Attorney Argues City Didn’t Thoroughly Investigate NorthSide Financing

On Thursday, a circuit court judge heard arguments that the city of Saint Louis’ Tax Increment Finance (TIF) Commission had not thoroughly investigated the financial backing of a proposed redevelopment of the city’s north side before approving it. The lawsuit, by no means a certain bet, could halt the recently approved project put forward by developer Paul McKee and his company NorthSide Regeneration LLC.

Judge Robert Dierker has not yet decided the case, but is working to reach a decision as soon as possible. Attorneys for all involved parties have until Dec. 7 to file additional documents, and Dierker will make his decision at some point after that.

Dorian Amon, the attorney who brought the lawsuit and who is representing several north side residents, spent nearly three hours questioning TIF Commissioner David Newburger about the efforts that the commission had made to determine whether NorthSide had the ability to raise enough money for its $8 billion project.

In NorthSide’s application for $390.6 million in TIF funds from the city, the company included a letter from an executive of the Bank of Washington, which stated that the bank was reiterating its financial support for the first half of the project. However, no specific loan amounts were included in the letter, nor did the bank executive sign it.

Amon argued that the letter wasn’t sufficient evidence of financial support for the project, pointing to its vague language. During questioning, Newburger, who said he has considered at least 50 development projects while serving on the commission, acknowledged that details are often hard to pin down.

“The terms of the plan is in constant flux,” he said.

The Bank of Washington letter, Newburger said, is typical of the evidence of financial backing submitted for all projects.

“No TIF project ever has a firm commitment,” he said. “Reason is, financial institutions are sitting on the side and waiting to see what the financial incentives are going to be.”

Later, when questioned by Paul Puricelli, who is representing NorthSide, Newburger explained that if concrete and sufficient evidence of financial backing had been submitted to the city, the city would have no reason to grant TIF funds.

“Fundamental reality of this, is this is an incentive program,” Newburger said. “We have to have testimony that without this TIF assistance that the transaction can’t be accomplished.”

Alderman April Ford-Griffin, who represents a ward that lies mostly within the development’s footprint, was also called to the stand to testify about what she and the Board of Aldermen had done to verify financial backing for the project.

Ford-Griffin said that there hadn’t been any formal investigation into the financial backing of the project, or into other statements made by McKee.

Instead, she said, the Board of Aldermen was more concerned with the amount of money McKee had already investigated in the project, and the efforts NorthSide was taking to acquire other government assistance.

“We were looking to make sure that they were leveraging everything,” she said, referring to all of the applications that the developer has made for federal and state subsidies.

When Amon and Puricelli were done making their respective cases about whether the TIF Comission and Board of Aldermen had done due diligence, Dierker left the attorneys with some advice.

“What we’re dealing with is not an administrative review of the commission’s procedures,” he said. “We’re dealing with the validity of the ordinance.” Dierker’s comment referred to the redevelopment ordinance passed by the Board of Aldermen establishing a redevelopment agreement between the city and NorthSide.

It’s possible, Dierker continued, that missteps by either the TIF Comission or the Board of Aldermen could invalidate the ordinance, but he firmly suggested that when the attorneys make their final written arguments on Monday, they focus on the city ordinance.

ANOTHER APPROACH

At the beginning of the hearing, three more attorneys, Eric Vickers, W. Bevis Schock, and James Schottel, Jr., attended the hearing in order to intervene in the case. Essentially, they would be also would be arguing that the redevelopment ordinance is invalid, but for different reasons than presented by Amon. Their motion to intervene will be held at 11 a.m., Dec. 9.

Full disclosure: W. Bevis Schock, one of the intervening attorneys in the case, also serves as the secretary of the Show-Me Institute’s Board of Directors. Schock is involved in the case through his private legal practice, not through his capacity as an institute board member.