Judge Rules NorthSide Can Move Forward, for Now

Deteriorating house in St. Louis’ north side.

SAINT LOUIS — A circuit court judge ruled on Thursday that a contested 1,500-acre development of the city’s north side can move forward. Critics had claimed in court that the city ordinance authorizing the development was invalid because the city hadn’t thoroughly vetted the development company’s funding before granting it up to $390.6 million in tax increment financing (TIF). However, Judge Robert Dierker wrote in his ruling that it isn’t the job of the courts to second-guess the city’s decision to approve the project. You can read that ruling here.

“The Court is concerned not with wisdom but with legality,” Dierker wrote. “If St. Louis ordinances 68484 and 68485 are within the scope of the authority conferred on the City’s Board of Aldermen by relevant statutes, the Court has no further role to play.”

Developer Paul McKee and the development company, NorthSide Regeneration, LLC, can count this as a win, but barely. Dierker peppered his ruling with offhand remarks about the wisdom of such a large-scale plan, and even began his ruling with a quote from economist Friedrich von Hayek about the weaknesses of centrally planned cities. And Dierker isn’t done with the case yet. On Feb. 16, he will hear another set of arguments against the ordinances from attorneys Eric Vickers, W. Bevis Schock, and James Schottel, Jr.

D.B. Amon, the attorney who had originally brought the lawsuit against NorthSide, had claimed that the city’s TIF Commission hadn’t investigated the ownership of NorthSide, nor had it received sufficient evidence of a financing commitment for the $8 billion project.

“The ownership and capitalization of Northside Regeneration is rather hazy on the record to date,” acknowledged Dierker, but he wrote that unclear financing alone isn’t enough to render the redevelopment ordinances invalid, and doesn’t show that the city necessarily violated procedure.

During the hearing, TIF Commission Chairman David Newberger had testified that NorthSide’s evidence of financing, a letter from the Bank of Washington stating that it was excited to provide financing for half of the project, was typical of the evidence submitted for other TIF projects.

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

“As evidenced by the testimony of the chairman of the City’s TIF Commission, the Commission’s review is rather superficial, and the Commission relies heavily on staff employed by the City or one of its agencies, as well as on the redeveloper, for practically all of its information,” wrote Dierker.

But, as NorthSide argued in its post-hearing brief, the Missouri Supreme Court ruled in 1996 that courts should refuse to second-guess local government legislation unless fraud, collusion, or bad faith was involved.

Dierker echoed that decision in his ruling.

“[I]t must be borne in mind that legislation is usually presumed valid, and that the Court does not enjoy the authority to second-guess the judgment of the Board of Aldermen,” he wrote. “Absent evidence of bad faith, fraud or collusion, the burden on the plaintiffs in seeking to invalidate the ordinances is a heavy one.”

Furthermore, Dierker wrote, the plaintiffs failed to demonstrate that they would be harmed if the project continued to move forward.

“Plaintiffs’ property may have suffered a diminution in value, but there is not evidence that they have attempted to sell any property without success or that defendants have intruded in any way on their use and enjoyment of their property,” he wrote. “As to the balance of hardships, a preliminary injunction is likely to do more harm to defendants than benefit to plaintiffs.”

Of course, Dierker wrote later, if things got much worse, the plaintiffs could always renew their motion to halt the project.

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.