Eminent Domain in Sunset Hills MO: St Louis (MO) Post-Dispatch, 11/16/05 & 12/21/05

Sunset Manor residents demand city terminate Novus deal

By Steve Birmingham

Sunset Hills should terminate its redevelopment contract because the developer cannot follow through on promises to buy out the Sunset Manor neighborhood, residents and others told the Board of Aldermen last week.

More than 100 people jammed the Nov. 8 board meeting with many registering the same complaint: Novus Development Company never had the money to pay for any of its scheduled closing dates with over 200 property owners in the neighborhood and the city should have known that.

The city granted $62 million in Tax Increment Financing (TIF) and Transportation Development District (TDD) assistance to Novus to build a $165-million "lifestyle" shopping center in the 300-parcel Sunset Manor neighborhood. The area, bounded by Watson Road, South Lindbergh Boulevard and Interstate 44, contains about 254 residences.

Gerald Carmody, an attorney representing several Sunset Manor neighborhood residents in lawsuits brought against the city, told the board its redevelopment contract should be terminated because Novus never had the financing in place for its scheduled Aug. 22 closing date nor its Sept. 31 rescheduled closing.

He also said the city should have sent the redevelopment plan back to its Tax Increment Financing (TIF) Commission for reconsideration when the physical size of the plan was changed.

"I'm here tonight to ask you to take a step forward, not look back, take a step forward in assessing where we are today with respect to the Sunset Manor redevelopment project, to accept the realities of the situation which is that this redeveloper cannot, and will not, develop the project that you all had envisioned when you approved these redevelopment ordinances, " Carmody said.

Carmody told the board "there is sufficient evidence that you now have before you to accept the fact that this not going to happen and that you need not wait any further to make that determination."

Carmody said he had evidence that what was going on was not what the board thought was happening when it approved the redevelopment ordinances.

"First and foremost, you assumed at the time you entered into these agreements that this developer had the financing to at least close on the houses that he promised these people that he would buy," Carmody said. "That was not the fact, that is not the fact and will never be the fact. He represented to you all that he had the financing that the lending institution has said he never did. Despite his claims that there are other reasons why and why not, the fact is he never did have financing, which I know each of you assumed was in place at the time you enacted these ordinances."

Carmody said that at the time the city approved the redevelopment plan, "it was for a different project than will ever be built."

According to Carmody, during the discovery process involved in the lawsuits, "it is without question that the lifestyle center that has been represented to you will not be there." What was represented to you to be the major anchor (Famous-Barr), a 200,000-square-foot anchor, was not in fact the anchor presently contemplated. And what was represented to you was not that they (Novus) were going to go to an adjoining municipality (Crestwood) and grab a retailer, something you all have said historically that you did not want to have happen."

Carmody also said Famous-Barr was Novus' only announced tenant and that they were going to have to pay that tenant $10 million to move from Crestwood to the city of Sunset Hills.

Not only were they going to have to pay $10 million to move Famous-Barr, "thereby putting in jeopardy all the TIF money that would be generated by that large square-footage, that tenant was not going to pay one dollar in rent for that 150,000 square feet of space," Carmody said.

Finally Carmody said the reduction in square footage for the entire project, which was smaller that what the TIF Commission considered, meant the city should have remanded the matter back to the TIF Commission for more consideration.

"Instead, you went forward," Carmody said. "Your consultant (PGAV) has admitted under oath that based upon that change the project should have gone back to the TIF Commission and should not have been approved by you. That did not happen."

The smaller project area (722,000 square feet) means "six acres of this project for which you have authorized Novus to condemn property will never be developed. These people will be forced out of their homes and businesses will be vacated. Tell me why that is not a substantial change to this project.

"Those are changes that have now been admitted that you did not know then," he said.

Will Aschinger, a member of the Stop The Sunset Hills Land Grab, told the board the neighborhood's residents needed the city's help in restoring the neighborhood.

"We want to hear the city's plans to put our neighborhood back together,' Aschinger said. "You allowed this to happen; you favored the developer over your constituents; now the burden is on you to fix the problem. It is your responsibility to develop a plan. You chose to run for office. We need a plan. It's your responsibility."

Aschinger said the residents would be happy to meet with the city to discuss ideas they have, such as applying for grant funds to restore the neighborhood.

"We need some of you to speak up, any of you that have a conscience about what is going on, to speak up and try to help save this neighborhood," Aschinger said. "We come here for accountability. You've not held Novus accountable for their failure to act and their misrepresentations. We hold you accountable because you were elected to protect us. Enough is enough. End the Novus development agreement tonight and begin to put our city back together. Do your duty and end this madness."

Mayor James Hobbs said the board "would address this in due time. As you know we have three lawsuits pending and there are certain things we can do and we cannot fight the lawsuits in public and we will not do it. We're proud of you tonight for giving us your information and appreciate it very much."

Suit alleges Novus manipulated financial information

By Steve Birmingham

A lawsuit alleges Sunset Hills did not follow state Tax Increment Financing Act requirements and that Novus Development concealed financial information from the city that could have effected the TIF assistance it received from the city.

Attorneys for William and Shirley Aschinger filed a motion for summary judgement Dec. 12 in their suit against Sunset Hills that attempts to overturn two ordinances approving a redevelopment of the Sunset Manor neighborhood and naming Novus Development as the project's developer.

The motion alleges that Novus substantially changed the nature of the
redevelopment plan after the city's TIF Commission hearings were concluded this summer, during which the Commission voted against the redevelopment plan.

In his argument, Jerry Carmody, an attorney for the Aschingers, stated that both Peckham Guyton Albers & Viets, Inc. (PGAV) and the city's bond counsel, who would have been responsible for issuing the $42 million in TIF bonds approved by the city in May, told Novus the project had to be referred back to the TIF Commission because of the substantial changes made to the plan.

The motion alleges that evidence shows that between the time the city's TIF Commission concluded its hearings in April and the city approved the redevelopment plan a month later, Novus made substantial changes by switching its anchor tenant from Bass Pro Shops to Famous-Barr, revised the site plan from over 750,000 square feet to over 821,000 square feet and dramatically increased the size and cost of the project.

According to the motion, Novus concealed from the city's consultant and the TIF Commission information that the cost of the project had increased from the $162 million proposed to the TIF Commission to almost $180 million.

The motion also alleges that Novus changed the anchor store during the TIF commission hearings but did not notify the commission nor PGAV until the hearings were concluded.

Novus originally agreed to pay Bass Pro Shops $30 million to build it a 200,000-square-foot building, which bumped the cost of the project up $15 million to over $177 million. When Novus later learned Bass Pro Shops would not be part of the development Novus replaced them with a 155,000-square-foot store and entered into a deal with Famous-Barr by promising them $10 million to move from the Westfield Shoppingtown/Crestwood and promising not to charge them rent for the life of the lease.

This change, the motion alleges, had significant legal consequences because under Missouri's TIF Act, as long as Bass Pro Shops was the anchor tenant, 100 percent of the tax revenue generated by the it would go to pay off the TIF bonds: With Famous-Barr as the anchor tenant and moving from one municipality to another within St. Louis County, Missouri's TIF Act allows only a portion of the tax revenue to be used to pay off the bonds.

The motion alleges that when the city, PGAV and the city's bond counsel learned that the revisions changed the project and that it should be sent back to the TIF commission, Novus manipulated its projections to convince them otherwise.

Jonathan Browne, president of Novus Development, was out of town and unavailable for comment.

St Louis Post-Dispatch: www.stltoday.com