After over 3 years of litigation, developer Paul McKee’s controversial Northside Regeneration Project is being allowed to proceed. On Tuesday the Missouri Supreme Court reversed a lower court decision blocking McKee’s use of so-called "Tax Increment Financing," (TIF) for the development.
McKee’s $8 billion, 1,500 acre plan for redevelopment in north city has basically been shelved since July of 2010, when Circuit Court Judge Robert Dierker ruled that that McKee's plans were too vague to qualify for $390 million in financing under the city’s TIF ordinance.
Now, McKee’s attorney Paul Puricelli says the developer is free to start breaking ground on new projects.
“Obviously we’re very excited and very happy for the result, not only for our client, but also for the citizens of North St. Louis, this is a big day for the city,” Puricelli says.
The TIF subsidy is not a direct payment of cash, rather it’s paid out over time as a percentage of future tax revenue created as a result of any new development.
McKee says withholding TIF meant he couldn’t pay for upgrades to basic infrastructure necessary for future development.
“The worst part was promising to do stuff, and then we’re not able to do it,” McKee says. “In my commitments to the people of the north side that’s what troubled me the most. And now we’re going to be able to do what my wife and I have been saying we were going to do for years.”
McKee’s complete plan calls for new factories, shopping plazas, housing, and schools over a 2-square-mile area north of downtown.
“Now that we’re released on the TIF, we can really start recruiting jobs big time,” says McKee. “Expect to hear more on those projects before the end of the year.”
McKee says he still only has about 75 percent of the total land he’s set out to assemble, and he still needs another 500 more, a move which will require the state legislature to pass an extensive of the Missouri Land Assemblage Tax Credit, a program which McKee hopes will pump another $50 million into the project.
As far as the TIF financing, that money can only be applied to infrastructure upgrades that the city would otherwise be expected to pay.
“50 percent of the growth will go to primarily to rebuild what really ought to be the government’s obligation, which is the public infrastructure,” says Jeff Rainford, chief of staff to St. Louis Mayor Francis Slay.
Rainford says as long as that ruling barred McKee from access to TIF, investors wouldn’t touch the Northside project because the infrastructure needs were so overwhelming. Now, residents will start to see improvements in their neighborhoods.
“This is a total slam dunk victory in that all of the people who’ve shown some interest in doing deals with him, but didn’t do it because of the lower-court ruling, know that, ‘hey, that’s been reversed and it’s time to go,’” says Rainford.
The Supreme Court ruling also means the pressure is now squarely on McKee to break ground and show progress, a move McKee’s critics say he is ill prepared to realize.
Attorney Beavis Schock represented two North St. Louis residents in the legal challenge to McKee’s use of TIF.
“This is classic ‘crony capitalism,” says Schock. “It’ll never work; they’ll issue bonds, which they’ll never be able to pay back, because only the market, and leaving people along can develop and economy. The government always gets it wrong.”
Schock says the Supreme Court ruling is a bad deal for the citizens of St. Louis, and risks wasting public dollars on the longest of longshot developments.
Follow Adam Allington on Twitter: @aallington
