News

Phantom of the Hood, Part 2

A local developer continues to gobble up land on the city's north side.

By Kathleen McLaughlin 

When Paul McKee Jr. bought a passel of property on the north side of St. Louis, he did it through partnerships that hid his identity. He'd later explain that he operated under the radar in order to keep prices down. But McKee's secrecy, and his burgeoning portfolio of vacant lots and crumbling buildings, raised the online eyebrows of blogger Michael Allen, who blew the developer's cover.

Late last year Allen traced the ownership of several hundred north St. Louis properties to McKee and posted the evidence on his Web site, www.eco-absence.org. Though city records indicated that the parcels were owned under different business names, Allen ascertained that all the partnerships listed the same mailing address. Allen came to refer to McKee's north St. Louis holdings collectively as "Blairmont" — after Blairmont Associates, the first partnership that purchased properties. McKee initially denied involvement, but Allen dug deeper and found that the developer had disclosed his ownership of the partnerships in documents the Federal Reserve required him to file because he was on the board of directors of Enterprise Financial Services. McKee also chairs the board of BJC HealthCare, the largest nonprofit hospital system in the region. (For more about how Blairmont came to light, see Randall Roberts' story "Phantom of the Hood," published in the January 11 issue of Riverfront Times and available online at www.riverfronttimes.com.)

Now McKee has the blogosphere crackling once again.

Before the 2007 legislative session, the developer met with Republican state senator John Griesheimer of Washington. Griesheimer, who chairs the Economic Development, Tourism & Local Government Committee, says a mutual friend suggested the confab to smooth things over with McKee, who had lobbied last year against a tax increment financing (TIF) reform bill the senator favored.

Griesheimer says McKee seized the opportunity to float the idea of a tax credit to encourage development in distressed areas. The senator ultimately inserted the Distressed Areas Land Assemblage Tax Credit Act into an omnibus economic-development bill that now awaits the signature of Governor Matt Blunt. A spokeswoman for Blunt says that because there are so many provisions to consider, the governor will take his time signing. His deadline is July 14.

Griesheimer's land-assemblage act would grant tax credits for 50 percent of the costs and 100 percent of the interest incurred in acquiring eligible land. It would carry a maximum annual credit of $12 million and a cumulative cap of $100 million, with credits available until mid-2013. In order to be eligible, projects must consist of at least 100 acres.

Aha! went the blogosphere.

Michael Allen and other north-side observers speculated that McKee had custom-tailored the act for Blairmont.

Tellingly, the 100-acre provision excluded house-by-house rehabbers and small-scale developers. The minimum acreage was so high, in fact, that hardly anyone could possibly qualify for it: 100 acres is almost twice the size of the infamous Pruitt-Igoe public housing complex, which once occupied 57 now-vacant acres north of downtown.

By Allen's count, McKee now owns more than 650 properties in north St. Louis that total 75 to 100 acres.

"I started getting e-mail from people doing development in Benton Park and in my district about this tax credit," says Democratic state representative Jeanette Mott Oxford.

"One hundred acres is very large in an urban context and very difficult to do within the context of neighborhoods," adds Stephen Acree, president of the Regional Housing and Community Development Alliance. "It may not even be desirable [from a developer's perspective] to have a 100-acre site."

Griesheimer, a self-described country boy, says the number sounded good to him. "I don't want to disrupt anybody's lives, but the places we're talking about redeveloping — I'm sorry, but you've got to be pretty well brain-dead not to think they need redeveloping," says the senator. "My idea of redeveloping is taking a blighted area and bulldozing it, putting mixed-uses in."

While McKee's effort has sparked debate about the magic number of acres for urban redevelopment, he says that he does not qualify for the tax credit "as it is written."

McKee would not elaborate on that statement, but the tax credit legislation did end up with a couple of tweaks that could make it difficult for him to benefit. First, the minimum project area in the original draft was 75 acres. McKee might still be short of the 100-acre benchmark that ended up in the final version. Second, 75 of the 100 acres cannot be acquired from a municipal authority or through eminent domain. Allen says Blairmont has not yet bought any property from the city of St. Louis, but he reasoned that to execute a plan, McKee might need more parcels and would inevitably run into some of the vast holdings of the city's Land Reutilization Authority.

While much of the speculation about McKee and the tax credit has centered on Blairmont and the city of St. Louis, he says he had another project in mind. McKee is also working on NorthPark, an industrial redevelopment project east of Lambert International Airport. The land was acquired as a noise buffer and turned over for redevelopment by an intergovernmental commission. Keeping that history in mind, the Tax Credit Act's restriction on municipal-owned and condemned land could pose an obstacle for McKee at NorthPark.

Jerry Dowell, policy director for Lieutenant Governor Peter Kinder, says that Clayton attorney Steven Stone, who represents one of McKee's corporations, McEagle Properties, helped write the Tax Credit Act, and that as initially drafted, the legislation called only for a minimum of 75 acres — with no restriction regarding city-owned land or eminent domain.

In response to a request for comments for this story, Paul McKee relayed a statement through his publicist, Tom Geiser of Black Twig Communications.

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