Section 16.4 Urban Redevelopment Corporations Law

• Library: Local Government Deskbook (2017 Ed.)

B. (§16.4) Urban Redevelopment Corporations Law

Chapter 353, RSMo, The Urban Redevelopment Corporations Law, authorizes establishment of private corporations, popularly known as “353 corporations,” for the public purpose of promoting public safety, health, and welfare by the planning, clearing, construction, or rehabilitation of “blighted” areas. Section 353.030(11), RSMo 2016; see also Council Plaza Redevelopment Corp. v. Duffey, 439 S.W.2d 526 (Mo. banc 1969). Powers are available to “any city within this state” including certain charter counties, but such county authority is expressly restricted to unincorporated areas. Section 353.020(3), RSMo 2016. Notably, neither villages, towns, nor other counties are included within the scope of this authorization, necessitating “joint ventures” between the excluded jurisdictions and local or county LCRAs when redevelopment activity under Chapter 353 is contemplated.

Chapter 353 reflects an expansive view of redevelopment. In defining the term “blighted area,” for example, Chapter 353 permits redevelopment not only where areas exhibit physical deterioration but also when economic obsolescence results in an inability to pay reasonable taxes. Section 353.020(1) and (2). Similarly, Chapter 353 expressly permits inclusion in development plans of areas that are not, of themselves, “blighted” as long as inclusion is required to accomplish the objectives of the plan for the improvement of the total redevelopment area. Section 353.020(1).

When making blight determinations, however, legislative bodies must be prepared to support determinations with an evidentiary record. More importantly, in the context of Chapter 353, that record must show that the area is both an “economic” liability and a “social” liability in its current state. See Centene Redevelopment Corp. v. Mint Props., 225 S.W.3d 431 (Mo. banc 2007) (construing language of § 353.020(2)). In Centene, a 353 corporation attempted to condemn a parcel of land after failing to come to agreeable purchase terms with landowners. Challenging the action, the landowners argued that the area was not blighted under § 353.020. In its review, the Supreme Court first observed that the definition language in Chapter 353 expressly requires that a “blighted area” must have become an economic and a social liability. Recognizing that the term “social liability” is not specifically defined by statute or caselaw, the Centene Court suggested that the term properly focuses on public health, safety, and welfare. Id.

In reversing the trial court to find for the landowners, the Centene Court determined that the blighting analysis conducted by a private planning consultant and principally relied on by the 353 corporation and the city had made no determination regarding the social liability of the area. Although the consultant’s analysis cited various criteria supporting a finding of economic liability, the Court observed that the analysis did not conclude that any of these conditions were injurious to the public health or safety. The Centene Court also discounted subsequent city testimony expressing concern about potential safety, crime, fire hazard, and vandalism problems in the area because these concerns were not supported by the information on the record from police and fire departments. Finally, rejecting an attempt to cite the anticipated benefits of the project as probative evidence of social liability, the Court required a focus on the current state of the properties themselves as the basis for blight determinations. Id.

“Social liability” was directly examined in the subsequently decided Cortex West Development Corp. v. Station Investments # 10 Redevelopment Corp., No. ED 90935, 2008 WL 2496962 (Mo. App. E.D. June 24, 2008) (vacated upon transfer). In determining that a particular area was blighted, the St. Louis Board of Aldermen considered a study prepared by a private consultant coupled with testimony and written reports of city staff, which revealed “unsafe conditions” in the form 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.” Id. at *3. Upon such evidence, the court determined that these conditions presented “a concern for the safety, health, and welfare of the public,” and constituted “sufficient evidence of the social liability of the area to support the city’s determination of blight.” Id.

Although subsequently vacated, Cortex does provide some practical guidance in determining the presence of “social liability” under Chapter 353. The Cortex reasoning is also consistent with the concurring opinion in Centene, observing that “Missouri’s blight statute does not limit a finding of ‘social liability’ to situations in which a portion of a community has so deteriorated that it has become a ‘breeding ground’ for crime and disease.” Centene, 225 S.W.3d at 437. The requirement for independent evidence of social liability remains particularly problematic, however, when cities wish to offer incentives for redevelopment of “greenfield” sites. In these cases, as well as generally, counsel is...