IN THE CIRCUIT COURT OF THE CITY OF ST. LOUIS, MISSOURI STATE OF MISSOURI, eX rel. JOSHUA D. HAWLEY, MISSOURI ATTORNEY GENERAL, MISSOURI DEPARTMENT OF REVENUE, MISSOURI DEPARTMENT OF ECOMONIC DEVELOPMENT Plaintiffs, V. NORTHSIDE REGENERATION LLC, Case No. Defendant. Serve: PEM AGENCY CORP. Registered Agent 1001 Boardwalk Springs Pl. #200 O?Fallon, MO 68368 VERIFIED PETITION Plaintiffs, State of Missouri, Missouri Department of Revenue and the Missouri Department of Economic Development, by and through Missouri Attorney General, Joshua D. Hawley, state the following for their cause of action: 1. Joshua D. Hawley is the duly elected Attorney General of Missouri and is authorized to bring this action by 27.060, 2. The Missouri Department of Revenue is an executive department that has autherity to perform post-issuance compliance functions in regard to tax credits. 3. The Missouri Department of Economic Development is an executive ciepartment that administers tax credit programs for the State. 4. Defendant Northside Regeneration, LLC (?Northside?) is 3 Missouri limited liability company that applied for tax credits under the Distressed Areas Lend Assemblage Tax Credit Act. Venue and Jurisdiction 5. Venus is proper in the Circuit Court of the City of St. Louis pursuant to 508.0102, because Northside maintains an of?ce for the transaction of business in the City of St. Louis. 6. This Court has authority over this civil aetion pursuant to Article V, 14 of the Missouri Constitution and 478.070. RSMO. Facts Anniicable to. All Counts 7. Section 99.1205 ESMO., the Distressed Areas Land. Assemblage Tax Credit Act, allows applicants who buy land in distressed areas to apply for transferrable tax creditsbesed on land acquisition casts and other 8. On or about November 15, 2012:, Northeide applied to the Department of Economic Development for tea: credite under the Act. Application attached as Exhibit A and incorporated by reference. 9. To support its application, Northeide provided a list of properties it acquired in distressed areas for which, it was seeking tax credit. The partial property list attached as Exhibit and incorporated by reference. 10. Northeide provided dooumentatioa for the acquisition costs for eaeh of the listed properties. 11* Northeide listed property at 1218? 1224 . 15th Street (?15?7?h Street Property?) in the City of St. Louis as one of the properties and provided documentation that the purchase price for the property was $4,981,420 and that it incurred $879,863 in closing costs for the property. 12. Northeide represented that it acquired the 15th Street Property on or about December 17, 2012. 13. Northeide listed property at 2500-2524, 2530 Madison Street (?Madison Street Property?) in the-City of St. Louis as one ef the properties and provided documentation that the purchase price for the property was $275,360. (Collectively referred to in the petition along with the 15"h Street property 38 ?the Properties?). 14. Northside represented that it acquired the Madison Street Property on or about December 28, 2012. 15. On. January 2, 2018, BED issued Northside tax credit in the amount of $4,468,972.58 for the acquisition of the Properties. 16. Northside transferred. this tax credit- on January 3, 2012. 17. On. November 7, 2018, a taxpayer redeemed part of this tsx- credit resulting in 3. reduction of tax revenue available to fund State government in the amount of $2,468,972.58. From this tax credit, $2,000,000 remains outstanding and available for redemption. Redemption of this remaining portion will result in reductiOn of tax revenue. 18. Less than six months after receiving the tax credit and transferring it} 011 one 19, 2013, Northside ?led a certificate of value with the St. Louis City Assessor that memorialized a. transfer of the 15th Street property from Northside hack to the sellers listing the purchase price as Certi?cate attached as Exhibit and incorporated by reference. 19. On July 28, 2016 the Circuit Court of St. Louis City awarded the original seller of the Madison Street Property $180,732.46 for the property in condemnation case. See LCRA v. Allen et. al. 15220011386, Pay-Outs Order dated July 28, 2016. This indicates that orthside did not follow through with actually acquiring the Madison Street Property. 4 20. Northeide did not actually incur acquisition. eoete for 15th Street Property because it ?unwound? the sale. See Exhibit. C, 21. Nortbeide did not actually incur acquisition caste for the Madison Street Pmperty because it ultimately did net acquire the property and the Court awarded taxpayer funds to the original. seller in the cendemnetian action. 22. Northeide provided annual. reperte, as required by 135.805 RSMO., to the State for the three years after the application fer tax credits. 23. Northeide did. not disclose in its annual reports, or otherwise, that it. ?unwound? or did not follow through with the sales oft'he Prepertiee. 24. Northeide failed to repay the State the tax credit Count I Tax Credit Fraud, 135.810 RSMO. 25. The State alleges and incorporates by reference paragraphs 1 through 24 as if fully set forth in this Gaunt l. 26. Northeide represented to that it purchased and incurred. acquisition costs for the Properties. 27. DEB reiied on this representatien when it issued the January 2, 2013 tax credit of $4,468,972.58. 28. Northeide did not incur acquisition costs for the 15th Street Property becauee it never paid the seller and ?unwound? the sale within six months. 29. Northeide did not ?incur acquisition costs for the Madison Street F?roperty because it did not follow through with the transaction and the. original seller receive& a condemnation award. 30. Northside made the representation to BED, under penalty of. perjury, certifying that all the information submitted in connection with the Application was true and correct. See Exhibit 31. Northside made the representation to BED, under penalty of perjury, certifying that it would inform DED if there were any changes to its certifications. 32. DEB had a right to rely on Northside?e 33. Northeide never informed DED that it failed to follow through with the purchase of the Properties or that it ?unwound? the sales. 84. When taxpayers ultimately redeemed the tax credit, the State lost tax: revenue it would. have otherwise received. 35. By issuing the tax credit based. on Northeide?e representation that it paid acquisition costs; when it did not actually pay those costs, the State suffered damagee? 36. Section 135.810 (8) RSMO. provides that any fraud in the tax credit coat application process shall result in a penalty equal ta one hundred percent of the credits issued. WHEREFORE, the State prays for judgment against defendant for one hundred percent of the credits issued in the amount of $4,468,972.58 and for such further relief as the court deems just. Count II Breach of Tax Credit Application 3?7. The State alleges and incorperatee by reference paragraphs'l through 86 as if fully set forth in. this Count II. 38. Northeide signed and submitted a tax credit application anti supporting documents on or about November 15, 2012. See attached Exhibit A. 39. Northside submitted additional materials supporting tax. credits based on the Properties in December 2012. 40. In the application-and supporting documents, Northeide certi?ed that it was entitled to the tax credit because it incurred aoquisitien costs for the Properties. 41. In the application, Northeide alsc premieecl that it would inform DEB if there were any changes t0 any of the certi?cations. 42. Northeide submitted annual reports; in connection with these tax credits in 20 .14, 2015, and 2016, but it never informed DEE that it did not actually incur acquisition costs for the Properties; nor that it had actually ?unwound,? cancelled, or failed to follow through with acquisition of the Properties. 43. Because Northaide failed to actually incur acquisition costs and did not dieoloee the failure to incur acquisition. costs, Northeide breached its agreement in its application for tax credit. 44. The State suffered damage because it granted tax credit where the applicant did not meet the requirements for the credit WHEREFORE, the State prays for judgment against defendant in the amount of $2,628,390 anti for such further relief as thecourt deems just. Count 111 Unjust Enrichment 45. The State alleges and incorporates by reference paragraphs 1 lillI?Ough 44 as if fully set forth in this Count 46. By accepting the tax credit, Northeide enjoyed a bene?t at the expense of the State because the credit represented a dollar for dollar reduction in state taXee for the redeemer. 4'7. It is unjust for Northside to retain the credit attributable to the Properties because Nerthside did net actually acquire the Properties and failed to inform BED that it (lid not actually acquire the Property. WHEREFORE, the State prays for judgment against defendant in the amount of $2,628,390 and for such further relief as the court deems just. Respectfully JOSHUA D. HAWLEY MISSOURI ATTORNEY GENERAL . ls/ Sarah J. Dobecki Sarah J. Dobecki #42846 Deng Noland #37178 Timothy Weeks #66308 Assistant Attorneys General 19.0. BOX 861 St. Louis, MO 64106 (314) 340-4748 (314) 3404121 Fax Sarah.Debecki@ago.mo.ch Attorneys for the State of Missouri and the Missouri Department of Revenue VERIFICATION OF PETITION State of Missouri SS County 0f Cole I, Sallie Hemanway am employed at the Missouri Department of Economic Deveiapment. I state "under oath that the allegati?ns centained in this Verifieci Petition are true and correct. I am fam?iar with the facts stated in this Veri?ed Petition and: if sworn as a. witness, I am competent to testify to them WW TS?allti? Hemenway 3w Subscribed and sworn to before me this I day of .Y . 2018? . Eu Cm Mace Nata} PubEic 11:2; Pg EAWN ELLEN OVERBEY {$315} My Cmmission Expims Q?cemb?r 13,2013. fig; SEAL Man?teau County 00111111133101; 8X DES: 1 623:: $1 5&0 a 10