Section 4 Urban Redevelopment Corporations Law

• Library: Urban Development Subdivisions, and Annexations (2011 Ed.)

The 1945 Missouri Constitution also provides the foundation for the General Assembly's grant of extensive redevelopment powers to specially formed private corporations. Chapter 353, RSMo, The Urban Redevelopment Corporations Law, authorizes establishment of private 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 2000; see also Council Plaza Redevelopment Corp. v. Duffey, 439 S.W.2d 526 (Mo. banc 1969). Although the original enactment limited availability of Chapter 353 to communities with larger population bases, more recent amendments expand availability to:

any city within this state and any county of the first classification with a charter form of government and a population of at least nine hundred thousand inhabitants or any county with a charter form of government and with more than six hundred thousand but less than seven hundred thousand inhabitants.

Section 353.020(3), RSMo Supp. 2010. County authority is expressly restricted to unincorporated areas. Id. Note that villages remain outside the scope of the authorization, necessitating "joint ventures" with local or county LCRAs when tax abatement is contemplated in the context of urban development.

Chapter 353 reflects an expansive view of redevelopment activity. In defining the term "blighted" area, for example, Chapter 353 permits redevelopment not only where areas exhibit physical deterioration, but also where economic obsolescence results in an inability to pay reasonable taxes. Section 353.020(1)–(2). Similarly, Chapter 353 expressly permits inclusion in redevelopment 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 plan area. Section 353.020(1).

More recently, Centene Plaza Redevelopment Corp. v. Mint Properties, 225 S.W.3d 431 (Mo. banc 2007), mandates that legislative bodies, when making blight determinations, must be prepared to support determinations with an evidentiary record. More importantly, in the context of The Urban Redevelopment Corporations Law, that record must show that the area is both an "economic" liability and a "social" liability in its current state. Id. In Centene, as part of a redevelopment plan, a 353 corporation attempted to condemn a parcel of land after the corporation was unable to come to agreeable terms wit0h the landowners. The landowners challenged the condemnation, arguing that the area was not blighted under § 353.020. Although the trial court agreed with the corporation and the city that the area satisfied the statutory definition of "blighted area," the Supreme Court reversed, observing that the definition language expressly requires that those areas must have become economic and social liabilities. Recognizing that the term "social liability" is not specifically defined by statute or in caselaw, the Court suggested that the term properly focuses on public health, safety, and welfare.

In reviewing the record, the Court found that the blighting analysis conducted by a private planning consultant and principally relied on by the corporation and the city 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 Court also noted that, if evidence to support a finding of economic liability could also constitute evidence to support a finding of social liability, the plain language of § 353.020 would be defeated. The Centene, 225 S.W.3d 431, Court discounted subsequent testimony from the city manager 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 the 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.

Some commentators have suggested that the attempted blighting of a portion of a notoriously prosperous suburban downtown area, particularly in the context of a condemnation action, was seen by the reviewing courts as simple overreaching. But the holding in Centene, 225 S.W.3d 431, cannot be so easily confined and similarly applies to applications for tax abatement. Indeed, the requirement for independent evidence of social liability may be particularly problematic when cities wish to offer these incentives for redevelopment of "greenfield" sites. Accordingly, counsel is cautioned to focus additional, independent evidentiary efforts on public health, safety, and welfare concerns presented by the properties in their current state. A careful reading of Judge Stith's 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," may offer both guidance and some degree of comfort. Id. at 437.

"Social liability" was directly examined in 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 making a determination that a particular redevelopment area was blighted, the St. Louis Board of Aldermen considered a blight 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 this evidence, the Eastern District held that these conditions presented "a concern for the safety, health, and...