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St. Louis committee calls for McKee investigation as his lawyers deny wrongdoing

June 27 2018 HUDZ meeting.
Kae Petrin | St. Louis Public Radio
The Housing, Urban Development and Zoning committee met Wednesday with a full agenda. It approved a resolution that would call for outside investigation of developer Paul McKee.

A St. Louis aldermanic committee approved a resolution Wednesday that calls forfederal and state authorities to investigate developer Paul McKee.

This comes as the developer faces legal challenges related to his development plans in north St. Louis. The state of Missouri sued McKee in mid-June, accusing him of misusing tax credits for a 1,500-acre project area north of downtown. Earlier the same week, St. Louis declared McKee in default on a development agreement between him and city agencies.

A lawyer for McKee on Wednesday sent a letter to the city denying wrongdoing. The letter, signed by Paul Puricelli of the Stone, Leyton & Gershman lawfirm, argued that the city, its Land Clearance for Redevelopment Authority and the LCRA’s holding corporation were in fact the ones in default.

At the Housing, Urban Development and Zoning committee meeting on Wednesday, resolution sponsor Alderwoman Cara Spencer, D-20th Ward, said outside investigation will be necessary because city employees “are involved with” McKee, and because the city is “strapped for resources.”

Larry Chapman at HUDZ meeting, June 27, 2018
Credit Kae Petrin | St. Louis Public Radio
Longtime St. Louis Place resident Larry Chapman told aldermen that the city was long overdue to investigate McKee.

Longtime resident of the St. Louis Place neighborhood and McKee critic Larry Chapman urged aldermen at the HUDZ meeting to pass the resolution. He said approving the resolution would demonstrate that officials want to address the history of “collusion” between the city and McKee.

“There’s no question there’s corruption going on here,” Chapman said. “I thank any alderman who will push forth this resolution to demonstrate that as a city we are on an up-and-up, and we want to do things on the up-and-up, and we want to make sure our citizens are protected.”

Chapman was joined by two other residents who spoke before the committee in favor of an investigation.

Alderwoman Marlene Davis, D-19th Ward, questioned the necessity of the resolution, saying that some outside parties — including the Internal Revenue Service “and some other federal entities” — had already indicated that they were beginning investigations.

But Spencer said that no formal investigations have been declared. The resolution, if passed by the full Board of Aldermen, would forward the city’s concerns to the U.S. Attorney for the Eastern District of Missouri and the Attorney General of Missouri.

Passed with an amendment

Otis Williams, HUDZ meeting June 27, 2018
Credit Kae Petrin | St. Louis Public Radio
Otis Williams of the St. Louis Development Corporation insisted that he had authorization to approve a modified agreement with McKee in 2016, then amend that agreement later. The HUDZ committee removed clauses that indicated otherwise in the resolution.

An earlier version of the resolution claimed that the St. Louis Development Corporation, the economic development arm of the city, wasn’t authorized to modify city agreements with McKee without approval from the Board of Aldermen. It alleged that SLDC director Otis Williams signed a “future assurances agreement” with McKee in 2016 without proper oversight.

In a memo issued to the city two weeks ago, McKee’s company Northside Regeneration maintained that it was not in default because it was “in complete compliance” with that 2016 agreement.  

Williams said at the committee meeting that he supports investigating McKee. But he insisted that he had permission from several boards to change the agreement, which ultimately offered the developer more flexibility.

“To say that I acted without authority is, in fact, erroneous,” Williams said.

The committee removed mentions of Williams from the resolution.

The amended resolution will be seen by the full Board of Aldermen on Friday, according to Spencer.

Read the letter issued by Paul McKee’s lawyers:


Follow Kae on Twitter: @kmaepetrin

Kae Petrin covers public transportation and housing as a digital reporter for St. Louis Public Radio.