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Hubbard, McCormack Baron feud threatens prestigious federal grant

Hubbard, McCormack Baron feud threatens prestigious federal grant

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ST. LOUIS — A feud has broken out between one of the oldest and most powerful political families on the city’s north side and one of the nation’s largest low-income housing developers.

The company, St. Louis’ McCormack Baron Salazar, says it just wants to keep work moving along on its taxpayer-funded, $100 million-plus renovation of apartments on Cass Avenue near Tucker Boulevard, just a few blocks north of downtown.

The Hubbard family, led by patriarch Rodney Hubbard Sr., says McCormack Baron has used the Hubbard name and a family-run tenant organization to secure federal grants and tax credits for development — and now won’t share the riches. Moreover, the company promised to turn the long-vacant and crumbling Carr School, owned by a family-run neighborhood nonprofit, into a community center — but has now backed out.

In response, the Hubbards have written letters to the U.S. Department of Housing and Urban Development, local officials and the area’s Congressional delegation. Hubbard’s daughter, St. Louis Alderman Tammika Hubbard, refused to back city tax abatement for the project. She even filed a bill with the board to bar demolition and construction permits in the project footprint.

McCormack Baron executives, “eat off the backs of poor people with public subsidy,” Tammika Hubbard wrote in a June email shared with government officials.

McCormack Baron says it abandoned plans to rehab Carr School when costs ballooned and the federal government said grant money couldn’t be used on the project, and is now considering the neighboring Elkay building for the center. The company says it has always kept Alderman Hubbard in the loop and simply couldn’t reach an agreement with the Carr Square Tenant Management Corporation — the nonprofit run by Rodney Hubbard — on a cut of the development fees.

Rodney Hubbard

Rodney Hubbard, executive director of the Carr Square Tenant Association, attends a meeting at City Hall on Wednesday, Oct. 9, 2013. Photo by Laurie Skrivan, lskrivan@post-dispatch.com

“We are hopeful that we can resolve this matter and join with all partners in this community to celebrate residents returning and moving into a transformed neighborhood in St. Louis,” the company said in a statement.

But the disagreement could threaten the project — the renovation of 675 low-income apartments — a complicated redevelopment that city officials consider a top priority. They’ve pledged $10 million in federal grants to revamp streets, sidewalks and lighting around the complex, near the new western headquarters of the National Geospatial-Intelligence Agency, under construction now. City officials hope the two projects can catalyze development in an area that has struggled with disinvestment for years.

Moreover, the clock is ticking on the prestigious $30 million “Choice Neighborhoods” HUD grant, awarded to the city in 2016 to help fund the project as well as social services for neighborhood residents. The city and McCormack Baron have until the end of 2023 to use the money. If they fail, St. Louis and McCormack risk losing favor in the eyes of HUD, which has only awarded about four such grants each year across the country for the past decade.

St. Louis Community Development Administration director Matt Moak, whose office is administering the grant, has called the project “too big to fail.”

Demolition of Preservation Square apartments in St. Louis

Demolition work progresses as a construction crew works on Thursday, Dec. 10, 2020 at Preservation Square as the first phase of the long-anticipated project begins as part of the McCormack Baron Salazar rehab of the low-income housing project located on Cass Avenue and 16th Street. Photo by Cheyenne Boone, cboone@post-dispatch.com

After stalling for years, renovation of the apartments, called Preservation Square, finally began over the summer.

But it’s unclear if McCormack Baron can leap the last hurdle: The Hubbards.

The family detailed its concerns in hundreds of pages of correspondence Tammika Hubbard recently provided to HUD, St. Louis officials, area Congress members, and the Post-Dispatch.

‘A new day’

The Hubbards have a long relationship with McCormack Baron Salazar. The Carr Square Tenant Management Corp., which has been controlled for years by the Hubbards, was incorporated in the early 1970s to organize public housing residents following the city’s 1969 rent strike.

McCormack Baron co-founder and chairman Richard Baron’s early career was as a legal aid attorney representing tenants in the same strike.

And the two have worked together on projects for decades.

But the Hubbards have also severed their relationship with McCormack Baron once already.

It was 2013. McCormack Baron was angling for the prestigious “Choice” grant from HUD for the Preservation Square renovation, according to the correspondence. The company needed support from the tenant organizations, which have long wielded political clout in the neighborhood largely made up of low-income housing developments.

But Carr Square was still waiting for a payment from McCormack related to another project, the neighboring Murphy Park Apartments, completed a decade prior.

Carr Square said the developer owed it and fellow tenant organization Cochran Gardens Tenant Management Corp. a combined $250,000 for the Murphy Park project — a $60 million development built, like many of the for-profit company’s projects, with the help of federal money and tax credits.

Vincent Bennett, a top McCormack Baron official, sought to make peace, according to the tenant groups. He told Carr Square and Cochran Gardens that it was “a new day,” and assured them they would get their money — and more.

Carr Square says it was promised a new community center at Carr School — to be named in honor of Rodney Hubbard’s father, Jonas — and a cut of McCormack Baron’s development fees from the rehab projects.

In 2014, Carr Square sent a letter of support for the initial Preservation Square renovation planning grant, and it was listed in the application to HUD as one of the community organizations that would help carry out the Choice grant’s objectives.

The city of St. Louis ultimately won the grant, giving McCormack Baron and the nonprofit that works closely with it, Urban Strategies, $30 million in HUD funding toward the $100 million effort to rehab the 30-acre affordable housing community, build a community center and provide social services to neighborhood residents.

HUD Secretary Julian Castro visited St. Louis in late 2016 to announce the award. Tammika Hubbard was among the politicians on stage at the event.

But the Murphy Park development payments never arrived, according to the correspondence. And an agreement was never inked to share the Preservation Square development fees.

“We were negotiating with them in good faith to be a co-developer,” said McCormack Baron spokeswoman Cady Seabaugh.

Since then, the relationship between McCormack Baron and the Hubbards has imploded.

‘Suppress a Black community’

Around the same time McCormack Baron was touting a partnership with Carr Square in its application for the HUD grant, a political scandal enveloped the Hubbard family, costing them some of their political power and drawing scrutiny from local and federal prosecutors.

In 2016, a St. Louis judge ordered a do-over in the August primary election after allegations of improper ballot harvesting by the Hubbards. The rematch cost former Missouri Rep. Penny Hubbard, Rodney Hubbard’s wife and Tammika Hubbard’s mother, her seat in the state house and led to the election of Ferguson activist Bruce Franks Jr. In December 2016, former Circuit Attorney Jennifer Joyce referred a voter fraud investigation of the incident to the U.S. Attorney. No one was charged.

Missouri Court of Appeals hears voting case

Attorney Jane Dueker, representing Missouri State Rep Penny Hubbard, visits with Hubbard's challenger Bruce Franks, Jr., after members of the Missouri Court of Appeals heard a case of alleged voting irregularities on Monday, Sept. 12, 2016 at the Old Post Office. Hubbard defeated Franks in the Democratic primary for the House District 78 seat in St. Louis. A lower court has ordered a new election. Photo by Robert Cohen, rcohen@post-dispatch.com

Then the Preservation Square project stalled.

McCormack Baron blamed the delay on former Missouri Gov. Eric Greitens’ 2017 move killing the state’s low-income housing tax credit program, just as the project was getting underway. The company secured federal low-income housing tax credits for the project in 2018 and 2019, which it said would raise a combined $21 million in equity. This December, when Missouri began issuing state housing tax credits again, McCormack finally won a round of both state and federal credits, which it said should help raise another $20 million for the project.

But Carr Square still wanted a cut of the development fees. The group sent a letter to Baron last March saying it would be willing to accept 7.5%, down from 10%.

The nonprofit understood the risks of development, wrote Carr Square president Cynthia Kendall. “However, if the Preservation Square rehabilitation does occur, then CSTC should be paid for its services,” she wrote.

Such fees would be lucrative. In the three phases of the Preservation Square renovation that have been approved for state and federal low-income housing tax credits, development fees total $7 million, according to Missouri Housing Development Commission documents. That would put Carr Square’s cut at about $525,000, with more phases planned.

Now, the tenant groups accuse the company of cutting them out of the ownership of Preservation Square despite their protests, according to the correspondence. McCormack’s actions, Carr Square wrote in a letter to HUD and area officials, have “continued to suppress a Black community and prevent it from becoming financially stable.”

Tammika Hubbard has refused to sponsor city tax abatement for the project, forcing McCormack Baron to move ahead without a development subsidy that has become common for city projects. She has blasted McCormack and Urban Strategies in public meetings, accusing them of trying to “go around the alderman.”

She even sponsored a bill that would bar construction in her ward in an effort to stymie the Preservation Square rehab project, though the measure never received a hearing.

Alderman Hubbard declined an interview for this story, but referred questions to longtime Carr Square resident Todd Irons-El, a sheik at the Moorish Science Temple of America in St. Louis. Irons-El, who said he was asked by the tenant associations to serve as spokesman in the dispute, said McCormack Baron’s conduct is part of a pattern of broken promises to the community. The company’s past rehabs of the neighborhood’s public housing stock have included the tenant management corporations as partners, and development fees have been shared before.

“How are you gonna sustain the community without giving them an equity interest?” Irons-El said. “They always sat down at the table and negotiated a development fee and how that should be shared. And we thought in this process, that should be a given.”

Negotiated in ‘good faith’

McCormack Baron and other developers have included Carr Square in other projects. The nonprofit was a partner in McCormack’s original development of Preservation Square four decades ago. And it has a small stake in developer Paul McKee’s NorthSide Regeneration company, which purchased hundreds of acres in the area and obtained some $43 million in state tax credits, some of which the state later accused NorthSide of obtaining fraudulently through sham real estate transactions. The partnership with Carr Square allowed NorthSide to funnel tax credits through the nonprofit to reduce its tax liability.

Carr Square claims it still owns a portion of Preservation Square, from when the housing was known as O’Fallon Place. In a letter forwarded to the Post-Dispatch from Carr Square attorney Bill Clendenin, whose firm Stone, Leyton and Gershman also works for McKee’s NorthSide, Carr Square said it owned 25% of the general partner interests in the eastern portion of the site, along 14th Street.

It could be the last leverage the Hubbards have, in this project:

It’s unclear if McCormack can renovate the units along 14th without the Hubbards’ blessing.

Baron said Carr Square doesn’t own as much as the Hubbards think, and the family’s concerns won’t slow the project. The 14th Street units, the company says, are part of a later phase.

But the quarrel has now drawn outside scrutiny, said Seabaugh, the McCormack spokeswoman: HUD’s St. Louis field office worried that Tammika Hubbard could have a conflict of interest. After the Post-Dispatch published a November article revealing Carr Square’s ownership stake in Preservation Square, HUD officials inquired about the ownership interest. The city and McCormack Baron sent a memo to HUD assuring the agency that Carr Square’s ownership was negligible, Seabaugh said.

Demolition work at Preservation Square

Demolition work progresses on Friday, Nov. 6, 2020, at Preservation Square as part of the McCormack Baron Salazar rehab of the low-income housing project located along Cass Avenue. Photo by David Carson, dcarson@post-dispatch.com

Still, McCormack Baron said Carr Square “has been and continues to be an important community partner on the near north side.” The company has been in “close contact” with Alderman Hubbard, Seabaugh said, and is holding out hope that a thaw is within reach.

“We’ve been in recent, very exciting meetings with the alderwoman,” she said.

Mending fences may be necessary. Tammika Hubbard faces opponent James Page, the director of the Downtown Neighborhood Association, in the April election — but she won approval from 62% of voters in Tuesday’s primary, beating Page by double-digits.

Page, so far, is staying quiet on the dispute between one of the most active developers in the ward and its alderman and her family. He didn’t respond to requests for comment.

Jacob Barker • 314-340-8291 @jacobbarker on Twitter jbarker@post-dispatch.com

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