Opinion
No. ED90935
June 24, 2008
Appeal from the Circuit Court of the City of St. Louis Hon. Margaret M. Neill.
Robert Denlow, St. Louis, MO, for appellant.
Gerard T. Carmody, St. Louis, MO, for respondent.
Station Investments #10 Redevelopment Corporation, Station Investments #10 Partnership, and Michael R. and Carol A. Travers (collectively referred to herein as "defendants") appeal the judgment of the trial court in favor of CORTEX West Redevelopment Corporation ("CORTEX") on its petition for condemnation, ordering certain property condemned. Defendants claim the trial court erred in ordering the property condemned because the finding of blight was not supported by substantial evidence. In addition, defendants argue the redevelopment plan submitted by CORTEX was fatally deficient. Finding no error, we affirm.
There were nineteen total defendants with potential interests in the property named in the petition for condemnation as well as "all unknown spouses, partners, heirs, beneficiaries, lessees, successors, assigns, and other persons, corporations, associations, and legal entities who may claim an interest in the affected property." The specific property at issue on appeal is commonly known and numbered as 4240 Duncan Avenue, St. Louis, Missouri 63110. However, on appeal, we consider the propriety of the determination of blight as to all properties because under section 353.020(1) an "area" may include buildings which are not themselves blighted.
CORTEX stands for the Center of Research and Technological Entrepreneurial Exchange.
In 1999, representatives from Washington University, St. Louis University, the Missouri Botanical Garden, the University of Missouri St. Louis, and BJC Health Care met to discuss their desire to develop the bioscience and biotechnology industry in St. Louis. A project was discussed to redevelop an area as a life sciences business park with office and research space, as well as other facilities such as a hotel and conference center. In response to this plan, the institutions formed the CORTEX corporation pursuant to Chapter 353 of the Missouri Revised Statutes. CORTEX ultimately filed a petition for condemnation against defendants. In the petition, CORTEX noted that by Ordinance Number 66847, the Board of Aldermen for the City of St. Louis ("the city") found a portion of the city (referred to herein as "the redevelopment area"), which included the property at issue here, to be blighted as defined in Chapter 353. The Ordinance declared that redevelopment of the area was necessary and in the public interest. CORTEX submitted a redevelopment plan for the area, and the plan was approved by Ordinance Number 66985. The trial court entered an order of condemnation, and defendants appealed. After the notice of appeal was filed, the trial court entered its findings of fact, conclusions of law, order, and judgment, designating the judgment final for purposes of appeal.
In their first point on appeal, defendants challenge the trial court's finding that the blighting ordinance was supported by substantial evidence because there was "little or no" evidence to support the requirements for blight under section 353.020(2) RSMo (Cum. Supp. 2004).
All further statutory references are to RSMo (Cum. Supp. 2004), unless otherwise indicated.
On appeal, we review the record to determine whether there is substantial evidence to support the legislative determination of blight.Centene Plaza Redevelopment Corp. v. Mint Properties, 225 S.W.3d 431, 433 (Mo. banc 2007); 523.261 RSMo (Cum. Supp. 2007).
Pursuant to section 353.020(2), a "blighted area" is a portion of the city which the legislature determines "that by reason of age, obsolescence, inadequate or outmoded design or physical deterioration have become economic and social liabilities, and that such conditions are conducive to ill health, transmission of disease, crime or inability to pay reasonable taxes. . . ." Defendants argue there is a lack of evidence of any factor of blight, specifically evidence that the condition of the area caused it to become a social liability. In making their argument, defendants rely heavily upon the Missouri Supreme Court's decision inCentene Plaza Redevelopment Corp. v. Mint Properties, 225 S.W.3d 431 (Mo. banc 2007). According to the Supreme Court, "social liability" to support a finding of blight focuses upon "the health, safety, and welfare of the public." 225 S.W.3d at 433. The court in Centene determined that there was insufficient evidence of social liability to support a finding of blight in an area of the City of Clayton. Id. at 434.
Defendants argue that here, as in Centene, there is no substantial evidence to support a conclusion that the area has become a social liability. Defendants claim the only information relied upon by the city to reach its determination of blight was the study conducted by Development Strategies, Inc. ("DSI"), a private company hired by CORTEX. According to defendants, the blighting study completed by DSI did not contain any conclusion that the area was a social liability. However, the record demonstrates not only that the blighting study did discuss the social liability of the area, but also that the study was not the only information relied upon to reach the city's determination of blight.
In the blight study, DSI concluded "[t]he data supports a finding that physical, social, and economic blighting conditions exist" in the area. (emphasis added) Moreover, the study noted the intent to utilize "state-enabled redevelopment powers to reverse the negative course of economic, social and physical decline" that is documented within the study. (emphasis added) The blight study also stated the area was not contributing to the "social welfare of the City and its residents. . . ." Specifically, in its discussion of the physical deterioration of the buildings, sites, streets, and sidewalks in the area, DSI concluded the deterioration contributes to unsafe conditions. There is significant analysis of the condition of the sidewalks and streets. The study concluded that fifty-four percent of the sidewalks in the area are in either fair or poor condition, which is described as "[s]ome cracking with uneven surfaces," or [b]roken or uneven surface," respectively. In addition, forty-seven percent of the streets are in either fair or poor conditions, which is described as "[p]atched or cracked surface or rippled asphalt, with some damage to curbing and inlets," or "[p]otholes, uneven surface, lack of maintenance with former surface revealed, with broken or no curbing and inlets that are damaged, inoperable or not in place," respectively.
Moreover, contrary to defendants' assertion that the blight study was the only information relied upon by the city in making its determination of blight, the record shows there was additional information presented to the city. Barbara Geisman, the executive director for development for the city, testified at the condemnation proceeding. She is a member of the city planning commission, which reviews planning and zoning matters and makes recommendations to the Board of Aldermen. According to Geisman, prior to the city's determination of blight, the planning commission considered the blight study completed by DSI, a power point presentation prepared by the deputy director of the city planning and urban design agency, as well as personal investigations and knowledge of the area. Geisman testified she independently investigated the conditions and found cracked and broken sidewalks, ponding water in deteriorating parking lots, rusty and broken window frames and windows, retaining walls that looked in danger of falling into the street, and razor wire, which indicated to her fear of people breaking into the property. Geisman also stated although the deputy director of the city planning and urban design agency did use portions of the blight study prepared by DSI, he did an independent investigation as well and presented that information in the power point presentation. The director of the city planning commission also provided the commission with a memo regarding the recommendation that the area be declared blighted. This memo contained a summary of the blight study prepared by DSI, but also contained an statement that the staff of the planning office of the planning and urban design agency of the city of St. Louis had reviewed the study and agreed with the conclusions based upon the independent knowledge of the staff regarding the area.
In Centene, the court noted there was no evidence presented regarding any public health concerns resulting from the condition of the area. 225 S.W.3d at 434. However, here, there is significant evidence of concerns regarding the public health, safety, and welfare resulting from the condition of the area. There is evidence of hazardous conditions of the property, such as retaining walls in disrepair, cracked and deteriorating sidewalks and streets, ponding water in deteriorating parking lots, razor wire, and rusty and broken windows and frames. In Centene the company who performed the blight study did not make any conclusions regarding the social liability of the area. Id. In addition, the court noted the company did not find that any of the conditions of the area were injurious to the public health or safety. Id. Unlike the company who performed the blight study in Centene, here, DSI did conclude that as a result of the condition of the property it was "unsafe" and that social blighting conditions existed in the area. Moreover, DSI concluded the area was in a social decline and was not contributing to the social welfare of the city and its residents.
As a result of the significant evidence of unsafe conditions of the property which present a concern for the safety, health, and welfare of the public, we believe there was sufficient evidence of the social liability of the area to support the city's determination of blight.
Defendants also take issue with the evidence concerning the other factors of blight enumerated in section 353.020(2). Specifically, defendants argue there is no substantial evidence to support a finding that the area has become a social and economic liability by reason of age, obsolescence, inadequate or outmoded design, or physical deterioration. Defendants' argument in this regard is meritless.
We note that the statute requires only one of the four factors to support a finding of blight; however, because the DSI blight study provides substantial evidence of the factors set forth in section 353.020(2), we discuss each below. The blight study noted almost half the buildings and square feet of the space in the area were constructed prior to 1940. The study also noted that eighty percent of the structures and more than seventy-five percent of the square feet of the area were constructed prior to 1960. According to DSI, the area is obsolete by virtue of a significant number of vacant or partially vacant buildings, a large abandoned railroad yard and rail spurs, and a large grain elevator in the center of the area that appears to be used "well below" its capacity. DSI also concluded much of the area has inadequate or outmoded design because of the failure to comply with the requirements of the Americans with Disabilities Act, issues with curb cuts to busy intersections which create dangerous and conflicting traffic movements, inadequacy of screening for outdoor storage areas, and a functionally outmoded and inadequate intersection at Sarah Street and Duncan Avenue. Finally, DSI noted the physical deterioration of the buildings, parking areas, streets, and sidewalks in the area, with the majority of these things falling in the fair or poor condition. This clearly constitutes substantial evidence of the factors of blight set out in section 353.020(2) sufficient to support the city's finding of blight.
42 U.S.C. section 12101, et seq.
Finally, defendants argue there is no substantial evidence to support the conclusion that the area has an inability to pay reasonable taxes. Defendants' argument appears to be focused more upon the methodology DSI used to arrive at the conclusion the area had the inability to pay reasonable taxes.
Defendants note CORTEX did not contend the conditions in the area were conducive to ill health, disease, or crime, but instead focused only upon the area's ability to pay reasonable taxes.
The DSI study concluded since 1993, the total taxable assessed value of the area declined by nearly ten percent in "constant dollars." In addition, over the last decade, the assessed value of the area increased only seventeen percent. DSI compared this increase to the almost thirty-four percent increase in the total assessed value for commercial properties in the city. The study also compared the redevelopment area's increase in assessed value to the increase of approximately twenty-six percent in the Consumer Price Index, and concluded the redevelopment area had "poor performance in terms of tax generation. . . ." According to defendants, this comparison of the taxes in the redevelopment area, which is largely industrial, to the taxes from all the commercial properties in the city, was improper.
Defendants presented the testimony of Barry Hogue, an expert in urban planning, at the condemnation proceeding. Hogue previously worked for DSI, and he has prepared blight studies of the same nature. He was hired by defendants to review the blight study prepared by DSI. Hogue stated his purpose was not to perform an independent blight study, but to simply review the study already completed to determine whether it demonstrated the area was blighted. Hogue expressed concern regarding the method by which the study determined the area had an inability to pay reasonable taxes. He felt the report was flawed because it failed to make an accurate comparison between the increase in assessed values for the redevelopment area, which was largely industrial, and other similar industrial properties in the city. Instead the study compared the redevelopment area with commercial properties in the city. According to Hogue, if the area's assessed values were compared with other industrial areas; it was outperforming the industrial properties within the city as a whole.
Here, it is clear the trial court did not credit Hogue's testimony concerning the proper comparison of assessed values for the determination of blight. Instead, the court found the determination of the DSI study that the area suffered from an inability to pay reasonable taxes to be credible based upon the decline of the total taxable assessed value as well as the comparison of the increase in assessed value of the redevelopment area to the increase in commercial properties in the city and the Consumer Price Index. We defer to the trial court's opportunity to judge the credibility of witnesses, and the trial court may believe or disbelieve any or all of a witness's testimony. Foster v. Village of Brownington, 140 S.W.3d 603, 607 (Mo.App. 2004). Thus, there was substantial evidence of the area's inability to pay reasonable taxes, and we will not disturb the trial court's decision to believe such evidence.
As a result of the foregoing, there was substantial evidence of the factors of blight as enumerated in section 353.020(2). Therefore, the city's finding of blight was supported by substantial evidence and the trial court did not err in entering its order of condemnation. Point denied.
In their second and final point, defendants claim the court erred in finding the redevelopment plan met requirements set forth by city ordinances. Specifically, defendants argue the redevelopment plan was deficient because it did not include a statement of estimated costs as required by city code section 11.06.080O and 11.06.020F, and the plan did not contain a schedule of rents as required by city code section 11.06.080L.
Pursuant to city code section 11.06.080, a development plan is to contain certain things. Section 11.06.080O requires a "detailed statement of the proposed method of financing the redevelopment which shall set forth the estimated cost of the project, as defined in Section 11.06.020F, and the proposed sources of funds, debt and equity, to meet such estimated costs. Section 11.06.020F defines "cost" as "the amount stated in the approved development plan which is determined to be the estimated or actual expenses to the Urban Redevelopment Corporation in the redevelopment project. . . ." Section 11.06.020F provides an extensive list of what these estimated or actual expenses shall include.
As CORTEX notes, the redevelopment plan contained subsection R, which was titled "Project Finance." This contained a detailed five-page discussion of the expected sources of financing for the project, including money from the CORTEX partners, tax credits, and grants. As CORTEX also points out, the redevelopment plan contains a statement of the estimated total investment of $840 million in subsection Z.
Defendants argue under Maryland Plaza Redevelopment Corp. v. Greenburg, 594 S.W.2d 284 (Mo.App. 1979), strict compliance with the city code sections is required to validate the ordinance adopting CORTEX's redevelopment plan. In Maryland Plaza, the court considered a similar question regarding whether a development plan's discussion of financing was deficient. Id. at 287. The court in Maryland Plaza concluded the redevelopment plan was "destitute of the requisite detailed statement of financing." Id. at 290. The court noted the redevelopment plan contained only "vague, general comments as to the proposed method of financing."Id. These comments were not sufficient to support the determination by the Board of Aldermen that the redevelopment plan contained a "detailed" statement of financing. Id. at 290-91. As a result, the court concluded the ordinance approving the redevelopment plan was void. Id. at 291.
The holding in Maryland Plaza was discussed in State ex rel. Devanssay v. McGuire, 622 S.W.2d 323 (Mo.App. 1981). In Devanssay, the court noted the reference in Maryland Plaza to the potential danger to owners of land in blighted area from redevelopers who are incapable of effectively redeveloping the area. Id. at 326. The Devanssay court concluded the legislating authority must be aware of potential problems in redevelopment, particularly financing issues, in determining whether a proposed redevelopment plan has merit. Id. "To approve a redevelopment plan without such information would be arbitrary." Id. Thus, theDevanssay court concluded the holding in Maryland Plaza recognized those principles; however, it did not impose any particular requirements on the financing statement or hold that the validity of the Board of Aldermen's action can be determined only from information in the redevelopment plan itself. Id. at 327. The court concluded the redevelopment plan must contain a description of the method by which the redeveloper intends to obtain the necessary financing to complete redevelopment. Id. The description must be detailed enough to allow the Board of Aldermen to determine its feasibility. Id. In addition, the Devanssay court held the Board was not limited to only the redevelopment plan itself in determining the propriety of approval of the plan. Id. Public hearings and committees may provide more detail and add to or clarify the plan as submitted. Id.
Here, as noted above, there is a detailed discussion of the proposed sources of financing contained in the redevelopment plan. Although there is no detailed recitation of the specific allocation of this money to particular projects such a demolition, landscaping, utilities, roadways, and other construction costs as enumerated in city code section 11.06.020F, there is sufficient information in the "Project Finance" section of the redevelopment plan from which the Board of Aldermen could assess the feasibility of the plan. In addition, the Board was provided the recommendation of the city planning commission and had the benefit of their review and personal knowledge of the project. Therefore, we do not believe the approval of the redevelopment plan was arbitrary, and the trial court did not err in ordering the property condemned.
Defendants also complain about CORTEX's failure to include a schedule of rents as required by city code section 11.06.080O. The code section states that the development shall contain:
A statement of the character of the existing dwelling accommodations, if any, in the blighted area, the approximate number of families residing therein, together with a schedule of the rentals being paid by them, and a schedule of the vacancies in such accommodations, if any, together with the rentals demanded where such vacancies exist. . . .
Here, the redevelopment plan did include subsection O, titled "Quality and
Character of Existing Residential Dwellings." This section contained a detailed discussion of the existing residential structures in the area as well as the estimated number of units occupied. Subsection P, titled "Relocation," notes the likely need to relocate most, if not all, residential dwellings in the area. Although the redevelopment plan does note new residential units are proposed, there is no statement that these units will be rental units. In addition, there is no mention that the current residential units are rental units. Therefore, a failure to include a schedule of rents for the existing and potential residential units within the redevelopment area is not fatal to the redevelopment plan. As such, the city did not err in approving the redevelopment plan, and the trial court did not err in ordering condemnation of the property. Point denied.
The judgment of the trial court is affirmed.
Roy L. Richter, J., Glenn A. Norton, J., concurs.
OPINION SUMMARY
Station Investments #10 Redevelopment Corporation and several other parties (collectively referred to herein as "defendants") appeal the judgment of the trial court in favor of CORTEX West Redevelopment Corporation ("CORTEX") on its petition for condemnation, ordering certain property condemned. Defendants claim the trial court erred in ordering the property condemned because the finding of blight was not supported by substantial evidence. In addition, defendants argue the redevelopment plan submitted by CORTEX was fatally deficient.
AFFIRMED. DIVISION THREE HOLDS:
The City of St. Louis's finding of blight was supported by substantial evidence. In addition, the redevelopment plan contained sufficient information from which the city could determine the feasibility of the plan and properly approve it.
RICHTER, P.J., AHRENS, J., AND NORTON, J. concurring.