City of St. Charles v. DeVault Management, 70806

• Court: Missouri Court of Appeals
• Writing for the Court: SIMON; ROBERT G. DOWD, Jr., P.J., and HOFF
• Citation: City of St. Charles v. DeVault Management, 959 S.W.2d 815 (Mo. App. 1997)
• Decision Date: 28 October 1997
• Docket Number: No. 70806,70806
• Parties: The CITY OF ST. CHARLES, Missouri, Plaintiff/Appellant, v. DeVAULT MANAGEMENT, et al., Defendants/Respondents.

Page 815

959 S.W.2d 815

The CITY OF ST. CHARLES, Missouri, Plaintiff/Appellant, v. DeVAULT MANAGEMENT, et al., Defendants/Respondents.

No. 70806.

Missouri Court of Appeals,

Eastern District,

Division Four.

Oct. 28, 1997.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Jan. 8, 1998.

Application for Transfer Denied Feb. 24, 1998.

V. Scott Williams, Matthew J. Fairless, Rollin J. Moerschel, Thompson Coburn, St. Charles, for Appellant.

Irving L. "Buddy" Cooper, Michael P. Steeno, Miller and Steeno, Michael A. Gross, Cynthia A. Sciuto, St. Louis, for Respondent.

SIMON, Judge.

The City of St. Charles (City) appeals a judgment of the Circuit Court of St. Charles County denying condemnation of apartment buildings in favor of defendants, DeVault Management (DeVault LLC), a limited liability company; DeVault Management (DeVault GC), a general partnership; Gregory Zes and James Zes, individually and as general partners of DeVault GC; and various other individuals and entities.

On appeal, City contends that the trial court erred when it: (1) incorrectly applied a burden of proof in reviewing City's compliance with the Tax Increment Financing Act (TIF Act), specifically Section 99.810(2) RSMo 1994 (all further references shall be to RSMo 1994 unless otherwise noted); (2) erroneously defined "comprehensive plan" and "conformity" from Missouri statutory provisions; and (3) improperly held City failed to prove its right to an order of condemnation because City presented substantial and unrebutted evidence of all elements required for an order of condemnation and defendants failed to present sufficient evidence to rebut the presumption of legitimacy of City's actions. We affirm.

Reviewing a court-tried case, we will sustain the trial court's decision unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.banc 1976).

The record reveals that James Zes and Gregory Zes (Zeses), brothers, purchased and managed apartment buildings through partnerships and limited liability companies including DeVault GP and DeVault LLC. In November 1992, DeVault GP purchased the Crestview Apartments (Apartments) from the Resolution Trust Corporation. In late 1994 or early 1995, DeVault LLC acquired Apartments, which currently contain 339 living units, 23 of which are townhouses and the remainder of which are one and two bedroom apartments. Renovation of Apartments began after the purchase.

On May 4, 1993, The City Council of St. Charles (City Council) passed Ordinance No. 93-90, in which it found the existence of one or more blighted areas within City and established a Tax Increment Financing Commission (TIF Commission) to propose redevelopment of certain areas, pursuant to Sections 99.800, et seq.,"Real Property Tax Increment Allocation Redevelopment." Section 99.810 provides, in pertinent part:

Each redevelopment plan shall set forth in writing a general description of the program to be undertaken to accomplish the objectives and shall include, but need not be limited to, estimated redevelopment project costs, the anticipated sources of funds to pay the costs, evidence of the commitments to finance the project costs, the anticipated type and term of the sources of funds to pay costs, the anticipated type and terms of the obligations to be issued, the most recent equalized assessed valuation of the property within the redevelopment area which is to be subjected to payments in lieu of taxes and economic activity taxes pursuant to section 99.845, an estimate as to the equalized assessed valuation after redevelopment, and the general land uses to apply in the redevelopment area. No redevelopment plan shall be adopted by a municipality without findings that:

(1) The redevelopment project area on the whole is a blighted area, a conservation area, or an economic development area, and has not been subject to growth and development through investment by private enterprise and would not reasonably be anticipated to be developed without the adoption of the redevelopment plan.

(2) The redevelopment plan conforms to the comprehensive plan for the development of the municipality as a whole.

* * *

Subsequently, TIF Commission identified a Redevelopment Area (Area) and prepared a redevelopment plan (Redevelopment Plan) and blighting study. Area consisted of approximately 106 acres in the City of St. Charles, bordered generally by Interstate 70 on the South, Fifth Street on the West, Boonslick Road on the North, and South Main Street on the East. Apartments occupied 11 acres within the Area.

On June 8, 1993, City Council passed Ordinance 93-127, which rezoned most of Area "to Zoning District RF (Riverfront District) from Zoning Districts RM (Multiple Family Residential district), LC (Limited Commercial District), C1 (Neighborhood business District), C2 (General Business district), C3 (Commercial District), M1 (Limited Industrial District) and M2 (General Industrial District) ..." Permitted land uses within the Riverfront District included public, semi-public and private commercial; parks; restaurants; retail; public meeting places and convention centers; floating casinos; multi-family residential; and other residential uses.

On December 21, 1993, City Council passed Ordinance 93-307, which made findings related to blight and adopted and incorporated the Redevelopment Plan, listing several blighting factors, including: a decline in real property values; the impact on public safety; the deterioration of site improvements; the conditions of the streets and street layout within the Area; and zoning conditions within Area and made findings relating to City's comprehensive plan and the Redevelopment Plan. In pertinent part, the Redevelopment Plan provided:

The City's Comprehensive Plan for the City dates from 1973 and has had no major update since that time. In general terms, this Redevelopment Plan and the General Land Use Plan contained herein is in conformance with the Comprehensive Plan.

* * *

The only significant divergence between the two land use plans concerns the area along South Main and the Crestview apartment complex property. The Comprehensive Plan, Land Use Plan Map suggests the retention of this area in residential land uses. The General Land Use Plan designates these areas for limited commercial development.

* * *

[I]t is the finding that the implementation of the Redevelopment Plan and redevelopment projects as conceived herein will be in general conformance with the Comprehensive Plan and in addition, will serve to enhance and enforce the implementation of the Riverfront District zoning provisions.

The comprehensive plan referred to in the Redevelopment Plan is the "City of St. Charles Comprehensive Plan" (1974 Comprehensive Plan), which was adopted by City Council in 1974.

On August 23, 1994, City Council passed Ordinance 94-214 authorizing City to enter into an agreement with Riverfront Station, Inc., to acquire the land located in Area for development. On September 22, 1994, City and Riverfront Station, Inc. executed an agreement designating Riverfront Station, Inc. as City's agent to acquire property through eminent domain.

On March 16, 1995, Riverfront Station, Inc. sent a letter to "DeVault Management, A Missouri General Partnership" offering to purchase Apartments for $3,300,000. Subsequently, the offer was rejected.

On June 20, 1995, City filed a Petition in Eminent Domain against DeVault GP, the Zeses as individuals and as general partners of DeVault GP and various other individuals and entities.

On July 21, 1995, Gregory Zes filed a Motion To Dismiss and Motion To Make More Definite and Certain, alleging City failed to: plead sufficient facts for eminent domain; inform him of all relevant hearings; adopt proper ordinances; and a defective summons was issued. Zes also contended lack of subject matter and personal jurisdiction and failure to state a claim for relief. DeVault LLC filed a Motion To Intervene contending that the Zeses conveyed Apartments to DeVault LLC by quitclaim deed on or about January 1, 1995, which was subsequently recorded in the Recorder of Deeds office of St. Charles County, Missouri. DeVault LLC argued it should be joined as a party to the proceedings based on its actual possession and ownership of the subject property.

On August 4, 1995, the trial court granted DeVault LLC's Motion To Intervene and granted in part Gregory Zes's Motion To Make More Definite and Certain. Subsequently, City amended its petition.

On or about February 15, 1996, Gregory Zes and DeVault LLC filed a First Amended Motion to Dismiss essentially alleging what was contained in Gregory Zes' Motion to Dismiss. Also, Gregory Zes and DeVault LLC filed "Answer ... To Plaintiff's Petition And The Amendment To Paragraph 5 Of Plaintiff's Petition" essentially admitting ownership of the subject property, denying other allegations and renewing its allegations as to jurisdiction and failure to state a claim for relief. On or about March 31, 1996, the Zeses, DeVault LLC and other defendants filed a Motion For Judgment On The Pleadings, which was denied.

At trial, City called Linda Medlock, City Clerk, who testified she is Custodian of Records for City and during her testimony, the following were offered and received into evidence: Ordinances 93-90, 93-307, and 94-214; a City boundary map; an offer letter from Riverfront Station, Inc.; and records of two City Council meetings. After her testimony, City stated "that would conclude the evidence of the City of St. Charles reflecting its prima facie case."

In response, defendants called the following individuals to testify: Robert Moeller, current Mayor of City, as to current City plans and actions related to the Redevelopment Plan; Todd Powelson, Director of Market Research for St. Charles County, as to assessed property values within Area; ...