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St. Louis finds Paul McKee's NorthSide Regeneration in default

"It is time to face facts. After a decade, the promised redevelopment has not come, nor is there any indication that it will," said a letter from City Counselor Julian Bush informing McKee of the default.
Credit: SLBJ
Paul McKee of NorthSide Regeneration

ST. LOUIS BUSINESS JOURNAL -- The city of St. Louis on Tuesday found Paul McKee's NorthSide Regeneration in default of its redevelopment agreement, a move that would remove McKee as designated developer for some 1,500 acres in north city and could lead to a legal battle.

"It is time to face facts. After a decade, the promised redevelopment has not come, nor is there any indication that it will," said a letter from City Counselor Julian Bush informing McKee of the default.

Mayor Lyda Krewson said in a statement, "Northside Regeneration has not lived up to its promises. The City has to take action. We had great hopes for this redevelopment agreement, but now we have to course correct."

McKee did not immediately respond to a request for comment.

City officials said Tuesday they were taking the extraordinary step — to unwind what was once a strong relationship with City Hall — in part because of recent allegations that McKee conspired with others to inflate property sale prices to collect more state tax credits. The credits were available to NorthSide via a state program, the Distressed Area Land Assemblage Tax Credits, created so it could assemble hundreds of acres north of downtown. NorthSide collected some $43 million from the program.

The default letter said certain transactions used to collect credits from the program, including with Buster Brown building owner Jim Osher, "have drawn the attention of law enforcement officials."

Bush wrote that the city found NorthSide in default of the $390 million tax increment financing agreement for other reasons:

  • No or little development in certain zones, including where a gas station and grocery are being built
  • Failure to pay real estate taxes, totaling $273,000 as of June 8
  • Failure to comply with a property maintenance plan by having 205 buildings cited for building code violations
  • Failure to demolish 123 buildings by Dec. 31, 2016
  • Failure to engage any co-developers even though the agreement called for partners to develop 25 percent of the area
  • Failure to notify the city of six property transfers

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