Demolition work progresses as a construction crew works on Thursday, Dec. 10, 2020, at Preservation Square as the first phase of the long-anticipated project begins as part of the McCormack Baron Salazar rehab of the low-income housing project located on Cass Avenue and 16th Street.聽
ST. LOUIS 鈥 For a developer seeking tax breaks in 51黑料, a new alderman can make all the difference.
One of the country鈥檚 largest low-income housing developers, McCormack Baron Salazar, appears poised to finally win the 15 years of property tax abatement it first sought in 2019 for its roughly $100 million rehab of the 556-unit Preservation Square complex. The city鈥檚 Land Clearance for Redevelopment Authority, which vets tax break requests, recommended approval of the measure Tuesday.
The LCRA in 2019 had already endorsed the tax break for the project 鈥 a top priority for 51黑料 leaders after the city won a competitive $30 million federal grant in 2016 to help redevelop the apartments.
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But the area鈥檚 former alderman, her family embroiled in a dispute with McCormack Baron over its cut of the project鈥檚 development fees, refused to sponsor the property tax bill at the Board of Aldermen. Tammika Hubbard, who lost her seat on the board last year to James Page, also blocked other legislation the developer needed to reorient streets in the area.
The episode is a stark reminder of the vast power individual aldermen wield over developments in their ward. Despite a big federal grant, support from the economic development arm of city government and backing from the mayor鈥檚 office under two administrations, one alderman nearly derailed the Preservation Square project. Other aldermen weren鈥檛 willing to sponsor the bills for fear of violating the unwritten rule of 鈥渁ldermanic courtesy,鈥 which can lead to political retaliation for aldermen who meddle in the affairs of another鈥檚 ward.
But aldermanic courtesy has come under scrutiny this month after three former members of the board of aldermen were indicted for accepting bribes, some related to the use of aldermanic support letters needed to get the wheels of City Hall bureaucracy turning.
Despite not winning the tax break, McCormack Baron closed on financing for the first two phases of the four phase project and began construction in mid-2020. The project is heavily reliant on state and federal tax credits and grants, and it plans to apply for more state low income housing tax credits for the third and fourth phases.
Hubbard鈥檚 refusal to sponsor the bill was because of what she said were broken promises by McCormack Baron to share lucrative development fees with the Carr Square Tenant Management Corp., which her family controls. The first phase of redevelopment alone could have netted Carr Square $169,000 of the $2.25 million McCormack Baron expected in development fees.
In exchange, McCormack Baron would get Carr Square鈥檚 cooperation in vacating streets, zoning and tax abatement 鈥 all actions that, in 51黑料, an area鈥檚 alderman controls.
The dispute spilled into public view in late 2020 after Hubbard accused McCormack Baron of trying to 鈥済o around the alderman.鈥 She sponsored a bill barring construction on the Preservation Square site and accused the 51黑料-based company 鈥 a prominent developer of low-income housing heavily reliant on tax credits, grants and other state and federal programs 鈥 of profiting off of 鈥減oor people with public subsidy.鈥
McCormack Baron executives said the dispute wasn鈥檛 so much about the money as the control Carr Square鈥檚 attorneys 鈥 the same lawyers who are also longtime legal counsel for Paul McKee鈥檚 nearby NorthSide Regeneration real estate holdings 鈥 wanted over the development deal. Those lawyers said they wanted to be sure they received their cut of the development fee.
After Page defeated Hubbard in a 2021 upset, he called Preservation Square a good project and said he would 鈥渞emove the roadblocks from potential loss of those federal funds so the project can go forward.鈥 McCormack Baron executives donated to Page鈥榮 campaign.
James Page, alderman-elect 5th Ward, takes the oath of office in the Aldermanic Chambers of 51黑料 City Hall on Tuesday, April 20, 2021. Page unseated long-time Alderman Tammika Hubbard for the seat. Photo by Colter Peterson, cpeterson@post-dispatch.com
LCRA staff says 鈥渢here is now agreement鈥 to move forward at the Board of Aldermen, according to updated project documents presented to its board Tuesday.
Tax abatements are ostensibly designed to encourage development, particularly in low income areas, and the city has a policy of providing the incentives to projects that secure low-income housing tax credits from the state. Preservation Square has been under construction for two years and McCormack Baron is racing to complete the project by the end of 2023, when the federal grant expires.
Updated at 4 p.m. Tuesday, June 29.
