Ok. I tried posting this as a link. I guess I'll just have to post the text of the URL and let you copy and paste it into the address bar of your browser.
Link: http://www.showmedaily.org/2011/01/whaeva-i-do-what-i-want-the.html/comment-page-1#comment-9199
We encourage everyone to comment.
Friday, January 7, 2011
Our Response to the Recent McEagle Open Letter to St Louis
I think I’ll just start with Mr. McKee’s quoting of Dietrich Bonhoeffer: “Silence in the face of evil is itself evil: God will not hold us guiltless. Not to speak is to speak. Not to act is to act.” That is so true. This is part of the reason we live in North St Louis, have built lives here, and continue to speak out against the wrongs we see around us.
So why wasn’t McKee speaking and acting decades ago as the city let North St Louis, the entire North St Louis mind you, slip into deeper and deeper ruin? He’s proclaimed in past statements that he’s been aware of this area of the city and its potential since the 70’s. The city government continues to ignore this area to this to this day, spending federal grant money south of Delmar at over 30 times the rate of north of Delmar where the need is the greatest. It appears that the city government neglects the northern part of the city and milks it for grant money. Mr. McKee could have ended his evil silence years ago to help bring services and jobs to North St Louis, but he did not. But now he has a moral awakening that North St Louis needs him to save it? Now after the state enacts a $100 million tax credit for areas like North St Louis?
If Mr. McKee really wishes to bring jobs and opportunity to North St Louis, he can do it without taking our homes and the property of the businesses currently operating here. All he has to do is write anyone out of the redevelopment plan who does not want to be in it. The people he would be sparing from the redevelopment ax are people who have stuck out the bad years and tried to make a life here, or tried to run a business here. Many of these people located here out of a sense that they were part of the future of the area. Many of us felt that by investing and sticking it out we were doing something good for our community and ourselves at the same time. They are committed to the City of St Louis as many others are not.
We’ve stuck it out, why can’t we stay to enjoy the revival? Write us out of the redevelopment area if we wish. That would make our homes and businesses secure from any future legislation authorizing eminent domain. Considering the investment we’ve made in the future of our city, this is only fair. Mr. McKee and the city leaders have refused to do this, and we have fought them and their defective ordinances and plans. Can they not get anything right? Even moral outrage?
The minimum of what we ask for is very simple:
o No possibility of eminent domain - that means you must write our property OUT of any redevelopment ordinances or blighting studies if we request it. By “our property” we mean all property owners, business or residential. This has been done in other projects and it is easily do-able within Missouri TIF law. This is the only guarantee against eminent domain under these circumstances.
o Dramatically improved compensation for moving expenses of renters if they are renting in a property sold for re-development. Give us what was given for projects like Kirkwood Commons to residents of Meacham Park in Kirkwood. If it’s good enough for the county, it should be good enough for the city.
o Northside Regeneration and McEagle will start pressing charges against anyone caught looting one of their many vacant dilapidated buildings.
o McEagle will secure now and continue to secure any vacant buildings. This means a secure board up and stabilization of at least roof repair. Board up does us no good if the building falls down into neighboring yards. It also does no good if it is done so poorly that the homeless and vagrant break in on a regular basis. This is to be done regardless of the project time line. We would ask the same of any absentee property owner. If you aren’t going to do something with it now, at least secure it. Post a phone number and neighbors will call you when something happens after they call the police.
None of these demands are out of line. If this had been done from the start, none of us would have fought Mr. McKee or his people. Even if we didn’t trust him (and we don’t) we could live with the above concessions from Mr. McKee and the city government; a city government that ostensibly should represent us in any negotiation. We want basic security for ourselves and our neighbors, and protections for the thousands of people who still live here. That’s all we ask. We don’t think it’s too much.
We are very tired of Mr. McKee’s vacant property and his continued surprise that these buildings he and his companies DO NOT maintain or repair are falling down, being set on fire, or collapsing after brick thieves knock holes in the walls. He has received $28 million dollars in State of Missouri tax credits to date for this project. Where has he spent the money he has received for selling these tax credits? I would like an accounting as a taxpayer and resident of the area. And just why is this not enough money to get his Clemen’s Mansion project off the ground without even more subsidized bonds being issued by the state? Is the state budget not enough of a wreck that it has to forego even more tax revenue in order to pay Mr. McKee for what he should have done when he bought the Clemens Mansion six years ago?
Mr. McKee can put his money where his mouth is on eminent domain and write anyone who wants out of this project. All it takes is some extra typing when his lawyers are writing up the redevelopment agreement. If he really doesn’t want to use eminent domain, put it absolutely beyond use.
As for Mr. McKee’s proven track record of creating jobs, we see his developments and the only jobs he seems to be creating without massive government subsidies are for the lawyers of the banks that he owes money to. Banks like the two that lent him money for his Hazelwood Logistics center and then had to take back the property in one case and sue him in federal court in the other. Neither bank will get back all the money they lent to him, and he continues to fight tooth and nail to give them as little as possible.
“You have to take these lenders to the wall.” That’s what he said to me personally in response to my questions about his disputes with his lenders in one of the Northside community meetings. So let me get this straight…He can’t pay back what he’s borrowed while he continues to live in his Huntleigh mansion next to August A. Bush, IV? Why is this man getting state and local subsidies to do anything at all?
Mr. McKee claims that breaking up the project area he has proposed would do no good. But that’s exactly how he proposed it; four parts phased over at least 20 years. I’m puzzled by this. This is just another example of him saying one thing and then saying something completely opposite later on. His project is phased because that’s how any large scale project is done. You don’t do it all at once.
The very best parts of our region and city were put together piecemeal by small holders and independent builders. Soulard was not re-habbed in a day and still isn’t finished. Lafayette Square has been the work of many, many years. Laclede’s Landing took many years. The come-back of Washington Avenue and the loft district started way back in the early 90’s and is only largely finished today. Benton Park between Cherokee St and Gravois has been in progress for about a decade. The section of Cherokee west of Jefferson has been in progress for at lest half that period. I could go on all day talking about other city neighborhoods, suburban neighborhoods, and small towns.
Piecemeal development does not yield immediate results, but the city and region have seen it yield dramatic and very valuable results over and over again. Give things over to the independent real estate developers, builders, business people, and homeowners and you very often get very, very good results. And when you don’t get good results from an independent small holder, it’s not a 2.5 square mile area in the heart of your city. They guy next door with the funny color scheme or weird floor-plan is just one guy, not a giant area.
What mega-projects has the region seen that turned out well? First, we’ve never seen anything close to this scale. Neither has any region of the U.S. The Stapleton project in Denver wasn’t nearly this large and was a completely vacant former airport.
What about the medium to large local project Mr. McKee has been directly involved in? I don’t see Winghaven as a success even with the big subsidies paid to MasterCard to locate there. Mr McKee just split with several business ventures at Winghaven that he was a key man in due to money. He declined to continue to contribute cash to them. As a general rule the only businesses you have to keep contributing cash to year after year are money loosing businesses. Other partners in those ventures have now taken over. How is that success? North Park was land eminent domained for airport noise abatement. It was then sold to Mr. McKee to develop. If it wasn’t for Express Scripts wanting to be right next to the UMSL campus, there would be nothing remarkable going on there. And what about Hazelwood Logistics Center? The city of Hazelwood eminent domained businesses that generated jobs and tax paying home owners and got some empty land and a few vacant warehouses in return. Vacant warehouses Mr. McKee couldn’t or wouldn’t pay his debts over. Should we continue subsidizing Mr. McKee to play his real estate development/default games with other people’s money when that money isn’t that of informed investors but the taxpayer? If we’re going to subsidize businesses, shouldn’t that be through financing programs to help expand the ones that aren’t losing money but generating it?
In closing I would like to quote my favorite moral philosopher Rheinhold Neibuhr: “Evil is not to be traced back to the individual but to the collective behavior of humanity.” For we do not believe Mr. McKee is evil, as he implies that we are. We believe he is merely acting opportunistically to take advantage of conditions that the collective behavior of humanity (and very poor regional leadership) have created. We note that could have acted in many ways at many times to help to overcome these awful conditions but has remained silent and did not act until now. Where was he in the past and why was he not public with his anguish over the plight of North St. Louis? If he wishes to claim some crusading moral authority, he should not only tell us of his morals now, but also of what he was doing all those years when he wasn’t publically protesting the unfair distribution of city resources and the unvarnished racism of it all.
All we ask of Mr. McKee and the city is that we be protected from his grand schemes and tax credit fantasies that we do not share, so that we may carry on with our own lives as we have done before he got the North St Louis religion.
So why wasn’t McKee speaking and acting decades ago as the city let North St Louis, the entire North St Louis mind you, slip into deeper and deeper ruin? He’s proclaimed in past statements that he’s been aware of this area of the city and its potential since the 70’s. The city government continues to ignore this area to this to this day, spending federal grant money south of Delmar at over 30 times the rate of north of Delmar where the need is the greatest. It appears that the city government neglects the northern part of the city and milks it for grant money. Mr. McKee could have ended his evil silence years ago to help bring services and jobs to North St Louis, but he did not. But now he has a moral awakening that North St Louis needs him to save it? Now after the state enacts a $100 million tax credit for areas like North St Louis?
If Mr. McKee really wishes to bring jobs and opportunity to North St Louis, he can do it without taking our homes and the property of the businesses currently operating here. All he has to do is write anyone out of the redevelopment plan who does not want to be in it. The people he would be sparing from the redevelopment ax are people who have stuck out the bad years and tried to make a life here, or tried to run a business here. Many of these people located here out of a sense that they were part of the future of the area. Many of us felt that by investing and sticking it out we were doing something good for our community and ourselves at the same time. They are committed to the City of St Louis as many others are not.
We’ve stuck it out, why can’t we stay to enjoy the revival? Write us out of the redevelopment area if we wish. That would make our homes and businesses secure from any future legislation authorizing eminent domain. Considering the investment we’ve made in the future of our city, this is only fair. Mr. McKee and the city leaders have refused to do this, and we have fought them and their defective ordinances and plans. Can they not get anything right? Even moral outrage?
The minimum of what we ask for is very simple:
o No possibility of eminent domain - that means you must write our property OUT of any redevelopment ordinances or blighting studies if we request it. By “our property” we mean all property owners, business or residential. This has been done in other projects and it is easily do-able within Missouri TIF law. This is the only guarantee against eminent domain under these circumstances.
o Dramatically improved compensation for moving expenses of renters if they are renting in a property sold for re-development. Give us what was given for projects like Kirkwood Commons to residents of Meacham Park in Kirkwood. If it’s good enough for the county, it should be good enough for the city.
o Northside Regeneration and McEagle will start pressing charges against anyone caught looting one of their many vacant dilapidated buildings.
o McEagle will secure now and continue to secure any vacant buildings. This means a secure board up and stabilization of at least roof repair. Board up does us no good if the building falls down into neighboring yards. It also does no good if it is done so poorly that the homeless and vagrant break in on a regular basis. This is to be done regardless of the project time line. We would ask the same of any absentee property owner. If you aren’t going to do something with it now, at least secure it. Post a phone number and neighbors will call you when something happens after they call the police.
None of these demands are out of line. If this had been done from the start, none of us would have fought Mr. McKee or his people. Even if we didn’t trust him (and we don’t) we could live with the above concessions from Mr. McKee and the city government; a city government that ostensibly should represent us in any negotiation. We want basic security for ourselves and our neighbors, and protections for the thousands of people who still live here. That’s all we ask. We don’t think it’s too much.
We are very tired of Mr. McKee’s vacant property and his continued surprise that these buildings he and his companies DO NOT maintain or repair are falling down, being set on fire, or collapsing after brick thieves knock holes in the walls. He has received $28 million dollars in State of Missouri tax credits to date for this project. Where has he spent the money he has received for selling these tax credits? I would like an accounting as a taxpayer and resident of the area. And just why is this not enough money to get his Clemen’s Mansion project off the ground without even more subsidized bonds being issued by the state? Is the state budget not enough of a wreck that it has to forego even more tax revenue in order to pay Mr. McKee for what he should have done when he bought the Clemens Mansion six years ago?
Mr. McKee can put his money where his mouth is on eminent domain and write anyone who wants out of this project. All it takes is some extra typing when his lawyers are writing up the redevelopment agreement. If he really doesn’t want to use eminent domain, put it absolutely beyond use.
As for Mr. McKee’s proven track record of creating jobs, we see his developments and the only jobs he seems to be creating without massive government subsidies are for the lawyers of the banks that he owes money to. Banks like the two that lent him money for his Hazelwood Logistics center and then had to take back the property in one case and sue him in federal court in the other. Neither bank will get back all the money they lent to him, and he continues to fight tooth and nail to give them as little as possible.
“You have to take these lenders to the wall.” That’s what he said to me personally in response to my questions about his disputes with his lenders in one of the Northside community meetings. So let me get this straight…He can’t pay back what he’s borrowed while he continues to live in his Huntleigh mansion next to August A. Bush, IV? Why is this man getting state and local subsidies to do anything at all?
Mr. McKee claims that breaking up the project area he has proposed would do no good. But that’s exactly how he proposed it; four parts phased over at least 20 years. I’m puzzled by this. This is just another example of him saying one thing and then saying something completely opposite later on. His project is phased because that’s how any large scale project is done. You don’t do it all at once.
The very best parts of our region and city were put together piecemeal by small holders and independent builders. Soulard was not re-habbed in a day and still isn’t finished. Lafayette Square has been the work of many, many years. Laclede’s Landing took many years. The come-back of Washington Avenue and the loft district started way back in the early 90’s and is only largely finished today. Benton Park between Cherokee St and Gravois has been in progress for about a decade. The section of Cherokee west of Jefferson has been in progress for at lest half that period. I could go on all day talking about other city neighborhoods, suburban neighborhoods, and small towns.
Piecemeal development does not yield immediate results, but the city and region have seen it yield dramatic and very valuable results over and over again. Give things over to the independent real estate developers, builders, business people, and homeowners and you very often get very, very good results. And when you don’t get good results from an independent small holder, it’s not a 2.5 square mile area in the heart of your city. They guy next door with the funny color scheme or weird floor-plan is just one guy, not a giant area.
What mega-projects has the region seen that turned out well? First, we’ve never seen anything close to this scale. Neither has any region of the U.S. The Stapleton project in Denver wasn’t nearly this large and was a completely vacant former airport.
What about the medium to large local project Mr. McKee has been directly involved in? I don’t see Winghaven as a success even with the big subsidies paid to MasterCard to locate there. Mr McKee just split with several business ventures at Winghaven that he was a key man in due to money. He declined to continue to contribute cash to them. As a general rule the only businesses you have to keep contributing cash to year after year are money loosing businesses. Other partners in those ventures have now taken over. How is that success? North Park was land eminent domained for airport noise abatement. It was then sold to Mr. McKee to develop. If it wasn’t for Express Scripts wanting to be right next to the UMSL campus, there would be nothing remarkable going on there. And what about Hazelwood Logistics Center? The city of Hazelwood eminent domained businesses that generated jobs and tax paying home owners and got some empty land and a few vacant warehouses in return. Vacant warehouses Mr. McKee couldn’t or wouldn’t pay his debts over. Should we continue subsidizing Mr. McKee to play his real estate development/default games with other people’s money when that money isn’t that of informed investors but the taxpayer? If we’re going to subsidize businesses, shouldn’t that be through financing programs to help expand the ones that aren’t losing money but generating it?
In closing I would like to quote my favorite moral philosopher Rheinhold Neibuhr: “Evil is not to be traced back to the individual but to the collective behavior of humanity.” For we do not believe Mr. McKee is evil, as he implies that we are. We believe he is merely acting opportunistically to take advantage of conditions that the collective behavior of humanity (and very poor regional leadership) have created. We note that could have acted in many ways at many times to help to overcome these awful conditions but has remained silent and did not act until now. Where was he in the past and why was he not public with his anguish over the plight of North St. Louis? If he wishes to claim some crusading moral authority, he should not only tell us of his morals now, but also of what he was doing all those years when he wasn’t publically protesting the unfair distribution of city resources and the unvarnished racism of it all.
All we ask of Mr. McKee and the city is that we be protected from his grand schemes and tax credit fantasies that we do not share, so that we may carry on with our own lives as we have done before he got the North St Louis religion.
Wednesday, December 15, 2010
Part 3 of How We Got Here
Part of the State of Missouri Tax Increment Financing (TIF) law also allows for eminent domain to be used to support private development projects. What essentially happens is that the local or state government approves a redevelopment agreement and TIF financing for a project and the developer can then ask the government to take private property within the area of the TIF supported project. If the government agrees (it almost always does) then the government seizes the property and sells it to the developer for the offer price.
If the owner of the seized property does not think the price reflects the actual value of the property then they go to court to get a higher price. Notice I didn’t say they go to court to fight the taking of their property. Currently, it is not possible to contest the taking under Missouri law after the legislation, local or state, authorizing the TIF and redevelopment agreement have been passed and signed into law. It’s only possible to contest the price. And you are only awarded market value of the property when you do win. So legal fees come out of what you win, as do any other costs you bear to fight for the fair price for your property. Even if you win in court, you still don’t get everything to which you would be entitled if you sold it willingly without eminent domain.
This is truly a lot of what we are fighting for. Simple property rights. The right to live unmolested in your own home, or operate your business on your property, without having to move on just because the government decided to give your property to someone else who is promising that they will do something with the property that will generate increased taxes. Note that I said “promising”. They don’t have to prove anything. They just have to present the documentation required by the TIF statute and the government has to approve it. Once that is done, anyone in the way of a proposed development is basically out of luck. There are essentially no standards in place for how rigorous that documentation has to be. Being unreasonable in light of actual financial conditions will not invalidate it. And only having vague promises by some random Podunk bank to finance only part of the project will also not invalidate it.
This is where our local government comes in. Our Board of Aldermen and Mayor wholeheartedly approved this project just last year. None of the Alderpersons I spoke to before the vote to approve this project had the least concerns that it might go sour; not the 5th ward Alderperson April Ford-Griffin, not the 19th ward Alderperson Marlene Davis, nor any of the others. In fact Alderperson Davis told me personally that she wasn’t concerned about any problems because “the lawyers would write the agreements so that the city couldn’t be hurt”. It seems her confidence was misplaced in at least a couple different such projects like the Bottle District (city now being sued for over $2.2 million) and One City Center where the developer went under (but not before the city guaranteed the repayment of the TIF bonds with general revenue funds). So who’s incompetent? The city lawyers drafting the agreements or the politicians approving them. I vote for both.
Other wholehearted supporters of the project on the Board of Aldermen were Casey Starr-Triplett, Freeman Bosley, Sr., and Steven Conway. I wonder if they all supported the Bottle District fiasco just as much?
If the owner of the seized property does not think the price reflects the actual value of the property then they go to court to get a higher price. Notice I didn’t say they go to court to fight the taking of their property. Currently, it is not possible to contest the taking under Missouri law after the legislation, local or state, authorizing the TIF and redevelopment agreement have been passed and signed into law. It’s only possible to contest the price. And you are only awarded market value of the property when you do win. So legal fees come out of what you win, as do any other costs you bear to fight for the fair price for your property. Even if you win in court, you still don’t get everything to which you would be entitled if you sold it willingly without eminent domain.
This is truly a lot of what we are fighting for. Simple property rights. The right to live unmolested in your own home, or operate your business on your property, without having to move on just because the government decided to give your property to someone else who is promising that they will do something with the property that will generate increased taxes. Note that I said “promising”. They don’t have to prove anything. They just have to present the documentation required by the TIF statute and the government has to approve it. Once that is done, anyone in the way of a proposed development is basically out of luck. There are essentially no standards in place for how rigorous that documentation has to be. Being unreasonable in light of actual financial conditions will not invalidate it. And only having vague promises by some random Podunk bank to finance only part of the project will also not invalidate it.
This is where our local government comes in. Our Board of Aldermen and Mayor wholeheartedly approved this project just last year. None of the Alderpersons I spoke to before the vote to approve this project had the least concerns that it might go sour; not the 5th ward Alderperson April Ford-Griffin, not the 19th ward Alderperson Marlene Davis, nor any of the others. In fact Alderperson Davis told me personally that she wasn’t concerned about any problems because “the lawyers would write the agreements so that the city couldn’t be hurt”. It seems her confidence was misplaced in at least a couple different such projects like the Bottle District (city now being sued for over $2.2 million) and One City Center where the developer went under (but not before the city guaranteed the repayment of the TIF bonds with general revenue funds). So who’s incompetent? The city lawyers drafting the agreements or the politicians approving them. I vote for both.
Other wholehearted supporters of the project on the Board of Aldermen were Casey Starr-Triplett, Freeman Bosley, Sr., and Steven Conway. I wonder if they all supported the Bottle District fiasco just as much?
Tuesday, December 14, 2010
Monday, December 13, 2010
Part 2 of How We Got Here
In late 2009 several individuals who are members of the Northside Community Benefits Alliance took up the opportunity to sue the city on the ground that the approval by the City of St Louis of the TIF application filed by Northside Regeneration, LLC and Paul McKee, Jr. was illegitimate. They are Bonzilla Smith, Isaiah Hairis, and Cheryl Nelson. Also joining the suit with other legal representation was Elke McIntosh.
The original plaintiffs are represented by attorney Dorian Amon. He is lifetime St Louis resident and graduate of the Washington University School of Law. He is also dedicated to fighting the abuse of power represented by real estate development projects such as the Northside Project.
Representing the joining plaintiff are attorney’s Eric Vickers, W. Bevis Schock, and James W. Schottel, Jr. Eric Vickers is a former St Louis City Attorney. W. Bevis Schock is a board member of the local Show-Me Institute, a libertarian advocacy organization.
All plaintiffs sought to invalidate the ordinances that authorized public support for this project. This public support came in the form of almost $400 million of tax increment financing and a redevelopment agreement with Northside Regeneration, LLC covering the 2.5 square miles mentioned in yesterday’s post. The redevelopment agreement qualified Northside Regeneration to access a $95 million state tax credit program that reimburses the developer for half of any acquisition costs, all maintenance costs (grass cutting and board-up for example) and very importantly any interest costs incurred on borrowings to purchase the property. This tax credit is called the Distressed Areas Land Assemblage Tax Credit or the McKee Tax Credit since he’s the only one in the state who could qualify for it and his lawyer Steve Stone of Stone, Leyton, and Gershman wrote it for the State Senator who sponsored it and got it passed.
One of the key provisions of this tax credit is that it covers interest costs. Thus, any loans for assembling the land for the project are without cost and create an enormous incentive not to have any equity in the project at all. You have to have some amount of seed money, but if you find a lender willing to finance 100% of your costs at this point you can pull all of that equity back out for use elsewhere. Apparently, Bank of Washington in Washington, MO is such a bank. As was Cornbelt Bank and Trust of Pittsfield, IL who also lent Mr. McKee money for this project.
I recommend you check out Bank of Washington on bankrate.com. One ratio of a bank’s solvency is the Texas Ratio. That ratio is the dollar value of bad loans and real estate taken back because of bad loans divided by money the owners have in the bank and the money bank management has set aside to cover future bad loans. Bank of Washington’s Texas Ratio places them as one of the 50 least solvent banks in Missouri. There are over 250 banks in Missouri so this places them firmly in the bottom fifth of all Missouri banks in terms of solvency as judged by that ratio. They also have taken $20 million in TARP funds as part of the US Treasury’s capital purchase program. $20 million is one quarter of their equity and means that we, as taxpayers own about 25% of Bank of Washington. Without this $20 million dollars of public money invested in Bank of Washington their Texas Ratio would be even worse than it is.
Unfortunately, you can’t check out Cornbelt Bank and Trust on bankrate.com. Cornbelt doesn’t exist any more. They were seized by the FDIC in late 2008 because of insolvency. Cornbelt and Bank of Washinton were the two banks that lent to Mr. McKee for his Northside Project. One is out of business, one is not feeling very well, so to speak.
When you look at all the McKee projects in the area, you are left with the distinct feeling that Mr. McKee’s track record is, at the very best, a mixed one. Hazelwood Logistics Center is falling apart. He has abandoned various Winghaven businesses he was a driving force in. North Park is primarily still vacant land and without Express Scripts (who get a state subsidy every time they ask) it would be much more vacant than it is. He seems to have borrowed more money against vacant land in Illinois (corner of Greenmount Road and Frank Scott Parkway south of O’fallon) than he paid for it. Nothing is happening there and with the economic recovery in slow motion and Mr. McKee's financial problems nothing probably will any time soon.
More tomorrow.
The original plaintiffs are represented by attorney Dorian Amon. He is lifetime St Louis resident and graduate of the Washington University School of Law. He is also dedicated to fighting the abuse of power represented by real estate development projects such as the Northside Project.
Representing the joining plaintiff are attorney’s Eric Vickers, W. Bevis Schock, and James W. Schottel, Jr. Eric Vickers is a former St Louis City Attorney. W. Bevis Schock is a board member of the local Show-Me Institute, a libertarian advocacy organization.
All plaintiffs sought to invalidate the ordinances that authorized public support for this project. This public support came in the form of almost $400 million of tax increment financing and a redevelopment agreement with Northside Regeneration, LLC covering the 2.5 square miles mentioned in yesterday’s post. The redevelopment agreement qualified Northside Regeneration to access a $95 million state tax credit program that reimburses the developer for half of any acquisition costs, all maintenance costs (grass cutting and board-up for example) and very importantly any interest costs incurred on borrowings to purchase the property. This tax credit is called the Distressed Areas Land Assemblage Tax Credit or the McKee Tax Credit since he’s the only one in the state who could qualify for it and his lawyer Steve Stone of Stone, Leyton, and Gershman wrote it for the State Senator who sponsored it and got it passed.
One of the key provisions of this tax credit is that it covers interest costs. Thus, any loans for assembling the land for the project are without cost and create an enormous incentive not to have any equity in the project at all. You have to have some amount of seed money, but if you find a lender willing to finance 100% of your costs at this point you can pull all of that equity back out for use elsewhere. Apparently, Bank of Washington in Washington, MO is such a bank. As was Cornbelt Bank and Trust of Pittsfield, IL who also lent Mr. McKee money for this project.
I recommend you check out Bank of Washington on bankrate.com. One ratio of a bank’s solvency is the Texas Ratio. That ratio is the dollar value of bad loans and real estate taken back because of bad loans divided by money the owners have in the bank and the money bank management has set aside to cover future bad loans. Bank of Washington’s Texas Ratio places them as one of the 50 least solvent banks in Missouri. There are over 250 banks in Missouri so this places them firmly in the bottom fifth of all Missouri banks in terms of solvency as judged by that ratio. They also have taken $20 million in TARP funds as part of the US Treasury’s capital purchase program. $20 million is one quarter of their equity and means that we, as taxpayers own about 25% of Bank of Washington. Without this $20 million dollars of public money invested in Bank of Washington their Texas Ratio would be even worse than it is.
Unfortunately, you can’t check out Cornbelt Bank and Trust on bankrate.com. Cornbelt doesn’t exist any more. They were seized by the FDIC in late 2008 because of insolvency. Cornbelt and Bank of Washinton were the two banks that lent to Mr. McKee for his Northside Project. One is out of business, one is not feeling very well, so to speak.
When you look at all the McKee projects in the area, you are left with the distinct feeling that Mr. McKee’s track record is, at the very best, a mixed one. Hazelwood Logistics Center is falling apart. He has abandoned various Winghaven businesses he was a driving force in. North Park is primarily still vacant land and without Express Scripts (who get a state subsidy every time they ask) it would be much more vacant than it is. He seems to have borrowed more money against vacant land in Illinois (corner of Greenmount Road and Frank Scott Parkway south of O’fallon) than he paid for it. Nothing is happening there and with the economic recovery in slow motion and Mr. McKee's financial problems nothing probably will any time soon.
More tomorrow.
Sunday, December 12, 2010
Part 1 of How We Got Here - The History of Our Struggle.
The Northside Community Benefits Alliance is a group of North St Louis neighbors who have organized in an effort to get a community benefits agreement between the city, the developer, and an independent non-profit organization. A community benefits agreement is just a contract that specifies what the developer and city can or will do with respect to the people who already live in a redevelopment area.
The reason why we organized was that from the very beginning of the developer’s property acquisition, it seemed that our elected officials were more interested in protecting the rights of the developer than our rights and property. Considering that we are the people they are supposed to represent, we did not look upon this kindly. At that point we decided that we needed to find another way to guarantee our economic security and property rights.
Anyone interested in becoming a member or assisting us in any way can contact us by sending an e-mail to info@northsidecba.org.
The development we banded together to change, is that proposed by Paul McKee, Jr. called the Northside Project. Mr. McKee is a St Louis developer who has put together various projects around the suburban St Louis area. He is also a former owner of Paric Construction, a St Louis based construction company now run by his son Paul McKee, III.
Paul McKee, Jr. is currently being sued in federal court over loans he personally guaranteed for part of his Hazelwood Logistics Center project. He seems to be unable or unwilling to pay off his $28 million loan balance so the bank that owns this loan, BankSouth, is suing him for the balance. He already walked away from another part of this project and gave it back to a different bank. That was a single warehouse and the other bank was ING.
Mr McKee was recently the subject of a St Louis Business Journal article detailing his stepping down from management of and walking away from ownership stakes in the Spa at Winghaven and the Winghaven Country Club. These ventures are pieces of his Winghaven development in St. Charles county. A development that also has not gone as originally planned financially despite massive state government subsidies to the tune of $40 million dollars granted to MasterCard International to move its headquarters from Maplewood to Winghaven.
Mr. McKee, along with his wife, sons, and what appears to be a family trust, are owners of Northside Regeneration, LLC. This is the development company they have organized to pursue their Northside Project. This project, as proposed, is an $8.1 billion project covering 2.5 square miles of part of downtown St Louis and the area immediately to the north of the entire downtown. Northside Regeneration, LLC is also partly owned (2.5%) by the Carr Square Tenant’s Association, the non-profit organization that manages the Carr Square Apartments. We wonder what magic made the McKee’s give 2.5% of their development project to a public housing tenant’s association.
More tomorrow.
The reason why we organized was that from the very beginning of the developer’s property acquisition, it seemed that our elected officials were more interested in protecting the rights of the developer than our rights and property. Considering that we are the people they are supposed to represent, we did not look upon this kindly. At that point we decided that we needed to find another way to guarantee our economic security and property rights.
Anyone interested in becoming a member or assisting us in any way can contact us by sending an e-mail to info@northsidecba.org.
The development we banded together to change, is that proposed by Paul McKee, Jr. called the Northside Project. Mr. McKee is a St Louis developer who has put together various projects around the suburban St Louis area. He is also a former owner of Paric Construction, a St Louis based construction company now run by his son Paul McKee, III.
Paul McKee, Jr. is currently being sued in federal court over loans he personally guaranteed for part of his Hazelwood Logistics Center project. He seems to be unable or unwilling to pay off his $28 million loan balance so the bank that owns this loan, BankSouth, is suing him for the balance. He already walked away from another part of this project and gave it back to a different bank. That was a single warehouse and the other bank was ING.
Mr McKee was recently the subject of a St Louis Business Journal article detailing his stepping down from management of and walking away from ownership stakes in the Spa at Winghaven and the Winghaven Country Club. These ventures are pieces of his Winghaven development in St. Charles county. A development that also has not gone as originally planned financially despite massive state government subsidies to the tune of $40 million dollars granted to MasterCard International to move its headquarters from Maplewood to Winghaven.
Mr. McKee, along with his wife, sons, and what appears to be a family trust, are owners of Northside Regeneration, LLC. This is the development company they have organized to pursue their Northside Project. This project, as proposed, is an $8.1 billion project covering 2.5 square miles of part of downtown St Louis and the area immediately to the north of the entire downtown. Northside Regeneration, LLC is also partly owned (2.5%) by the Carr Square Tenant’s Association, the non-profit organization that manages the Carr Square Apartments. We wonder what magic made the McKee’s give 2.5% of their development project to a public housing tenant’s association.
More tomorrow.
Saturday, December 4, 2010
Things to come
O.k. The next few posts will be a history from the beginning to today.
In an effort to bring everyone up to speed who comes to our page, we'll start at the beginning and explain what we've done and where we've been. We'll also provide a little background so that people can learn who the players are and what they have done.
The first thing I'll post is a link to the first main-stream media article about this whole mess. It's called "Phantom of the Hood". It's from the Riverfront Times way back in 2007. I think I still have a copy of the original print edition somewhere. Even though this was before I had moved to North St Louis, and way before I had met anyone who lives in the footprint of what eventually was announced as Paul McKee, Jr.'s Northside Project, something about that article stuck with me.
Note I said "the footprint of what eventually was announced as Paul McKee, Jr's Northside Project". I did not say the neighborhood where my friend Sheila Rendon has lived all her life with her family; or where my friend Isaiah Hairis bought a brand new suburban style house about ten years ago that would be very nice but wholly unremarkable in any middle class suburb in the area; or the cop block where quite a few St Louis City police officers live; or the brewery apartments constructed around, and inside of, the old Falstaff Brewery.
So many people think it's a bombed out wasteland up here, and it's true there are those parts of the area that are like that. But there are also average people here just trying to make a life. Some have lived here since they were born, some have come much more recently. They deserve to be able to continue on with their lives without harm or financial penalty for choosing the wrong place to stand and try to build a community.
No one, whether they were born here or came later, was told when they chose to make this area their home, "Oh by the way...this place...it's temporary. Eventually, we'll replace this with something better, but we can't guarantee you'll be able to stay." What NSCBA wants is a fair deal for those people who have invested here no matter if they put down roots as a family, or they built a business here.
What we consider fair is just compensation to make everyone financially whole for any move if it comes to that. For a renter, this means moving expenses with a little extra for the hassle of moving, and help finding a comparable apartment elsewhere in the city or even the county if they choose to move there. For a home owner what this means is the ability to buy a comparable house in a neighborhood where they won't be chased out again, moving expenses, and a little extra for the hassle of uprooting yourself and family and settling in a different place. For a business owner or apartment building owner this means a high enough price for your property that you can easily afford a similar facility elsewhere, compensation for any disruption in your business, and a little extra for the hassle of moving. There should also be extra coverage for investors, since you've forced someone to liquidate an investment they found through their own and often not insignificant efforts and make those efforts all over again to find another investment. There should also be coverage of any contingency expenses that were due to the move but not anticipated prior to it. It's a simple concept, if government, through it's efforts to improve the city for everyone wishes to force some of it's citizens do something for the good of all, then the citizens who are affected should be made whole in any way they want. We'll all pay for it later in out taxes, and if it benefits everyone, then everyone should pay.
If the City of St Louis and a private developer they are empowering with a redevelopment agreement can't afford this type of compensation to residents, business owners, and investors who have stuck it out and been loyal to their community and city, then they can't afford the development. It's that simple. If the proposed development isn't financially viable enough to fund all such expenses, then it isn't just to shift those uncovered costs onto the people who live in the footprint of a proposed development now.
For these situations, I say build around anyone who doesn't want to sell at the price you offer. It's that simple. If you can't buy them out, build around them. It's cheaper, and fairer, and it can be done. Write their property out of the boundaries of the redevelopment agreement. It's been done before and can be again. That way, the people who have stuck it out, who have been loyal and patient, will not be abused by having to guess what will happen in the future. They will have certainty and know they are safe.
For those in city and state government; if you abuse ordinary people, you will never have their trust and they will always fight you. Just as we have.
You may sneer at our idealism, that we demand that government and society live up to its ideals, but without people who push, we would never have anything better. And we will keep pushing. All of us can do better.
Keith Marquard
Treasurer, NSCBA
In an effort to bring everyone up to speed who comes to our page, we'll start at the beginning and explain what we've done and where we've been. We'll also provide a little background so that people can learn who the players are and what they have done.
The first thing I'll post is a link to the first main-stream media article about this whole mess. It's called "Phantom of the Hood". It's from the Riverfront Times way back in 2007. I think I still have a copy of the original print edition somewhere. Even though this was before I had moved to North St Louis, and way before I had met anyone who lives in the footprint of what eventually was announced as Paul McKee, Jr.'s Northside Project, something about that article stuck with me.
Note I said "the footprint of what eventually was announced as Paul McKee, Jr's Northside Project". I did not say the neighborhood where my friend Sheila Rendon has lived all her life with her family; or where my friend Isaiah Hairis bought a brand new suburban style house about ten years ago that would be very nice but wholly unremarkable in any middle class suburb in the area; or the cop block where quite a few St Louis City police officers live; or the brewery apartments constructed around, and inside of, the old Falstaff Brewery.
So many people think it's a bombed out wasteland up here, and it's true there are those parts of the area that are like that. But there are also average people here just trying to make a life. Some have lived here since they were born, some have come much more recently. They deserve to be able to continue on with their lives without harm or financial penalty for choosing the wrong place to stand and try to build a community.
No one, whether they were born here or came later, was told when they chose to make this area their home, "Oh by the way...this place...it's temporary. Eventually, we'll replace this with something better, but we can't guarantee you'll be able to stay." What NSCBA wants is a fair deal for those people who have invested here no matter if they put down roots as a family, or they built a business here.
What we consider fair is just compensation to make everyone financially whole for any move if it comes to that. For a renter, this means moving expenses with a little extra for the hassle of moving, and help finding a comparable apartment elsewhere in the city or even the county if they choose to move there. For a home owner what this means is the ability to buy a comparable house in a neighborhood where they won't be chased out again, moving expenses, and a little extra for the hassle of uprooting yourself and family and settling in a different place. For a business owner or apartment building owner this means a high enough price for your property that you can easily afford a similar facility elsewhere, compensation for any disruption in your business, and a little extra for the hassle of moving. There should also be extra coverage for investors, since you've forced someone to liquidate an investment they found through their own and often not insignificant efforts and make those efforts all over again to find another investment. There should also be coverage of any contingency expenses that were due to the move but not anticipated prior to it. It's a simple concept, if government, through it's efforts to improve the city for everyone wishes to force some of it's citizens do something for the good of all, then the citizens who are affected should be made whole in any way they want. We'll all pay for it later in out taxes, and if it benefits everyone, then everyone should pay.
If the City of St Louis and a private developer they are empowering with a redevelopment agreement can't afford this type of compensation to residents, business owners, and investors who have stuck it out and been loyal to their community and city, then they can't afford the development. It's that simple. If the proposed development isn't financially viable enough to fund all such expenses, then it isn't just to shift those uncovered costs onto the people who live in the footprint of a proposed development now.
For these situations, I say build around anyone who doesn't want to sell at the price you offer. It's that simple. If you can't buy them out, build around them. It's cheaper, and fairer, and it can be done. Write their property out of the boundaries of the redevelopment agreement. It's been done before and can be again. That way, the people who have stuck it out, who have been loyal and patient, will not be abused by having to guess what will happen in the future. They will have certainty and know they are safe.
For those in city and state government; if you abuse ordinary people, you will never have their trust and they will always fight you. Just as we have.
You may sneer at our idealism, that we demand that government and society live up to its ideals, but without people who push, we would never have anything better. And we will keep pushing. All of us can do better.
Keith Marquard
Treasurer, NSCBA
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