ST. LOUIS — Six months ago, city officials teed up eminent domain action against more than 100 properties north of downtown held by Paul McKee’s NorthSide Regeneration, which owns hundreds of derelict properties that have riled residents and stalled redevelopment efforts for over a decade.
Lawsuits to take the land are ready to be filed. St. Louis Mayor Cara Spencer’s administration, which inherited the eminent domain push from the prior mayor, just has to say “go.”
City officials, however, are now seeking to negotiate a deal for some of NorthSide’s land, hoping to avoid a lengthy court battle from the longtime landowner known for his litigiousness.
While governments can use eminent domain to secure ownership and clear claims against property relatively quickly, landowners can sue over whether they were paid the true value of the real estate.
The status of the city’s condemnation of NorthSide Regeneration land has gained fresh urgency now that the long-awaited western headquarters of the National Geospatial Intelligence Agency is set to welcome some 3,000 employees to its new north St. Louis campus. The grand opening of the new campus was celebrated Friday.
When the NGA began planning a move from its longtime home on the south riverfront, part of St. Louis officials’ pitch to keep the agency in the city was new development surrounding the campus could help lure the workforce and contractors it needs. Because of the scale of NorthSide’s holdings, any developer looking for a sizable project site likely has to buy some parcels from NorthSide.
City development officials, however, have said the properties are so leveraged with debt that McKee demands prices well in excess of what North City real estate is worth. At a court hearing last year, lawyers for the St. Louis Development Corp., the city’s development arm, said NorthSide owed $50 million to its primary lender, Bank of Washington, and had not made a payment on its loans in a decade.
“There are very few other opportunities for development to happen,” said Virginia Druhe of the St. Louis Place Community Association, an area neighborhood group. “We need access to land to have opportunity for housing and neighborhood development.”
SLDC spokesman Deion Broxton said condemnation lawsuits against McKee properties or a settlement are both “options.”
“There is no definitive timeline, but we are constantly engaging in conversations to come to a solution as soon as possible,” he said in a statement. “It is in the city’s best interest to have contiguous parcels. We continue to work towards acquiring those parcels to market in the future.”
SLDC chief Otis Williams, who has spent years dealing with McKee and the NGA, said negotiations to acquire the real estate could go on for several months. And they could include more of NorthSide’s holdings — it and affiliated companies own some 1,600 properties and more than 200 acres around the NGA — than just the parcels that have begun the eminent domain process. How much the city can buy “will always come down to financing,” Williams said.
More than 100 offer letters already have been sent for the properties, mayoral spokesman Rasmus Jorgensen said. If NorthSide rejects the offers, the city will ask the courts to force them to accept.
“The mayor is in favor of using this step, if needed, in cases where negligent landlords have failed to maintain their properties, many of which sit vacant and have, for too long, dragged down neighborhoods surrounding the NGA and become a barrier to growth for the community,” Spencer’s spokesman wrote in a statement.
McKee and one of his lawyers, Paul Puricelli of law firm Stone, Leyton & Gershman, did not respond to questions about the talks. Puricelli and the firm also represent Bank of Washington in litigation involving NorthSide.
‘No better time’
Nearly 10 years after the NGA took the city’s offer and opted to build its new campus in North City, there is little to no new development waiting to greet the area’s new federal employees. Officials and residents that helped develop and push through the 2024 legislation authorizing eminent domain against NorthSide say the city needs to move now if it hopes to catalyze development for restaurants and offices catering to the NGA and its employees.
McKee and NorthSide, they say, have not proven they can make that happen.
“He’s the major block,” Druhe said. “We don’t have any public meeting places, no restaurants, no cafes, no nothing. … If they or the NGA think those employees are going to be leaving during the daytime or using things on their way in or out, then there is urgency.”
Alderman Rasheen Aldridge, who represents the area and worked with residents to develop the eminent domain legislation, said it is time to get McKee’s properties “out of his hands.”
“There’s no better time than now with NGA opening up,” Aldridge said.
Northside Regeneration began buying up homes and lots 20 years ago to assemble hundreds of acres in neighborhoods north of downtown. It has touted its role in luring the NGA — first proposing the site it had partially assembled to the NGA and then selling its holdings there to the city for the project. A good chunk of the land, however, had been purchased from the city’s land bank just a few years earlier.
Residents and the city eventually grew tired of waiting for NorthSide’s promised development and criticized its lack of maintenance on hundreds of vacant lots and derelict buildings. In 2018, a trial revealed NorthSide had claimed millions in Missouri tax credits from what an FBI investigation termed “paper-only” real estate transactions.
Then-Missouri Attorney General Josh Hawley sued, alleging tax credit fraud. His successor, Missouri Sen. Eric Schmitt — who had carried the tax credit bills in the Missouri Legislature and accepted more than $100,000 in campaign contributions from McKee’s lawyers and bank — settled the case with Northside in 2019.
The revelations prompted Mayor Lyda Krewson’s administration to terminate NorthSide’s 2009 redevelopment agreement with the city. NorthSide’s lender, Bank of Washington, sued and the litigation is ongoing.
Political maneuvering
Bank of Washington already has tried to circumvent the city’s eminent domain power. Sen. Nick Schroer, a St. Charles County Republican, sponsored legislation last year that would have required the city to pay off the bank’s debt on top of the price for the actual real estate if it used eminent domain.
The bank is led by the Eckelkamp family, who are big donors to the Republicans who control state government. Susan Eckelkamp has held multiple roles within the state GOP, including serving as Missouri’s committeewoman to the Republican National Committee.
The bill in the Legislature did not pass, and St. Louis began sending out legal notices required to begin eminent domain proceedings earlier this year. In March, former Mayor Tishaura O. Jones’ administration sent $1 million in offer letters for 87 properties, nearly all tied to NorthSide, the final step in the eminent domain process before filing condemnation lawsuits. Another 83 properties, mostly owned by NorthSide Regeneration, received “60-day letters,” a first step in the process that advises the owners the city is proceeding with condemnation.
Jones lost her reelection bid to Spencer, who appointed Williams as her new chief of the SLDC. Clayco founder Bob Clark, who has worked on projects with McKee over the years, was a major donor to Spencer, and the Bank of Washington gave a $10,000 donation to a political action committee supporting her.
Spencer historically was one of the harshest critics of McKee, sponsoring legislation that removed an exemption shielding NorthSide and other developers from paying city nuisance fines and fees. In 2018, Spencer called for a criminal investigation of NorthSide after what city lawyers termed “fraudulent contracts” that netted millions in state tax credits for the developer and its lender came to light. Spencer was one of only two votes at the St. Louis Board of Aldermen against giving McKee more tax incentives in 2019.
Spencer said during the campaign she would have to review the specifics before committing to the use of eminent domain on the NorthSide Regeneration parcels but reiterated she long has sought to hold the developer accountable.
Aldridge noted that Spencer voted for his 2024 legislation and said both she and Williams have indicated to him they would continue to pursue NorthSide Regeneration’s land. He said he understood the May tornado that struck the city just a month into Spencer’s tenure has consumed much of the new administration’s attention, but the “community can’t wait.”
“I know if this is something she would not follow through on or Otis would not follow through on, there would be hell to pay from residents,” Aldridge said.
Druhe, the St. Louis Place resident, said Spencer indicated at a recent town hall she wanted to see the process move forward. The city’s negotiations with NorthSide make sense, she said, but she hopes the negotiations do not drag out the process and keep the city from acting.
“It is question of how long you’re going to spend on that before you decide, you’ve made your offer, they’ve made theirs, it’s time to move on,” she said.
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Jacob Barker | Post-Dispatch
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