HADLEY REDEVELOPMENT PROJECT

Unfortunately, there is a long and tortured history to this project. From the very beginning, I have expressed concern that the redevelopment plan was not financially viable (a concern echoed by 8 members of the TIF commission), and that this developer did not have the experience necessary to complete the project the City envisioned during its RPA process. When I ran for re-election to the Council in April 2008, I again expressed those concerns, and pledged to cast my vote in a manner that would help our residents and business owners be treated fairly and get the project "completed in a timely manner." Not only have my concerns from the beginning remained unresolved, but they have increased significantly.

This page is my attemp to outline the project's more recent history, the problems that have arisen, and the basis for my votes. I recognize that the information is rather long and detailed, and for that I apologize. If you would like a quick synopsis of the council's actions over the past year, I am compiling links to the Post-Dispatch articles on the issue, that will be posted soon. In the meantime, there are several links in the passages below to council minutes and to local newspaper articles.

Fall/Winter 2008 (7th Amendment)

On October 29, 2008, the council granted another 60-day extension. I voted against this extension for several reasons. First and foremost, because I, along with other councilmembers, do not believe that the project will ever be built pursuant to the project plan originally submitted in 2006. The significant changes in the economy made the project's completion even less likely. The council had already agreed to a 25% reduction in the residential component (Bill 5221, passed August 18, 2008), which I voted against. I also feared that negotiations with the developer would continue on for the full 60 days, and that residents would not have a definitive answer about the fate of their homes until after the holidays.

Unfortunately, the negotiations with the developer did indeed drag on. The first proposal provided a mere $1000 compensation for the residents. At the council's next meeting, a motion to amend the payment to residents to $3000 was defeated. A motion to amend to pay residents $1500 passed. Because of this change, the final vote on the extension had to be delayed again.

On November 24, 2008, the council held a special meeting to again discuss the extension. Unfortunately the discussions were held in closed session and I am not able to relate the contents. However, a motion to table the extension was passed unanimously. The council met again on November 28, 2008, and held yet another closed session. At that meeting, the Bill (5233) failed to receive the five votes necessary for passage. Along with my other concerns about the project, I cast my "no" vote because a lengthy extension subjects the City to significant risks for which the developer was unwilling to provide adequate security, or guaranties. At the conclusion of that meeting, the council rejected the developer's proposed terms of extension, and the developer had until December 29, 2008 to issue its Notice to Close.

At the December 15, 2008 meeting, the developer asked the Council to reconsider its November 28 vote rejecting the proposed extension. Michelson presented a new proposal with some significantly changed terms. First, the time for the developer to submit its Notice to Close would be extended TWO years, instead of one. Second, the payments to the residents would total $3,000, payable in two separate installments. And third, the City would be required to sell the northern property (i.e., the property bounded by I-64, Hanley, Dale, and the Heights) with no strings attached. The proposal did not offer any additional security to the City for the risks associated with any long-term extension.

A word about procedure here. Because Bill 5233 had been defeated (on November 28), a motion to reconsider must be made by a member who previously voted against it. In this case, those councilmembers would be myself, Mr. Gallagher, Ms. Greenwald, Mr. Lore, and Ms. Williams.

I believe the council did the right thing in its refusal to reconsider the bill. First and foremost, the developer's continued refusal to guaranty the risks to the City was untenable in the circumstances. The issues concerning the 2-year (vs. 1-year) extension are obvious. As for resident payments, although the proposal was an increase from prior proposals, it would be for twice the time (and for many, those payments would do little more than pay the real property taxes for the two years their homes were tied up in this project). And finally, the separation of the northern property from the rest of RPA1, and many of the associated conditions (which I'll describe below) is, in my view, merely a way for the developer to minimize its losses by developing the north (offices and hotel) and potentially abandoning the southern redevelopment (commercial and residential).

As I predicted at the October 29 meeting, the negotiations went on to the final moments. On December 23, the mayor called a special meeting for December 29, the developer's final deadline. On December 26, the council was presented with another proposal for an extension, and more revisions were sent to the council on December 29, mere hours before the special meeting.

The significant changes in the extension presented in the last week of December were an increase in resident payments to $4,500 and the developer's agreement to provide $2 million in security to the city to cover risks associated with possible condemnation and inverse condemnation suits. The sale of the northern parcel with "no strings attached" remained.

On December 29, the council met and a motion was made to go into closed session. I voted against holding a closed session, as I believe that the residents deserved to hear what the council had to say about the matters at hand - particularly the sale of the north without fair compensation for the residents living in the southern phase. Unfortunately, I was in the minority on that vote, and a lengthy closed session ensued. Because the majority of the discussions were held in closed session, I am not at liberty to disclose the content of those conversations. Ultimately, a majority of the council voted for an emergency measure granting yet another extension - to January 21 - on the project. I voted against this extension, as I believe we have extended this project long enough, and I am vigorously opposed to any sale of the north property that would allow the developer to walk away from the rest of RPA1.

As of January 1, the council has its regular meeting scheduled for January 5, and has until its January 20 meeting to vote upon any extension from the current January 21 deadline.

Separation of the Northern Parcel from the rest of RPA1

First, I want to point out that the segregation of the north property from the rest of RPA1 was already negotatied and addressed in the first and the second amendments to the redevelopment agreement. Basically, the city agreed to sell the property to the developer, and agreed to take a note (vs. cash) as payment, IF the developer provided evidence of its ability to finance the purchase of the homes in the southern portion of RPA1. If such evidence was not provided, and the southern portion was not redeveloped, then Michelson would be required to return the northern property back to the City. These terms created sufficient safeguards so that the developer could not build on the north and abandon the south. However, it appears that Michelson somehow believes its need for an extension warrants revisiting this issue.

The developer's December 2008 proposal to purchase the north would work as follows. First, the City sells the north to Michelson, who pays about $6.3 million for the property. Then the City MUST lend that money back to Michelson in order to purchase property currently in condemnation. The collateral/security for those loans would be a first deed of trust on the properties purchased, and a second deed of trust on the north property. If Michelson were to abandon the south portion of the project and not pay the City back, then the City would end up owning the property in condemnation (e.g., the Bell property, and others), although Michelson would pay a 10% penalty to the City (known as "liquidated damages").

This proposal about the north property has a myriad of complications. First, it has the potential to leave the City and its residents scrambling to find another developer if Michelson were to abandon the south (or to simply abandon redeveloping the south altogether). This is significant because including the north property was an incentive to obtain the best prices possible to the residents. If the developer were to walk away from the south and the City tried to get another developer for the south part of the project, that incentive (of the north property) would be gone. Another problem is that the TIF laws have a five-year time limit from the date of approval of the project (which was July 2006) to purchase all properties in RPA1. Given the two-year extension with an October 30, 2010 deadline, there would be less than a year to try and salvage any kind of redelopment south of Dale.

Second, the developer now wants to City to become its banker for purchase of property currently under condemnation. Aside from the obvious concerns about the City being a banker, this would mean that those who challenged the project in court would be bought out before those who negotiated with the developer in good faith from the beginning. This is just plain old unfair to those who have stood by the City and the developer. Also, if the developer were to abandon the south, it could mean that the City ends up owning that very property! I do not believe that is a proper use of taxpayer financing.

Speaking of taxpayer financing, I believe that using TIF for the north, alone, is completely improper. The purpose of TIF is to help develop areas that are in need of redevelopment and that could not be revitalized without the use of TIF assistance. Although there were prior attempts to sell the northern property before the current project was contemplated, I believe those attempts were for public uses (e.g., an aquarium). I am not aware of prior attempts to sell that property for commercial development, and believe that it could be developed without taxpayer assistance. If this parcel is so important to the developer, then it should be done without taxpayer dollars, period.

Although I have several other concerns about the purchase and development of the north separate from the rest of RPA1, I believe that the above are significant enough to warrant a "no"vote on the proposal.

September 2008 Posting:

On August 29, 2008, The Michelson Redevelopment Group asked the Council, in an emergency meeting, for a sixty-day extension to send certain residents of the Hadley Heights Redevelopment area of its notice to close on the purchase of their homes. The council voted to grant a short, seven-day extension in order to receive input from affected residents and other members of the Richmond Heights community. On September 2, 2008 the Council unanimously granted the requested sixty-day extension. I voted in favor of this request because Michelson asked for an extension of only the notice, but not of the closing dates, and also agreed to pay an additional $1000 to affected residents for their consideration in the delay. However, I also gave my word that I would not vote in favor of any additional requests for an extension.

On September 2, 2008, I voted in favor of a 60-day extension of this redevelopment. I agreed with the extension for two main reasons: (1) the extension did not extend the date to close on the properties, and (2) developer compensated residents for the associated inconvenience. You can read about the meeting from a Post-Dispatch article or the meeting minutes.

July 2007 - April 2008 Postings:

Although I did not agree with the majority of the council in the selection of the developer, I did vote with the majority in approving the redevelopment agreement that got the project started. I was very active in the review of the 100+ page document, and fought vigorously for a contract that would get the project completed as quickly as possible.

At the time Michelson was selected for this redevelopment, I voiced my strong concern that this project was too large and too important to the City to award it to a developer with no prior experience in a public/private redevelopments, no experience purchasing more than 100 separate parcels of occupied land, and - more importantly - no experience in the use of TIF and other city-backed financing. I also had concerns about the lack of a known relocation team to help residents find new homes (preferably within Richmond Heights).

Unfortunately, many concerns I voiced during the selection process and agreement negotiation have come to pass. Several property owners have challenged the redevelopment in the St. Louis County Circuit Court, and the entire project has been stalled. Because of this, the city faces tremendous challenges. The first is that the residents who live in the area are in limbo and completely unable to plan their lives, as they do not know when their homes will be purchased. In addition, many business owners in the project area face similar challenges, and I suspect that some will move out of Richmond Heights altogether. Moreover, the developer has informed us that it is impossible that the homes to be built will be done and occupied by the 2010 census. This can have very significant ramifications and costs to the City, as many financial items are based upon our population.

In addition, the developer has still not found a suitable new location for our public works department, which is critical to the project moving forward.

While I believe it is in the City's best interest that the project go forward as planned, the Council must keep a very close watch to ensure that our residents and business owners are treated fairly and the project is completed in a timely manner without additional taxpayer-backed financing.

UPDATE ON HADLEY-HEIGHTS REDEVELOPMENT

Since my April 2008 election, the council has approved FOUR significant amendments to this project's Redevelopment Agreement. Two of the amendments involved extensions to an August 28, 2008 deadline (which was implemented in another of the four measures). Of the two remaining amendments, I abstained from voting on an amendment that split the purchase and redevelopment of the area into three distinct and TIF-eligible project and that provided additional TIF financing. I abstained from this vote because after the developer's last-minute notice to the City of a 25% decrease in the residential housing component, the cost benefit analysis received by the council less than 26 hours before the meeting did not, I believe, provide sufficient time nor information upon which the council could vote.

Finally, I voted AGAINST the amendment that changed the project's residential housing numbers. After vigorous negotiations throughout 2006 to increase the number of new homes from approximately 150 to approximately 200, in late June 2008 Michelson advised the City that it was now only willing to move forward if the project were to be changed to allow for only 153 homes. I noted when commenting on my vote that I believed this change to so significantly change the benefits of the development to the City, that it no longer justified the use of TIF (Tax Increment Financing) or Eminent Domain.

Paid for by Gina Mitten
Copyright 2008, 2009 Gina Mitten. All rights reserved.