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St. Louis nears deal with McKee for land in proposed spy agency site

(Maria Altman | St. Louis Public Radio)
Vacant land within the proposed north St. Louis site for the National Geospatial-Intelligence Agency. Developer Paul McKee owns about 300 parcels.

Developer Paul McKee owns the lion’s share of the land within the proposed north St. Louis site for the National Geospatial-Intelligence Agency.

As the secretive federal agency looks for a new home, the developer was instrumental in getting the city location on NGA’s short list. However, McKee was driving a hard bargain with the city for his land. He was among 19 property owners named in an aldermanic resolution to authorize eminent domain, the court process for forcing land sales.

But it appears the city won’t need to go to court to get McKee’s property.

St. Louis Development Corporation executive director Otis Williams said the two sides have an agreement. It just needs to be finalized.

"We essentially have reached a deal, but it’s being written up by the lawyers," he said. "As soon as we get the documents to review, it should be something we should be able to complete in the next week or two."

McKee spokesman Jim Gradl said he could not comment until after the deal is made public.

The leverage

The city’s Land Clearance for Redevelopment Authority made a $5 million purchase in August, but it didn’t buy the land from McKee.

Instead, the LCRA bought mortgage notes on nearly a quarter of McKee's Northside Regeneration property from an entity called Titan Fish Two. It also took over Titan Fish Two’s lawsuit, which was filed last spring in St. Louis County alleging Northside Regeneration owed it $17 million in debt. Williams told St. Louis Public Radio that the lawsuit will be dropped once the deal with McKee is finalized.

The LCRA's purchase also includes 46 parcels within the NGA site that Titan Fish Two owned. Those parcels belonged to McKee until Titan Fish Two foreclosed on the properties last June.

While the purchase price in August was for $5 million, the deal requires the LCRA to pay Titan Fish Two an addition $2 million if the NGA chooses north city.

A good deal?

Williams is adamant that buying the notes from Titan Fish Two and negotiating with McKee makes more fiscal sense than taking the developer through eminent domain proceedings.

Paul McKee, Jr. of McEagle Properties, LLC. McKee released an open letter today to the people of St. Louis about his NorthSide development project. (St. Louis Public Radio)
Credit (St. Louis Public Radio)
The city bought 46 parcels of McKee's land Titan Fish Two foreclosed on in June. The $5 million purchase also included notes on more than 370 other McKee properties.

"Our experience in eminent domain is that you can get a better deal through negotiations than going through the court process," he said.

City officials and real estate developers say it’s hard to quantify what bringing the federal agency would mean for an area that’s seen little to no development in decades.

While the city is offering options to nearly all property owners, Williams said the $5 million outright purchase from Titan Fish Two was necessary to keep the city in the running to get the federal facility.

"In order for us to get to the point where we can deliver, there are some things we needed to do to put ourselves in a position to win," Williams said.

St. Clair County is seen as the biggest competitor for the NGA site. Officials there are offering to give the federal government nearly 400 acres of farm ground near Scott Air Force Base.

Meanwhile, the city needs to show that development will sprout up if the NGA does choose an urban location. Williams said it’s critical that McKee, who owns much of the surrounding land, be in a position to do that.

While Northside Regeneration has yet to get a project off the ground, McKee has gotten the go-ahead from the state for an urgent care center in the formerPruitt-Igoesite. The developer has had an option to buy the land, just south of the proposed NGA site, for $1 million since 2012. That option expires in January, but Williams said it too will be folded into the city’s agreement with McKee. 

Follow Maria on Twitter: @radioaltman

Maria is the newscast, business and education editor for St. Louis Public Radio.