Missouri tax credits helped McKee buy land; now the city of St. Louis wants to buy it
The city of St. Louis wants the National Geospatial-Intelligence Agency to relocate to the north side of the city. In order to make it a viable option, the city is hustling to buy all 100 acres in the proposed footprint just north of the former Pruitt-Igoe housing project site.
Yet more than half of the property is owned by developer Paul McKee’s Northside Regeneration, which received significant state tax subsidization to acquire the land.
(Listen to a previous story on how other property owners in the area are reacting to the proposed project.)
In 2007 state legislators passed the Distressed Areas Land Assemblage Tax Credit. It offered up to $95 million in tax credits to developers buying at least 50 acres of land in distressed areas. At the time McKee was the only developer who qualified for the program, which reimbursed land purchases up to 50 percent and covered loan fees and interest, as well as maintenance.
McKee and Northside Regeneration received a total of $43 million in those state tax credits between 2009 and 2013. So far none of the projects Northside Regeneration promised have come to fruition.
Tax credits for land within NGA site
Within the proposed NGA site, Northside Regeneration received $3.5 million in state tax credits for the $7 million purchase of 89 parcels, according to documents from the Missouri Department of Economic Development. That includes the $3.75 million purchase of a commercial building at 1516 N. Jefferson.
The city now needs those properties for the NGA site.
The St. Louis Development Corporation is leading the city’s effort to assemble the land. Executive Director Otis Williams said the tax credits will be taken into consideration when the city acquires the land. He refused to comment further, citing ongoing negotiations.
Earlier this year, Williams estimated it would cost the city $10-12 million to buy all residential properties, and at least $25 million to buy a handful of business properties.
St. Louis Public Radio asked McKee’s spokesman Jim Gradl whether the developer’s asking price for the property would take the $3.5 million in state tax credits into account. In an emailed statement, he said Northside Regeneration is in discussions with the city and could not get into specifics.
"The price being discussed is the same price offered directly to the NGA 18 months ago--before the city got involved and before the NGA narrowed the many sites under consideration down to four," Gradl said. "It was a price designed to attract the NGA to the site."
Land bought from the city
Northside Regeneration also bought much of the land it owns within the proposed NGA site directly from the city.
In a massive sale made in February 2012, McKee’s company purchased more than 1,200 parcels from the city for $3.1 million. Those purchases were made from the city’s Land Reutilization Authority, the Land Clearance for Redevelopment Authority, and the Planned Industrial Expansion Authority.
At that time Northside Regeneration bought more than 260 parcels within what is now the proposed footprint of the NGA for about $600,000. The prices for the parcels ranged from as little as $89 to as high as $20,000.
The sales agreement between the city and the developer stipulated that the city could buy back the land at its purchase price if Northside Regeneration failed to meet job and project benchmarks. But the first deadline for such benchmarks is not until the end of 2016.
Auction of McKee's land
The city may not be negotiating with McKee when purchasing some of the parcels Northside Regeneration has owned to date. In April, a Kansas entity called Titan Fish Two sued McKee and Northside Regeneration, claiming the developer owes more than $17 million from a 2007 loan taken from the now-defunct Corn Belt Bank and Trust.
The suit asks the court to take over more than 400 parcels, or about a quarter of Northside Regeneration’s land in St. Louis. Some of that land is within the proposed NGA site. Titan Fish Two said in a statement through its attorney earlier this spring that it would work with the city regarding the NGA project:
“Titan Fish Two, LLC recognizes that the City of St. Louis is actively engaged in efforts to facilitate the National Geospatial-Intelligence Agency’s relocation to North St. Louis. Our client is supportive of those efforts and excited about the City’s plans for the NGA site. Notwithstanding its pending lawsuits against Northside Regeneration, LLC, Paul McKee and McEagle Properties, L.L.C., our client intends to fully support the City regarding its plans for NGA and the Northside area. We do not anticipate that the filed lawsuits will have any effect on the City’s ability to purchase the property necessary for the NGA’s relocation.”
Then late last month Titan Fish Two posted notice that it will auction 47 parcels of Northside Regeneration’s land, much of it within the NGA footprint. The sale is set for noon on Wednesday on the east steps of the Civil Courts Building in downtown St. Louis.
It’s not clear whether the city will bid on the land. St. Louis Development Corporation officials did not respond to a request for comment.
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