Scottrade Litigation proves you can’t fight City Hall – even from the inside | St. Louis Metro News | St. Louis | St. Louis News and Events

Over the past week, the owners of the St. Louis Blues have pushed back the final two hurdles that stood between them and a veritable pile of taxpayer money. And they did it in a way that leaves no doubt about who is running this town.
He’s the one who can afford the most aggressive lawyers.
Faced with two principled positions against a cash back at the Scottrade Center that could cost St. Louis taxpayers $107 million, the Blues fought hard. Through their attorneys, they threatened City Comptroller Darlene Green with contempt of court and fines of up to $1,000 a day because she wanted to keep their documents in escrow while she appealed. . Then the lawyers threatened Alderman Cara Spencer with their own six-figure bill, all because Spencer dared to take legal action against their taxpayer-funded windfall.
These kinds of threats tend to get people’s attention.
And so, last week, Green released the documents. Spencer settled the lawsuit. The Blues will get their renovations, and you and I will be stuck with the bill. Another day, another private entity plunders the public purse. That’s life in Saint-Louis.
But before we close this chapter and resign ourselves to paying $107 million to host an already profitable franchise, it’s worth remembering how terrible this deal is.
Late last year, the team went to the Board of Aldermen for legislation authorizing $64 million in bonds to fund renovations at the Scottrade Center. Their timing couldn’t have been better – the city’s progressives were already busy fighting a plan to raise taxes to pay for an MLS stadium. A hard-fought mayoral election distracted and fractured board members.
And it wasn’t just that then-Mayor Francis Slay’s longtime chief of staff, Jeff Rainford, was the turning point for the Blues. The campaign of board chairman Lewis Reed, himself a mayoral candidate, pocketed a $100,000 donation from a minority team owner just a week before the vote, joining the $75,000 that he had previously harvested from various members of the owning team.
Then-alderman Antonio French, by far the proposal’s most vocal critic, noted that the Blues benefited from the use of Scottrade without paying taxes or rent to the city, the ostensible owner of the ‘installation. He noted that the owners of the Blues benefited not only from the team’s games, but also from other events at the center. Then he asked for a copy of the lease.
He never had one. But pushing to clarify which parties are responsible for what under the terms of the 1992 agreement, he got this statement, from Husch Blackwell lawyer David Richardson: The lease “is pretty much silent on major capital improvements like this one”. (See 1:51 in the video below for the key quote.)
Who could dispute that? Especially when the city seemed desperately unable to produce documents to confirm or deny this claim? Just ask Cara Spencer; the alderwoman filed for Sunshine Law and still couldn’t get the thing.
Aided by the confusion, Reed pushed the bill through less than a month later. Indeed, he got approval so quickly, in the end, even Reed decided it had been too quick – or at least politically toxic – and voted no.
It was only after that that the lease was discovered, and – go figure – it wasn’t quiet at all. As Spencer learned after a third party finally slipped him a copy, “fixing and replacing improvements” is the obligation of the tenant – the owners of the Blues.
“When I finally got my hands on the lease, I was disgusted,” she told the RFT in August.
Because of those lease terms, Spencer believed the $106 million in taxpayer money was a “gift” to the Blues’ private organization — which she says could make it illegal under the United States Constitution. Missouri. It was then that she, along with activist Jeannette Mott Oxford and former councilor James Wilson, filed suit. Attorney Eric Vieth took the case pro bono.
Now, reasonable people could debate the merits of the lawsuit. On the one hand, the city certainly benefits from having Blues games (and concerts) downtown. On the other hand, at this point, the city has crossed the line from generous benefactor to total sucker. That’s why we have judges: both parties have their point of view, and it takes a legal expert to understand things.
But the Blues have upped the ante. Arguing that Spencer’s suit was “frivolous, without substantial legal basis, reckless, punitive or in bad faith”, lawyers for Husch Blackwell – yes, the same firm whose partner misrepresented the terms of the lease during this committee meeting in January – recently demanded that parties bringing it should be saddled with their legal costs. It was not an empty threat. Husch Blackwell partners charge some of the highest hourly rates in town.
Spencer’s team had lost some of their arguments, as Husch Blackwell’s attorneys pointed out in their filing. But it’s not like the expensive lawyers prevailed to have the lawsuit dismissed. He was heading to trial this week.
Nevertheless, the fee request was a game-changer. As Spencer admits, the prospect of having to pay what was surely a giant legal bill was horrifying. “I can’t put this burden on my family,” she says.
That Spencer, Oxford and Wilson settled their case so soon after Green signed the bond papers is no coincidence. For one, St. Louis Circuit Court Judge Joan Moriarty was hearing both cases — and in ruling against Green, the judge suggested at the very least some sympathy for the Blues’ legal arguments.
Second, Green’s intransigence had given the other group some cover. Once Green signed the bond papers, Spencer’s lawsuit was “the only obstacle”, in the words of the team, to the issuance of the bonds. And with the GOP’s proposed tax reforms effectively banning tax-exempt bonds like those involved in funding Scottrade, the team has made it clear that they are determined to stop at nothing to get the deal done before it’s not too late.
Of the threat of attorney’s fees, Spencer says, “We knew they only had a 5% chance of winning. [them]. But even if the odds were low, the reality of this ordeal would be incredibly devastating.”
Less than two weeks after the Blues requested his attorney’s fees, the parties settled.
The fact is that the Board of Alderman is to blame for the terrible Scottrade deal. Once President Reed got his votes, the deal was done. And what a bargain – based in part on the City’s mind-boggling generosity to the team, Forbes recently pegged the Blues’ value at $450 million, up 45% from a year earlier.
Still, it’s striking how many parties lined up in opposition after that – and how little progress they were able to make in pushing for the deal to be reconsidered in light of the lease or other funding sources to explore. Everyone from the longtime city comptroller (Green) to the city councilor when the lease was signed (Wilson) to a sitting alderman (Spencer) did everything in their power, to except personal ruin, to stop spending. It just wasn’t enough.
You could say that their cause was pipe dream, that they never had a chance – and that they wasted everyone’s time by refusing to believe it. You might say that if you can’t afford to hire reputable lawyers, you shouldn’t sue. You could, I suppose, even argue that we need our horseflies willing to risk destroying their own lives and ruining their families to pursue the business they believe in.
But you can’t pretend things aren’t broken at City Hall. We’ve all seen the lease now. We know who was supposed to pay – the same parts that already benefit from the expensive upgrade. And it’s infuriating that a broke (and broken) city is nonetheless the part on the hook.
Sarah Fenske is the editor of the Riverfront Times. Email him at [email protected] or follow her on Twitter @sarahfenske