September 7, 2012
Jefferson City, Mo. – Attorney General Chris Koster today filed a lawsuit seeking to recover tax credits issued for work that was never completed at the Cupples 9 development at Ninth and Spruce in downtown St. Louis.
The lawsuit alleges that Ballpark Lofts I, LLC obtained more than $2.4 million in Brownfield tax credits to defray environmental remediation costs to redevelop the Cupples 9 project but failed to complete that remediation. Despite not completing the environmental remediation, an environmental consultant Ballpark hired submitted a report to the state on Ballpark’s behalf claiming that the remediation was complete.
“Lawsuits like this are crucial because they ensure that Brownfield tax credits achieve the purposes for which they were granted,” Koster said. “These tax credits are important tools of economic revitalization and growth, and my office is committed to ensuring that those who mislead the state do not get away with it.”
The lawsuit was filed against Ballpark Lofts I, LLC; McGowan & Walsh, LLC; Kevin X. McGowan; and Nathaniel S. Walsh. The lawsuit alleges that Ballpark Lofts I owned the Cupples 9 project and obtained the $2.4 million in tax credits for its redevelopment from the Missouri Department of Economic Development. McGowan and Walsh, LLC owns Ballpark Lofts I, and McGowan and Walsh the individuals are the members of the limited liability company bearing their name.
Based on Ballpark Lofts’ redevelopment plan, which promised to remove all lead-based paint, the state found that the project was eligible for $2,419,014 in Brownfield tax credits. By June 2010, $1,814,260.50 of the tax credits had been issued to Ballpark based on documentation it submitted showing environmental remediation costs. The Department of Economic Development withheld the last $604,753.50 because, pursuant to state law, no more than 75 percent of tax credits can be issued before the environmental remediation is complete.
On March 31, 2010, Lafser & Associates, Inc., an environmental consultant hired by Ballpark, submitted a report to the state on Ballpark’s behalf that asserted that all lead-based paint was abated as of that time. On the basis of that report, the last $604,753.50 in tax credits was issued to Ballpark in September 2010 and February 2011.
The Cupples 9 property was later sold via foreclosure, and the subsequent purchaser discovered that the building still contained lead-based paint. A subsequent inspection by the Department of Natural Resources and independent contractors found that the Cupples 9 building still contained unacceptable levels of lead.
Ballpark subsequently sold the tax credits to a third-party, which prevents the state from simply canceling them.