Bully pulpits: Both sides submit final briefs in McKee trial
This article first appeared in the St. Louis Beacon, April 23, 2010 - In the post-trial arguments submitted by both sides in the trial over Paul McKee's proposed $8 billion redevelopment project in north St. Louis, the parties found something else to argue about: Teddy Roosevelt.
Attorney Paul J. Puricelli, in his brief submitted on behalf of McKee's Northside Regeneration project, argues that the developer's proposal is the best chance to transform an area of the city that has long suffered from neglect.
Combatting efforts by plaintiffs to argue that the city wrongly approved McKee's redevelopment plan and the tax increment financing that would help pay for it, he opens his written argument with this quote from Roosevelt in 1894:
"Criticism is necessary and useful; it is often indispensable; but it can never take the place of action, or be even a poor substitute for it. The function of the mere critic is of very subordinate usefulness. It is the doer of deeds who actually counts in the battle for life, and not the man who looks on and says how the fight ought to be fought, without himself sharing the stress and the danger."
But the intervenors in the case, who own property in the affected area, take the TR quote in a wholly different way from which Puricelli says it was intended. The brief filed by their lawyers says:
"Northside Regeneration's quoting Theodore Roosevelt's rejection of criticism to start its brief is illustrative of its view of the largest development project to ever be proposed to the citizens of St. Louis -- above criticism. But it is exactly the exercise of criticism -- 'to consider the merits and demerits of' -- that the law demands of legislators when such proposals are put before it.
"The evidence at trial points overwhelmingly to the fact that the Board of Aldermen did not even remotely engage in the criticism of McKee's proposal that Roosevelt said is both 'necessary' and 'indispensable.' Which is to say that the board made findings in accordance with the TIF statute's requirements without having any evidence -- let alone substantial evidence -- to back up those findings."
Puricelli says the Roosevelt quote was meant to be a shot across the bow at the plaintiffs, not the court, but the other side tries to turn the quote around, saying:
"Although Northside's opening quotation is nothing short of a signal to the court to 'back off' critiquing the production being sold as the deliverance for beleaguered north St. Louis, the curtain exposing McKee first began to rise when the court in its preliminary order perceptibly posed the question: Is McKee a modern day P.T Barnum? Now we pull the curtain completely up on this clever scheme to soak public funds for a private benefit."
Each side goes on to do verbal battle on several issues in the case, which is now in the hands of Circuit Judge Robert H. Dierker, who heard it without a jury. He says his ruling may be issued next month.
PHASING IN THE PROJECT
McKee's proposal divides the redevelopment into four phases, completed over 23 years, with the first two areas at the western edge of the Gateway Mall, near Union Station, and in the vicinity of where the new Mississippi River bridge will land in Missouri, north of downtown. The $390 million in tax increment financing approved so far covers those two areas.
His brief says that dividing the overall plan into such phases makes the best sense for such a large-scale project because it will let the Board of Aldermen keep closer track of how things are going.
"This structure allows the board to retain control over the extent to which it will activate TIF financing as the project progresses, a result that plaintiffs should favor. In this fashion, the board can periodically assess the progress of redevelopment to determine whether it justifies the continued support of TIF."
But the plaintiffs brand such a phased approach a "flim flam" that harms property owners whose neighborhood will not see change for a long time, if ever, depending on how well the first parts of the project end up.
"Under Northside's reasoning, if areas A and B do not succeed, then it has no obligation to proceed with redevelopment of areas C and D. However, in presenting its redevelopment plan to the city and the public, Northside represented that it would redevelop the entire area, with no phasing conditions."
One of the major focuses of the trial was whether McKee has lined up financing needed to complete the multibillion-dollar project.
His brief quotes David Newburger, chairman of the TIF Commission, on how such a tax break is used to help reassure lenders that a project is solid.
"No TIF project ever has a firm commitment in the sense of a bank commitment," Newburger testified, "and the reason for that is the financial institutions are sitting on the side and they're not going to make a commitment until they know what other incentives are in place so that they understand what the value is."
Under those circumstances, the brief says, "every witnesses asked agreed that it would not be commercially reasonably to expect any lending institution to issue a firm commitment, on day one, to lend $8 billion toward the redevelopment project -- not because the project was not feasible, but because no one could predict the evolution of economic conditions or the redevelopment plan over its 23 year life."
Further, it noted that Washington University Professor Michele Boldrin, whose critique of the McKee plan during the trial was strongly negative, did not suggest any alternative to the current financing plan, which at this point is primarily a loan commitment from the Bank of Washington, Mo., that would cover only a small part of the project's costs.
In their brief, the plaintiffs challenge that point, saying:
"Intervenors reject Northside's contention that they needed to present alternate financing. ... The only financing the aldermen -- and this court -- need review is what Northside produced."
Another issue that was a focus of the trial was the use of blight, a designation required before tax increment financing can be approved for redevelopment. The property owners who challenged the TIF introduced photographs that showed many parts of the McKee project area that had already seen new construction.
They hammered this point home in their brief, noting:
"Northside's own study reflects that 75 percent of the buildings in the redevelopment area are either in fair, good or excellent condition. This hardly demonstrates a predominance of blight conditions of the building structures in the redevelopment area. ... Northside cannot refute the on-the-ground evidence of residents, who submitted comments to the TIF Commission, that their sidewalks and streets are in fact not blighted."
But in its brief, McKee's side said that "intervenors' attempts to isolate individual areas, properties or elements within the study not only constitute impermissible attempts to assess the area piecemeal, they sometimes are nonsensical."
It cited earlier court rulings that said a redevelopment area must be viewed as a whole when a determination of blight is made, and it cited testimony by Boldrin that the 5th Ward, which includes 85 percent of the redevelopment area, is "probably the poorest part of the city of St. Louis."
THE "BUT FOR" TEST
A further issue debated in the briefs is the "but for" test -- a point of view designed to determine whether a particular area would be redeveloped without the use of tax increment financing.
McKee's side said that the test "contemplates, in fact requires, that the board consider the potential for growth in the redevelopment area as a whole -- isolated pockets of progress do not satisfy the test."
The brief goes on to argue that the plaintiffs offered no evidence analyzing the area as a whole in terms of development activity, and that all parties agree that "it is not reasonable to expect a redeveloper to bear the financial burden of a complete rehabilitation of public infrastructure that, under ordinary circumstances, would exist to support a commercial or residential development."
But the plaintiffs rebut the infrastructure argument by saying that they "reject Northside's pie-in-the-sky assertion that they will invest $345 million in public infrastructure with TIF... Northside cannot show that this commitment is supported by substantial evidence."
Attorneys for the plaintiffs said during trial that they had accepted the case pro bono, but they did ask that Dierker award them fees to be paid by McKee.
His lawyers argued strongly against such a decision, saying that "this case does not present the special circumstances necessary to trigger an award of attorneys' fees and costs. Plaintiffs' allegations of 'intentional misconduct' are nothing more than a recitation of plaintiffs' disputed arguments on the merits -- this time, complete with inflammatory adjectives. Plaintiffs' allegations are offensive and border on libelous."
In their final word, the plaintiffs' lawyers note Dierker's rhetorical question in an earlier court order, wondering whether McKee was "more of Burnham or of Barnum?" After noting the Roosevelt quote in the McKee brief, they close their argument on the effects on the property owners by the proposed deveopment by quoting wordsmith - William Shakespeare, specifically what his Mistress Quickly has to say about the ravenous Falstaff:
"He hath eaten me out of house and home."
Presumably, until Dierker issues his ruling, the rest is silence.