Tierney v. Planned Industrial Expansion Authority of Kansas City , 1987 Mo. LEXIS 377 ( 1987 )

OPINION IN CONSOLIDATED ACTIONS

BLACKMAR, Judge.

The Dispute

The Tierneys, plaintiffs in 69317 and re-lators in 69528, are the owners of land at 1500 Baltimore in downtown Kansas City, containing a structurally sound and usable building. The Planned Industrial Expansion Authority of Kansas City, Missouri (PIEA) instituted condemnation proceedings in accordance with Chapter 100, RSMo. The owners filed suit against PIEA and others seeking a declaratory judgment that the condemnation proceedings were invalid and also damages on account of “condemnation blight.” Following hearing, the trial judge overruled the owners’ challenge to the condemnation proceedings. He had previously dismissed the three-count petition in the civil action, but allowed the owners to raise all their objections in the condemnation hearing. The owners then sought prohibition or mandamus in the Missouri Court of Appeals, Western District. That court issued a preliminary rule in prohibition which it made absolute after argument, concluding that PIEA had not complied with certain mandatory requirements of the statutes and therefore had no power to go forward with the condemnation proceedings. Another panel affirmed the judgment of dismissal of the declaratory judgment action, on the ground that the writ remedy was adequate. We granted transfer in both cases because of the important issues involved. We now quash the preliminary rule in prohibition and affirm the judgment of dismissal.

In 1967 Missouri adopted the Planned Industrial Expansion Act, Section 100.310, et seq., RSMo 1986. The act provides for the establishment of the Planned Industrial Expansion Authority of Kansas City, Missouri (PIEA) as a body corporate and politic, having the authority to acquire land in “blighted”, “insanitary” or “undeveloped industrial” areas, 100.310(2), (11), (18), RSMo 1986, by eminent domain if necessary, and to dispose of the land to redevel-opers, in accordance with redevelopment plans, with approval at various stages by it and by the City Council of Kansas City. We are commanded by Section 100.610 to construe the act “liberally to effectuate the purposes of the law.”

On August 13, 1981, the City Council enacted an ordinance designating a tract bounded by both sides of Wyandotte and Central, between 1-70 (15th Street) on the north and 17th Street on the south, as a “blighted, insanitary or undeveloped industrial area.” This ordinance did not include the Tierney property.

On July 22, 1982 the council enacted another ordinance designating as blighted¹ the area covered by the 1981 ordinance, together with a tract to the west not involved in these proceedings, and a tract to the east consisting of the west side of Baltimore Avenue between 1-70 (15th Street) and 16th Street and containing the Tierney property. The entire tract covered by the 1982 ordinance contains 22.7 acres.

On September 28,1982, the council enacted an ordinance approving a General Development Plan submitted by PIEA for the area covered by the 1982 ordinance. The plan had been previously considered and approved by the City Plan Commission. This ordinance recited the existence of a “general plan for the development of the community as a whole,” and contained the finding that the PIEA plan was in conformity with the general plan.

On December 8, 1982, PIEA accepted a contract proposal by K-A Company for the redevelopment of the area. The owners contend that this proposal substantially changed the development plan as approved by the City Council the previous September, to such an extent that it invalidated the prior approval.

On November 21, 1985, PIEA adopted a resolution authorizing the commencement of condemnation proceedings. On November 27, 1985, it filed a petition for condemnation of the area covered by the 1982 ordinance. The declaratory judgment action was filed a few minutes later. The court held a hearing on the condemnation petition and, after substantial deliberation, entered an order on July 22, 1986 sustaining the petition in condemnation and appointing commissioners. The relators filed a prompt petition in the court of appeals seeking mandamus or prohibition. Timely notice of appeal in the civil action had previously been filed.

Challenges to Eminent Domain Proceeding

In State ex rel. Washington University Medical Center Redevelopment Corporation v. Gaertner, 626 S.W.2d 373 (Mo. banc 1982) we held that a landowner could not file a counterclaim in a condemnation action. This ruling poses a problem as to how an interested person may challenge the legality of an attempted condemnation in the appellate courts. If the trial court upholds the condemnation then the con-demnor may take possession on paying the damages assessed by the commissioners and the property may be irreversibly altered before the case can be heard by the appellate courts.

There are cases in which the lawfulness of the condemnation has been determined in a prohibition proceeding.² To succeed the relator must show that the condemnation proceedings are unauthorized by law. If so, the trial court lacks subject matter jurisdiction. When the disputes are essentially factual the claim of lack of jurisdiction is extremely difficult to sustain because the trial judge has the authority to resolve fact issues in the hearing on the condemnation petition. Issuance of a preliminary rule in prohibition, furthermore, is solely within the discretion of the appellate court.

It is also possible to file a civil action against the condemning agency seeking in-junctive or declaratory relief.³ This may provide a factual record, but unless the plaintiff owner is successful in the trial court there is no assurance that the con-demnor will not take possession and alter the property before the appeal can be pursued. Matters of interim relief, in the form of temporary injunction, stay, or expediting of the appeal, require the exercise of judicial discretion.

There is no sure way to assure the owners a full dress appeal, in advance of the taking. If the trial court decides against them they may often have to be content with the “just compensation” the law requires. In this case, however, there is a factual record which we may resort to in determining the legal issues in both proceedings. We conclude that the condemnation is not illegal for the reasons assigned.

The Finding of Blight

The owners argue that their property was not shown to be “blighted”, “insanitary”, or “undeveloped”, and that it could not be properly included in the area covered by the ordinance, by reason of Mo. Const. Art. I, Sec. 28, prohibiting the taking of private property for private use.

They do not challenge the basic concepts underlying urban redevelopment, as recognized by State ex rel. Dalton v. Land Clearance Authority, 364 Mo. 974, 270 S.W.2d 44 (1954) and confirmed by numerous later decisions.⁴ If the proper findings are made by the legislative authority, land may be acquired for redevelopment or industrial expansion and sold to other private interests, even though the owners are not willing to sell. Naboth may not always retain his vineyard, but must sometimes be content with just compensation. Ahab need not resort to major force, but may simply file a petition and pay the award. I Kings 21. Redevelopment of “blighted, substandard or insanitary” areas is a public purpose. Mo. Const., Art. I, Sec. 21. Whether a particular area is blighted, furthermore, is a matter for the legislative body to resolve.⁵ Its authority controls unless its decision is shown to be so arbitrary and unreasonable as to amount to an abuse of the legislative process. Allright Missouri, Inc. v. Civic Plaza Redevelopment Corporation, 538 S.W.2d 320 (Mo. banc 1976).

The owners do not challenge these basic principles. They assert rather that the legislative findings in the case before us are so arbitrary and unreasonable that they cannot supply the jurisdictional base for eminent domain. Their property was not included in the 1981 ordinance, declaring a smaller tract to be blighted, but was included in a 1982 ordinance which added only unblighted property along the east side of Broadway and the west side of Baltimore. They argue that the addition of this unb-lighted property, without the required finding that the addition is necessary to attract redevelopers, contravenes the constitution and the statutes.

They do not challenge the proposition, established in State ex rel. Atkinson v. Planned Industrial Expansion Authority of St. Louis, 517 S.W.2d 36 (Mo. banc 1975) and confirmed in other cases such as Allright Missouri, Inc. v. Civic Plaza Redevelopment Corporation, supra, that a blighted area may include parcels which are not themselves blighted if these parcels are necessary to provide a tract of sufficient size or accessibility to attract redevel-opers. They say that the principle may be invoked by the addition of property only if there is an explicit finding of necessity, citing Prudential Building and Loan Association v. Urban Renewal and Community Development Agency of Louisville, 464 S.W.2d 629 (Ky.1971).

We do not agree. The city council is entitled to consider the area as a whole. Its authority is not limited simply because a part of the area covered by a proposed ordinance has already been declared blighted. Nor do the governing statutes or ordinances require an explicit finding to support the inclusion of properties which are not blighted. The conclusion that all included properties are reasonably necessary for the redevelopment of the area is implicit in the declaration of blight. We do not find the Kentucky case persuasive.

The owners next attack the legislative finding of blight, pointing out that 27% of the area found to be blighted consists of streets and alleys, and 37% of surface parking. They point out that when these figures are added to the more than 50% of the buildings which are sound structures the greater part of the property in the area cannot properly be described as blighted.

Even if we assume that an area may not be said to demonstrate a “predominance” of blight unless more than half of the ground area is blighted, the owners’ argument is not sound. Streets and alleys exist to serve the adjoining properties, and partake of the character of these properties. Surface parking constitutes a two-dimensional use which inhibits other, more economically intense, uses. Streets and parking lots consume valuable urban land. The legislative authority may properly find that they contribute to a condition of blight. Parking Systems, Inc. v. Kansas City Downtown Redevelopment Corporation, 518 S.W.2d 11 (Mo.1974), is helpful on this issue.

The owners, finally, attack the concept of “economic underutilization” as a basis for condemnation. They suggest that almost all land could be put to a higher and better use, and argue that the concept of economic underutilization is so broad as to confer upon the legislative authority and PIEA the unlimited discretion to take one person’s property for the benefit of another, contrary to Mo. Const. Art. I, Sec. 28.

We do not find the fault or the danger perceived. The concept of urban redevelopment has gone far beyond “slum clearance,” and the concept of economic underu-tilization is a valid one. This is explicit in State ex rel. Atkinson v. Planned Industrial Expansion Authority of St. Louis, 517 S.W.2d 36 (Mo. banc 1975), sustaining the statutes governing this case. Centrally located urban land is scarce. The problems of assembling tracts of sufficient size to attract developers, and of clearing uneconomic structures, are substantial and serious. The willingness of the owners to sell is not controlling. We need not repeat all of the evidence which was before the city council tending to show that redevelopment of this area could promote a higher level of economic activity, increased employment, and greater services to the public. Industrial development is a proper public purpose. We do not sit as a court of appeal over the decisions of the council. The burden is on the owners to show that the finding of blight constitutes an arbitrary or unreasonable abuse of the legislative authority. They have not made this showing. See, Allright Missouri, Inc. v. Civic Plaza Redevelopment Corporation, 538 S.W.2d 320 (Mo. banc 1976).

Absence of a General Plan

The owners argue that PIEA may not proceed to acquire their land by eminent domain because of failure of compliance with Section 100.400.1(3), RSMo 1986, providing as follows:

An authority shall not recommend a plan to the governing body of the city until a general plan for the development of the city has been prepared.

If this contention has merit, it precludes all activity under the planned industrial expansion statutes until the city has adopted a general plan. We therefore consider the point before taking up the objections to the particular plan. The claim, however, is not well taken.

The owners concede that a City Master Plan was adopted in 1947. They point out, however, that Kansas City has greatly expanded its boundaries since that time. The present boundaries of the city are divided into 46 planning areas. Supplemental area plans exist for no more than 30 of these areas including the 1978 Downtown Area Plan, No. 14, which includes the Tierney property. The owners argue that the failure to extend the master plan to the remaining areas is a fatal defect, contending that a “general plan” must include the entire city.

The owners do not satisfy us that there is a violation of the general plan requirement. The area here in question adjoins the downtown business district. It is in the oldest portion of the city, at its very heart. The conditions on which the 1947 plan was based remain essentially unchanged. The city maintains a City Plan Commission with a professional staff, and also has the services of the staffs of the Land Clearance for Redevelopment Authority and of PIEA. There is no showing that the absence of plans for some outlying areas rendered the 1947 plan and the supplemental area plans any the less useful. The city authorities are entitled to exercise some discretion in the use of their resources, and might well conclude that some of the annexed areas were relatively stable, or not appropriate for industrial development, so that area plans were not priority items.

The text of the statute does not support the owners’ claim, and we do not believe that it was intended that planned industrial development stand still until every square foot within the city limits is covered by a plan.

Conformity to the General Plan

Section 100.400.1(9), RSMo 1986, provides that the governing body of the city may approve a plan if it finds that the plan is “in conformity with the general plan for the development of the community as a whole.”

Both the City Plan Commission and the City Council made the required findings. The owners argue, nevertheless, that the Downtown Industrial Area Plan of 1978 recommends that the land use for the area should remain “light industrial,” and specifically rejects “core type uses, such as retailing, offices, and high density housing.” That plan goes on to suggest that “high intensity core type uses, such as high-rise office, apartment and intense retailing should not be allowed so as not to detract from the economic revitalization of the Central Business District or the development of Crown Center and Pershing Square.”

Relators point out that the PIEA plan makes provision for land use in the area as follows:

Proposed land uses within the project area shall be limited to facilities relating to commercial use such as office buildings, financial institutions, hotels, motels, parking structures, commercial support services and ancillary uses.

We find no disabling disharmony between the 1978 plan and the uses proposed in 1982. Under the city’s zoning ordinances “commercial” zoning is “higher” than light industrial zoning, and the classifications are cumulative, so that commercial uses are permissible in a light industrial area. Planning is a continuing process, and a plan cannot remain static or inviolate. The City Plan Commission and the City Council are charged with the responsibility for comparing the PIEA proposal to the preexisting plans and determining whether there is substantial compliance. To the extent that there are differences, we must assume that the duly constituted authorities concluded that the preexisting plans should be modified. The owners would introduce inflexibility and invite close judicial scrutiny, in a way not contemplated by the governing legislation.

Compliance With Statutory Requirements

Section 100.400 sets out certain factual information which must be included in every plan. This information includes population and employment data for the relevant area; zoning proposals; information on necessary street and utility changes and projected figures on the amount of building construction. Examination of the plan itself shows that these requirements were substantially complied with. The plan specifically states that the population density of the area is .83 persons per acre and that the unemployment rate is 17.2%. The plan includes a specific estimate that 500,000 feet of office space would be built. It also states expressly that a change in zoning from M-l to planned commercial was contemplated. It says that no changes in the existing sewer or water systems are foreseen, and that existing building codes and ordinances shall apply within the plan area. Exhibits attached to the plan contained graphic layouts which superimposed planned street configurations over existing streets. The plan, in short, contained the essential information which would permit members of the city council to make an intelligent, informed and appropriate legislative decision regarding approval of the plan. It is evident from the record that the council was assisted in its evaluation of the plan by several- city agencies specifically charged with insuring the efficient and productive development of the city as a whole. The statutory requirements were devised to further this purpose. They should not be read as requiring that the council be informed of the precise placement of every brick before the duly appointed authority is even allowed to commence proceedings to acquire the property, and before the plan can be tendered to potential developers for bidding. The council had the means of information necessary for a studied decision.

The owners place strong reliance on State ex rel. Maryland Plaza Redevelopment Corp. v. Greenberg, 594 S.W.2d 284 (Mo.App.1979), holding that an ordinance approving the redevelopment plan of a private developer was invalid and insufficient to confer the power of eminent domain because the plan did not provide the Board of Aldermen with the required information as to the method of financing. The case is not very close to this one. There the land was to be acquired by a private redevelopment corporation organized under Chapter 353, RSMo, which would be responsible for paying any judgment ultimately rendered in favor of the owners. The financial resources of the developer were of vital importance, but the plan submitted gave virtually no information on this score. The holding has perhaps been somewhat qualified in State ex rel. Devanssay v. McGuire, 622 S.W.2d 323 (Mo.App.1981), which appears to relax the requirements for detailed financial information, and holds that the legislative body’s conclusion that adequate information has been furnished is entitled to substantial weight.

The owners cite State ex rel. Terrell v. Nicholls, 719 S.W.2d 862 (Mo.App.1986) for the proposition that failure of compliance with the enabling ordinance will deprive the redeveloper of the power to condemn.

Terrell also involved a Chapter 353 private redevelopment corporation. The corporation failed to notify property owners of the terms of the redevelopment plan within ninety days of approval by the Board of Aldermen, as expressly required by the governing ordinance. The court of appeals held that this failure precluded the redevelopment corporation from exercising the power of eminent domain. The notification requirements were designed to give the owners the opportunity to redevelop their own property. The express violation of the ordinance deprived them of this opportunity. No such deprivation occurred in the present case. There has been no suggestion that the owners in this case were denied their statutory right to propose their own redevelopment plan. Section 100.-310(9), RSMo 1986. As our earlier discussion indicates, furthermore, the plan submitted to the council in this case is not lacking in essential information, in the manner of the plan criticized in Greenberg.

Modification of the Plan

Relators complain that, even if the PIEA plan approved by the council complies with the statutory requirements, that plan was substantially modified by the proposals of the private contractor ultimately adopted by the PIEA. The proposal changed the configuration of several streets and called for an office building on relator’s property rather than a hotel as originally contemplated. The argument fails to take account of the time sequence established by the statute. The city council approval of September 28, 1982, furnished the jurisdictional basis for acquisition of the property in the blighted area. This came before the plan was made available to developers for bidding. Jurisdiction is not lost because of what PIEA and the developers may later agree upon. Nor are the owners specially aggrieved by changes made after their property has become subject to condemnation.

It could hardly be expected that all details for the planned development could be spelled out at the time of council approval, or even at the time the initial contract is agreed to. There is no way to determine which potential developers might show interest, or what kind of development they might consider economic. Changes may be necessary to meet changing economic conditions, if uses contemplated in the initial plan are adequately provided by other new construction. We will not read the statutes in such a way as to frustrate their effectiveness, especially in view of the legislative command that they be construed “liberally to effectuate the purposes.” Section 100.610. We are not persuaded that the modifications relied on by the owners represent a significant departure from the plan approved by the council. A “substantial modification” as described by Section 100.400.1(10), such as to require council approval, should be read as referring to a modification which would substantially alter the nature of the contemplated development. We find nothing of this sort in the record.

The city council retains ultimate control over the plan and any modifications. Section 100.400.1(10). The circumstances relied on by the owners do not divest the circuit court of jurisdiction over the eminent domain proceedings.

The Damages Claim

We conclude that the trial court properly dismissed Count III of the civil action, which sought damages for “condemnation blight,” on the basis of the suggestion in State ex rel. Washington University Medical Center Redevelopment Corporation v. Gaertner, 626 S.W.2d 373 (Mo. banc 1982). The defendants are the city, the Planned Industrial Expansion Authority of Kansas City, Missouri, K-A Company (the developer), Whitney Kerr, one of the partners in the developer, and Kansas City Corporation for Industrial Development, a not-for-profit corporation whose role is not precisely stated. There are obstacles to the claims against each of these defendants.

Relief against the city is sought because of the passage of the blighting ordinance and the ordinance approving the initial redevelopment plan as submitted by PIEA. There is no precedent for holding a city liable for the actions of its governing body in adopting ordinances authorized by the planned industrial expansion act, which calls for the exercise of legislative judgment. The bare declaration of conditions found to exist in an area does not meet any accepted definition of “taking.” When a blighting ordinance is passed, furthermore, there is no assurance that a developer will be found or that development will ever proceed.

The claim against PIEA is based on its recommendation of the blighting and plan approval ordinances to the city council following its staff studies, and on its approval of K-A Company as a developer. PIEA is “a public body corporate and politic ... exercising public and essential governmental functions.” Section 100.310(1), RSMo. Its duties consist of preparing general redevelopment plans for submission to the city council and considering proposals submitted by developers for the redevelopment of areas found to be blighted. The owners seek to hold it civilly liable simply for performing its statutory functions. We likewise are aware of no precendent for this. Section 100.520, indeed suggests substantial limitations on the civil liability of the authority.

The developer and Kerr have no governmental powers at all and do not possess the power of eminent domain. They are sought to be held simply for entering into a contract with PIEA on a matter within that agency’s statutory authority. In doing this they violate no duty which they owe to the owners. No basis for the claim against the other defendant, Kansas City Corporation for Industrial Development, is suggested in the briefing.

It is apparent that the process of planned industrial development would be greatly inhibited if the governmental and private participants were held to the kind of liability sought to be imposed by Count III of the petition. We conclude that this count states no claim on which relief can be granted.

Washington University Medical Center, supra, involved a claim against a private urban redevelopment corporation established by Chapter 353, RSMo 1978. What the Court said about the possibility of such a claim in a separate action was obiter, because the actual holding was that a claim for “condemnation blight” could not be made by way of counterclaim in the condemnation action. A claim against a private corporation is free from some of the immunity problems that are present in this suit. The case relied on, therefore, does not furnish substantial precedent for these plaintiffs. The facts alleged in Count III, furthermore, seem substantially different from those alleged in the counterclaim in that case, in which the dominant theme was loss of rental income.

The owners also cite Roth v. State Highway Commission, 688 S.W.2d 775 (Mo.App.1985). The essential charge in that case was that the highway commission interfered with the rights of propertyowners by interceding with municipalities to frustrate the owners’ attempts to get building permits, long before it instituted condemnation proceedings. The petition in effect charged that there had been a taking by the acts of agents of the condemning agency, which triggered the right to just compensation, before the processes of law were called upon to condemn the property. No claim of this sort is presented by Count III, which seeks relief based on the public acts of the defendants rather than on any interference with the owners.

Any action of the kind sought to be maintained in Count III must be on a theory that there has been a “taking.” Such actions are sometimes referred to as actions for “inverse condemnation,” and may be maintained in spite of sovereign immunity to fulfill the constitutional command that property not be taken without just compensation. Mo. Const. Art. I, Sec. 26. See Owen v. City of Springfield, 741 S.W.2d 16 (Mo. banc 1987) Rendlen, J., dissenting). The petition and other papers in this case do not state facts showing a taking, up to this point. There has been no abatement of the owners’ rights in the property, which is leased through 1991. The owners, indeed, seek to forestall the acquisition by arguing that PIEA has no right to acquire the property, and have caused postponement of the taking up to this time by suing out an extraordinary writ.

After the Commissioners’ award is filed, PIEA may “take” the property by paying the amount of the award into court. Both the owners and PIEA have the right for the review of that award by a jury. There is also the right to abandon the acquisition proceedings. S.Ct. Rule 86.06. Until the ultimate condemnation award is determined there can be no accurate determination as to whether there has been a taking, in advance of the statutory taking, which has not been adequately compensated.⁶ Further consideration of the owners’ entitlement, if any, should be postponed until that time. We express no opinion as to what kind of action might be brought, what showing is required, or whether any facts warranting relief appear in this record.⁷

The judgment in Case No. 69317 is affirmed. The preliminary rule in Case No. 69528 is quashed.

BILLINGS, C.J., RENDLEN and HIGGINS, JJ., and MORGAN, Senior Judge, concur. WELLIVER, J., dissents in separate opinion filed. DONNELLY, J., dissents and concurs in separate dissenting opinion of WELLIVER, J. ROBERTSON, J., not sitting.

1 . For economy we will use 'blighted” as a collective term for land meeting any of the statutory tests of "blighted," "insanitary," or "undeveloped industrial." Section 100.310(2), (11), (18).

2 . State ex rel. Devanssy v. McGuire, 622 S.W.2d 323 (Mo.App.1981), containing an instructive exposition of the problems of a landowner who would challenge the propriety of eminent domain proceedings; State ex rel. Weatherby Advertising v. Conley, 527 S.W.2d 334 (Mo. banc 1975), overruled on other grounds State ex rel. Missouri Highway and Transportation Commission v. Anderson, 735 S.W.2d 350 (Mo. banc 1987).

3 . Allright Missouri, Inc. v. Civic Plaza Redevelopment Corp., 538 S.W.2d 320 (Mo. banc 1976) cert. denied, 429 U.S. 941, 97 S.Ct. 358, 50 L.Ed. 2d 311 (1976); Parking Systems Inc. v. Kansas City Downtown Redevelopment Corp., 518 S.W.2d 11 (Mo.1974).

4 . See particularly, Annbar Associates v. West Side Redevelopment Corp., 397 S.W.2d 635 (Mo. banc 1965) app. dismissed 385 U.S. 5, 87 S.Ct. 41, 17 L.Ed.2d 4 (1966); State ex rel. Atkinson v. Planned Industrial Expansion Authority of St. Louis, 517 S.W.2d 36 (Mo. banc 1975), sustaining the law now before us.

5 .See generally, Annotation, What Constitutes a "Blighted Area Within Urban Renewal and Redevelopment Statutes, ” 45 A.L.R.3d 1096.

6 . There may be multiple takings as a part of the same acquisition proceeding. Missouri Highway and Transportation Commission v. Eilers, 729 S.W.2d 471 (Mo.App.1987).

7 . See Castle, Note, “Condemnation Blight: Compensating the Landowner in Missouri," 48 Mo.L. Rev.220 (Winter, 1983); Dunkin, Note, "Denial of Landowner's Counterclaim: Another Obstacle on the Road to Just Compensation," 50 UMKC L.Rev. 353 (Fall, 1981).