Responding to allegations that developer Paul McKee and another property owner inflated real estate values in 鈥渟ham鈥 sales to procure state tax credits, one 51黑料 alderman is asking colleagues to join a call for a criminal investigation and another plans a hearing on McKee鈥檚 NorthSide Regeneration project.
The action from city officials to determine the value of one of the properties聽鈥 the former Buster Brown building near Jefferson and Cass avenues owned by Jim Osher. It was taken through eminent domain two years ago to make way for the future National Geospatial Intelligence Agency western headquarters.
Alderman Shane Cohn, 25th Ward, plans to hold a hearing May 30 in the Neighborhood Development Committee about McKee鈥檚 project. He sent an email to committee members saying he wants to hear from city economic development officials at the 51黑料 Development Corporation and those from the mayor鈥檚 office about McKee鈥檚 NorthSide Regeneration project.
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Meanwhile, Alderman Cara Spencer, 20th Ward, is circulating a resolution calling for a criminal investigation from state and federal authorities.
As details of the transactions came out in trial, Mayor Lyda Krewson released a statement Wednesday saying she was 鈥渃ommitted to investigating these claims thoroughly and taking appropriate action.鈥
The allegations came out in trial to decide a challenge to the value of a property the city acquired by eminent domain as it was assembling land for the NGA's planned western headquarters.
鈥淚 agree with the mayor that we should conduct an internal investigation,鈥 Spencer said Friday. 鈥淏ut I think given the players here, this is bigger than what we can handle internally.鈥
McKee鈥檚 lawyers have said there was nothing 鈥渘efarious鈥 about the purchases, which occurred in 2011 and 2012, and that no one overpaid because the Buster Brown building was at a 鈥渒ey corner.鈥
But the evidence at the trial has raised questions about the structure of the sales and revealed that the Missouri Department of Economic Development by 2013 had flagged them and refused to continue issuing Distressed Area Land Assemblage tax credits for them. Many saw that program, written with help from McKee lawyer Steve Stone, as tailored for the developer鈥檚 efforts to amass 1,500 acres north of downtown over the last 15 years. He was able to tap it for over $40 million before the state Legislature let it expire.
It reimbursed him for half the sales price of properties and other costs, including interest. Lawyers representing the city allege that sales prices between Osher and McKee was well above comparable sales and what Osher had paid to acquire the buildings.
The DED eventually clawed back the credits by issuing lower amounts in other McKee transactions.
In an emailed statement Friday, McKee lawyer Darryl A. Piggee asked why the eminent domain trial was being 鈥渦sed as a referendum on the (Distressed Area Land Assemblage Tax Credit) and whether (NorthSide Regeneration) has used the tool appropriately?鈥
鈥淲hat we do know is that SLDC (but not Mayor Slay, or Mayor Krewson or her new Development Director) have opposed this project since 2006, when they initially became aware of it,鈥 Piggee wrote. 鈥淪LDC鈥檚 opposition picked up pace after Paul McKee brought NGA to the table and their opposition, and efforts at delegitimizing McKee, increased after NGA selected a site in the middle of NSR鈥檚 project area.鈥
The trial that began this week is the culmination of a two-year fight waged by Osher over the value of his former Buster Brown building, which he claims is worth close to $5.5 million. The city ended up paying around $800,000 when it condemned it in 2016.
Osher鈥檚 legal fight led to discovery that netted documents and emails from McKee and his associates describing the transactions with Osher. Those interactions include another sale structured as a seller-financed leaseback to the west of the NGA site.
NorthSide 鈥渕ade applications for credits regarding more than 750 purchases, and only three or four of them were denied,鈥 Piggee wrote. 鈥淭wo of the denials related to seller financed sale-leaseback acquisitions. The transactions were not 鈥榮ham鈥 transactions.鈥
Piggee said McKee and his lawyers still disagree with DED鈥檚 conclusions but that there was 鈥渘o allegations of fraud in their findings.鈥
The details of the transactions, though, threaten to finally rupture a long marriage between McKee and the city, which years ago gave him development rights to the area north of downtown. But development has been slow to follow McKee鈥檚 acquisitions, and the two sides almost had a falling out as the city was trying to buy back land to assemble a site for the NGA.
Troves of public documents recently obtained by the Post-Dispatch, and interviews, tell of a development deal that nearly came apart, but ended up keeping 3,000 jobs in the city.
As part of the deal finally struck to buy McKee鈥檚 land for NGA, the city entered into new agreements pledging to amend its existing development agreement with McKee. It gave the developer more time to start work before the city could claim a default by McKee under his development agreement with the city.
Spencer鈥檚 resolution also claims that SLDC Director Otis Williams didn鈥檛 have the authority to enter into agreements modifying the NorthSide Regeneration development agreement without aldermanic approval.
In a statement, Williams said those agreements to facilitate the NGA land transfer didn鈥檛 amend the existing redevelopment agreement with McKee and are 鈥渘o different than many redevelopment projects undertaken by鈥 SLDC that need final approval from aldermen.
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Recent trial revealed Paul McKee's questionable tax credit practices
Jacob Barker | Post-Dispatch
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