Developer Paul McKee’s $8.1 billion vision of bulldozing 1,500 acres of homes and businesses in St. Louis was dealt a fatal setback on Friday when the St. Louis Circuit Court struck down two city ordinances authorizing his proposal. [1] The judge agreed with local property owners that the Northside Redevelopment approved by St. Louis aldermen last fall failed to meet requirements set forth by state law.[2]
Judge Robert H. Dierker acknowledged that projected revenues “seem utterly incredible”:
“For example, Northside projects that Redevelopment Area C would generate an increase in assessed valuation on the order of 2400% over the life of the development plan with consequent massive increases in tax revenue.”[3]
The judge sympathized with the property owners’ arguments, noting the developer’s
“unprecedented plan that includes, in the words of a distinguished economist, ‘pie in the sky,’ and economic projections seemingly manufactured out of thin air.”[4]
He continues:
“The question before the Court, fundamentally, is whether the City’s Board of Aldermen had the discretion to say, in Alderman Bosley’s words, ‘Let’s try it.’ The Court concludes that the answer must be, ‘No.’”
St. Louis bureaucrats cozied up to private developer Paul McKee last year. The Board of Aldermen passed ordinances that labeled the Northside community “blighted” and established a $390 million Tax Increment Finance district that set in motion the potential for the billionaire developer to seize existing homes and businesses and replace them with luxury condos and ritzy retail space and keep any increase in tax revenue that his enormous redevelopment areas generated to pump back into his development. McKee sold his scheme to local politicians by promising to line their coffers with increased tax revenues. To alleviate the concerns of local property owners, he claimed, “We are not allowed to do eminent domain. That’s clear, it’s written in the document.”[5] But how else was he suddenly going to acquire so many acres of property when the property he wanted was not for sale?
The court determined that because no specific “project” was ever detailed, the authorizing ordinances were invalid. McKee’s plan to “redevelop” the entire Northside community depended on vastly exaggerated claims that had no base in reality. Even though he had drawn up plans to drive people out of the homes and businesses they had worked so hard to own, hired attorneys to argue his case in the courtroom, and convinced the city to finance his lofty vision, he had never sold the city on an actual project—just some grandiose “pie-in-the-sky.”
McKee says he’ll be challenging the ruling, but property owners have pledged to continue their fight for the property they rightfully own.[6]
A full copy of the decision is available here: http://stlouis.bizjournals.com/stlouis/stories/2010/06/28/daily60.html.
[1] Brian Flinchpaugh, “Judge rules for plantiff in NorthSide redevelopment trial,” St. Louis Globe-Democrat, July 2, 2010.
[2] Kelsey Volkmann, “Judge nixes $390M in financing for McKee’s NorthSide,” St. Louis Business Journal, July 2, 2010.
[3] Missouri ex rel. Smith v. TIF Commissioners, No. 0922-CC09379, Slip Op. at [17] (Mo. Cir. Ct. July 2, 2010).
[4] Missouri ex rel. Smith v. TIF Commissioners, No. 0922-CC09379, Slip Op. at [1] (Mo. Cir. Ct. July 2, 2010).
[5] Charles Jaco, “Paul McKee says North City development will go on despite ruling,” Fox2Now St. Louis, July 5, 2010.
[6] Kelsey Volkmann, “Judge nixes $390M in financing for McKee’s NorthSide,” St. Louis Business Journal, July 2, 2010.