Developer Paul McKee is poised to more than double his real estate holdings in north St. Louis, a move that could represent a big step forward for his controversial plan to remake several battered neighborhoods there.
On Monday, McKee’s NorthSide Regeneration will ask three city development boards for the right to buy 1,233 parcels of city-owned land — roughly 162 acres in all — across the near north side. The price? About $3.2 million.
The move would be the biggest buy yet for McKee, whose vision of thousands of new homes, office buildings and more has been stalled for nearly two years since a judge tossed out a $390 million city subsidy, but who has continued to push his project forward in small steps while he appeals that ruling.
The purchase needs the approval of an alphabet soup of city agencies that own the land, but the request has the blessing of top development officials and St. Louis Mayor Francis Slay.
“It’s a good thing,” said Slay chief of staff Jeff Rainford. “He’s willing to move forward even without the (tax increment financing) issues being settled.”
The purchase has been discussed at City Hall since at least 2009, when McKee first unveiled his NorthSide plans. But it’s not clear why it’s happening now. McKee answered several questions by email Friday but did not directly address his timing. He has, however, been showing the NorthSide to prospective tenants in recent months and says he has ’some deals that are pretty far along.”
“He wants to move forward on some projects,” said Rodney Crim, executive director of the St. Louis Development Corp.
McKee already owns about 800 parcels — totaling perhaps 130 acres — scattered across the 1,500-acre project area. Most of that he bought in secret over five years, using shell buyers to keep the price down. Since stepping out from behind the curtain, he has made a few purchases — like the 17-acre Bottle District site north of downtown, which he closed on in December — but nothing on a large scale.
Now, McKee wrote Friday that he can combine the city land with his current holdings to offer a wide range of sites to businesses or housing developers.
“Opportunities to create large-scale development in the most blighted areas of our cities are rare,” he wrote, saying that the combination can “create a unified development footprint worthy of the City’s hopes for the future.”
McKee has acknowledged that the project’s slow progress has stretched him financially but said Friday he has lined up funds to buy the land. He received $2.1 million in Missouri state tax credits in December, with an application for more still pending, and, according to city records, has continued to borrow in relatively small doses from the Bank of Washington, the only bank that has publicly committed to NorthSide.
He will not be able to claim the state tax credits for this land — purchases of city-owned property are not eligible — and city leaders say he’s paying full price, minus a small break for buying so much.
“We’re not giving him these properties. We’re not selling them at a discount,” Rainford said. “He is buying them for what we think these properties are worth.”
The land — much of which the city acquired after previous owners stopped paying taxes — includes hundreds of small lots and individual buildings scattered all over McKee’s 1,500-acre NorthSide footprint. In some cases, it amounts to nearly whole blocks of vacant urban prairie, with just one or two privately owned homes still occupied and standing.
The deal also comes with a two-year option to buy the site of the old Pruitt-Igoe housing complex for $100,000. The 33-acre site at Jefferson and Cass avenues, which has sat empty since the mid-’70s, is today basically a forest surrounded by chain-link fence, and may have pollutants in the ground. But it’s a key site for McKee, and he has suggested he’ll turn it into a retail complex.
The deal also highlights the city’s long history of “land banking” — assembling unwanted land for future development.
The practice has become more popular in recent years as cities like Detroit and Cleveland wrestle with widespread abandonment, and Missouri lawmakers are considering a bill to create a land bank in Kansas City. But St. Louis has been doing it since 1971, when the Land Reutilization Authority became the nation’s first city-run land bank.
Today, the LRA owns about 10,000 parcels, with other city land banks owning about 1,000 more.
It pays to mow grass and picks up trash and, if there’s a building on the site, is responsible for keeping it safe. It collects no taxes on these properties, and many it has owned for decades. Selling more than one-tenth of that property will generate at least $100,000 in new taxes, even without any development, said Crim.
And selling it to a developer increases the odds that something will get built there, said Rainford.
“Whenever possible, we want land in the hands of the private sector,” he said. “As long as the city’s holding the ground, nothing’s going to happen on it. Our bias is trying to get this land out the door.”
The city’s land-banking program has come under some fire in recent years.
Free market think tank the Show-Me Institute found that the LRA rejected nearly half of all offers to buy its property from 2003 through 2010, often citing possible “future development” as a reason why. Some of those rejections were in the NorthSide footprint, said Audrey Spalding, a Show-Me policy analyst who conducted the study. That McKee is buying them now comes as no surprise, she said, but it also provides no guarantees.
“I’m thrilled that 1,200 parcels are being bought. In terms of tax revenue, it’s a positive. And if Paul McKee’s dreams come to fruition, it’s going to be great for the city,” she said. “But I don’t see it as a validation of holding land vacant in hopes of a big development.”
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