Sunset Hills TIF draws two lawsuits
June 15, 2005 - Opponents of the Novus Development Co.'s Main Street at Sunset redevelopment project last week filed two lawsuits against the city of Sunset Hills.
The city's Board of Aldermen last month approved Novus' request for $42 million in tax-increment-financing, or TIF, to help fund a $165.2 million shopping center at Interstate 44, Watson Road and South Lindbergh Boulevard.
The project will raze 254 homes and several businesses. Only the Hampton Inn and Denny's restaurant will remain. Some owners have signed contracts with Novus and welcomed the deal. Others did not and now face eminent domain.
One lawsuit was filed by 11 Sunset Hills residents and seeks to have the city's Board of Aldermen consider initiative petitions to repeal two enabling ordinances for the project. If the board fails to repeal the ordinances, the suit seeks a public vote to repeal the enabling ordinances.
The second lawsuit was filed by Sunset Hills residents and commercial property owners along with Missouri Residential I, an affiliate of Westfield America Inc. The lawsuit contends the city violated the state's TIF statutes and the U.S. and Missouri constitutions in approving the TIF assistance and redevelopment agreement.
Will Aschinger, one of the plaintiffs in the lawsuit filed by Westfield, said the company, which owns the nearby West-field Shoppingtown Crestwood, was paying for the lawsuit.
"This is not developer against a developer," Aschinger said. "They're trying to protect their property down the street, absolutely, but it's about the people who live there. It's about the people who have businesses there, and if they lose it, Jonathan Browne (of Novus) will be making a living off of it."
Mayor James Hobbs said he could not comment on the lawsuits.
"They are just two frivolous lawsuits, and our attorney told us not to say anything," Hobbs said.
City Attorney Robert C. Jones said he could not comment specifically about the lawsuits.
"The city is going to defend themselves vigorously and they are confident in the actions that they took," Jones said.
The lawsuit that asks the city to allow residents to vote on the repeal of the ordinances lists Mayor James Hobbs, the eight aldermen and City Clerk Laura Rider as defendants.
The suit alleges the city of Sunset Hills violated the citizens' constitutional right to petition the government. Sunset Hills residents had presented initiative petitions with more than 600 signatures to the city May 19 to request that the Board of Alder-men either repeal the ordinances or allow citizens to vote on it. The lawsuit claims that when the city refused to respond to the petitions, the city was in violation of the Missouri Constitution by denying citizens the power to enact and reject laws.
Section 49 of the Missouri Constitution states that, "The people reserve power to propose and enact or reject laws and amendments to the constitution by the initiative ..."
The lawsuit asks that the judge declare that residents have a legal right to an initiative proposing ordinances. The lawsuit also asks that the judge require the Board of Aldermen to accept and process the residents' petitions that propose the repeal of the ordinances so that they either must pass and adopt the proposed ordinances or put the ordinances on the ballot.
The lawsuit states that the city attorney, Jones, sent a letter to Phillis Hardy, one of the plaintiffs, which said, "Cities of the fourth class of the state of Missouri do not have any statutory provisions authorizing initiative, referendum and recall. The city of Sunset Hills is a city of the fourth class and thus, is bound by the provisions of the sections of the Revised Statutes of Missouri governing said types of cities.''
Jones said the letter was accurately represented in the lawsuit and that in his opinion, a fourth-class city like Sunset Hills cannot conduct initiatives and referenda.
"I don't think it can be done, they are saying that it can and that's what they're saying in their lawsuit," Jones said.
Aschinger said he believes the city is using this as an excuse.
"I think it's a smoke and mirrors thing," Aschinger said. "I think the city is going to hide behind the fact it's a fourth-class city ... and for the city attorney to say they don't have the mechanisms in place, if they can allow the threat of eminent domain over 254 homes and 20 businesses, but they can't figure out how to bring this to a vote."
The second lawsuit alleges the city violated state TIF statutes on several counts.
The lawsuit first claims that the city did not conduct a second public hearing after "substantial'' changes were made to the redevelopment plan, including the addition of 61,000 square feet of commercial space, several buildings and a movie theater, four new parking structures and an extension of the entrance ramp from Lindbergh Boulevard to Interstate 44.
Under state law, only minor changes may be made to a redevelopment area, otherwise the changes must be resubmitted to the TIF commission.
The lawsuit claims the city adopted ordinances that incorporated a finding by the city's planning consultant that Sunset Manor was a "conservation area,'' which is required for the adoption of a redevelopment plan, even though Sunset Manor did not meet the definition of a "conservation area'' under the TIF law.
Under the statute, a conservation area is "not yet blighted but is detrimental to the public health, safety, morals, or welfare and may become a blighted area because of any any one or more of the following factors: dilapidation, obsolescence, deterioration; illegal use of individual structures ... A conservation area shall meet at least three of the factors provided in this subdivision..."
The lawsuit states that the Sunset Manor has been subject to growth and development, which should continue with no need to adopt the TIF. TIF statutes prohibit the adoption of a redevelopment plan when the area as a whole has been subject to growth and development.
The lawsuit also claims the city adopted the redevelopment plan with a cost-benefit analysis that was incorrectly prepared. The statute requires a cost-benefit analysis that shows "the economic impact of the plan on each taxing district which is at least partially within the boundaries of the redevelopment area."
The lawsuit further contends that the redevelopment analysis "incorrectly compares the impact on the economy if the project is built or not built" and claims the project is not financially feasible.
Aschinger said the individuals listed as plaintiffs on the lawsuit have taken a stand to protect their property rights.
"It's about protecting personal property rights, and it's about the Sunset Hill mayor and its aldermen, in my opinion not doing things correctly, and not allowing them to abuse their power in this neighborhood," Aschinger said.