a post-trial motion to get in front of JudgeDierker again. "When we get back in front of him, we will be able to show him that his definition of the project at is at odds with the TIF statute," he said. "The statute defines a redevelopment project very broadly. The judge added a further definition to the project to require specifics like building a sewer on such-and-such street, at such-and-such cost, and that's not part of the TIF statute."
St. Louis Counselor Patti Hageman said city officials are "disappointed" with the decision and considering an appeal. "We do not believe the ruling is an end to a visionary attempt to revitalize the northside," she said. "As the court's decision itself noted, if the project has merit, which the city believes it does, then this ruling is only a temporary obstacle to an important opportunity for reinvestment on the city's northside."
McKee wants to partner with homebuilders and other developers on the 1,500-acre proposal to build up to 4.5 million square feet of office space, 1 million square feet of retail space, 2,200 new single-family homes and 7,800 apartments on 1,500 acres in north St. Louis and west downtown over the next two decades.
In an earlier memorandum filed in December 2009 in the 22nd Circuit Court, Dierker raised concerns about the project’s financing and the city’s blighting of property. In previous statements, Dierker cited some of the city’s largest proposed development projects, from the Gateway Mall to Ballpark Village, and wrote that NorthSide is “perhaps the most ambitious of all.”
“How much can or will become reality?” Dierker asks. “Is there more of Burnham or of Barnum in one Paul McKee?”
When asked about the judge’s concerns about the project’s viability, Puricelli said: “If you don’t try, it certainly is never going to happen. We agree with (St. Louis) Alderman Freeman Bosley.” Bosley had testified at the trial, saying “Let’s take a chance on it.” Courtesy of St. Louis Business Journal.
Click here to download a copy of the judge's ruling