Almost a decade after Missouri authorized up to $12 million in tax credits to finance the remediation of the Carondelet Coke site on the city’s southernmost tip, St. Louis officials are still waiting for state environmental regulators to declare the site completely clean.
The wait forced a city economic development office on Tuesday to extend for the third time a $2.6 million line of credit it originally opened in 2011 to cover some of the cleanup costs as developers turned the area into an industrial park for warehouses.
And until it gets an all-clear determination from the Missouri Department of Natural Resources, the tax credits it’s banking on to repay the loan won’t be issued.
Meanwhile, the original tax credit agreement said about $1.4 million in credits could be withheld if the projected 400 jobs weren’t created on the site by the end of 2017, a deadline that had since been extended to this year.
So far, developer Green Street Properties has built one speculative 125,000-square-foot warehouse on the 53-acre property where plans call for five buildings with 725,000 square feet of buildings. There are only some smaller users leasing space in the current building, according to city economic development staff.
St. Louis Land Clearance for Redevelopment Director Otis Williams acknowledged some risk that the state wouldn’t issue all of the authorized credits, but he said his office was still in negotiations with the state to extend the job-creation deadline.
“We know how they feel, but we’re trying to convince them otherwise,” Williams said. “If we can come up with a client or a user (for the development), I think we can convince them.”
The action is the latest glimpse into a cleanup project that has been decades in the making, with taxpayers picking up most of the tab. Remediation work still remains on a 2.1-acre portion of the site, a DNR spokesman said Thursday.
In 2009 and 2010, Missouri authorized up to $12.3 million in Brownfield Remediation Tax Credits for the site’s cleanup, though only 75 percent of those credits have been issued to reimburse cleanup costs. The remaining 25 percent requires DNR to determine the site is clean before it is released.
The Carondelet Coke site was once one of the most contaminated and polluted sites in the city. Laclede Gas first built a plant there to make coal gas and industrial coke. The utility later sold it to another company, and the plant continued making industrial coke until the last owner abandoned the property in 1987.
By 1992, after years of unpaid taxes, the city’s land bank took title to the property — and had to figure out how to remove the toxic byproducts of industrial coke production.
A 2012 Post-Dispatch investigation detailed how city officials were hesitant to add the site to the federal Superfund program, which could have forced former owners to pay for its cleanup, because they worried the Superfund designation could have taken years longer to return the site to productive use and saddled it with the stigma of the federal cleanup program.
Instead, brownfield tax credits, which companies use to offset their tax bill and reduce state tax collections, were identified as a source. Laclede Gas (now Spire) and former owner SGL Group each contributed $471,250 to the cleanup. The city and site developer Green Street Properties also paid Laclede $765,000 for 12 additional acres along South Broadway on the edge of the site.
Laclede also agreed to finance the deal by buying the tax credits, which could have saved it several hundred thousand dollars in state taxes. Because “it has taken a little longer than expected,” the LCRA may have to revisit its agreement with Laclede should the city ultimately get the final tranche of tax credits, Williams said. Regardless, he said, there are plenty of buyers that could monetize the credits.
The cleanup was performed by Environmental Operations Inc., a company that has performed high-profile brownfield tax credit cleanups that include the Northwest Plaza and River City Casino sites. The 2012 Post-Dispatch investigation found that it had served as a consultant on the Carondelet Coke project to solicit bids and and then awarded the work to itself, a practice later criticized in a state audit of the program.
That 2014 audit said DNR issued a certificate of completion for nine acres of the site in December 2013 but required additional groundwater monitoring on the remaining 44 acres.
DNR spokesman Brian Quinn said that the department issued a certificate of completion for a second portion of the site in 2015, and that at four of five remaining parcels, “all environmental work, including groundwater monitoring, has been completed.”
“Some contamination remains in place on these four parcels, but is not considered a risk to future occupants, provided that engineered controls that have been and/or will be implemented are properly maintained,” Quinn said in an email.
Environmental covenants that limit some land uses on the site and ensure maintenance of equipment designed to handle contamination are being prepared, and certificates of completion will be issued once those covenants are filed in the properties’ title records, Quinn wrote.
But contamination remains on a thin, 2.1-acre swath of the site along River Des Peres. It and the other sites that are awaiting the all-clear from DNR are still owned by the city’s land bank.
“Additional environmental work, including site characterization, groundwater monitoring, and risk assessment, is necessary on one active parcel,” Quinn wrote. “Discussions are ongoing between the (DNR) and the (St. Louis) Land Reutilization Authority regarding the nature and extent of the additional work. A timeframe for completion of the work at this parcel is not known at this time.”