ST. LOUIS — An investor in an ambitious plan to rehab the old Armory along Interstate 64 in Midtown has sued the developer, accusing it of not following through on a reimbursement agreement.
James Moyle, of Tennessee, and his company, Lazlo MM Investments, of Utah, sued city hall darling Green Street St. Louis, alleging that Green Street has not bought out Lazlo for a $2.3 million stake in the project, among other complaints.
The suit signals trouble for a marquee project, first announced four years ago, in which the city’s redevelopment office has a financial stake: In October 2018, the St. Louis Development Corp. lent $730,000 to the developer from an Environmental Protection Agency Brownfields loan fund.
The dispute also could foreshadow future problems with ambitious real estate projects as the economy enters its worst downturn in decades and demand for office space faces uncertainty after the coronavirus pandemic forced many companies to adapt to a remote workforce.
Green Street has an $83 million plan to turn the vacant Art Deco structure — built in the 1930s by the New Deal-era Public Works Administration for the Missouri National Guard and later used by many civic groups — into nearly 200,000 square feet of office space.
The project has a bevy of public and private financing: $8 million in city-approved tax increment financing; a $3.25 million loan from the carpenters, sheet metal workers and painters unions; plus the SLDC loan, which is larger and more direct than most city aid.
But the project has stumbled some in recent years. In 2017, Green Street indicated the Armory would be open by the end of last year. Its most recent marketing brochure touts an October opening. While the exterior of the building, prominently visible from the interstate, has been rehabbed and new windows added, tenant announcements and news on its progress have been limited in the years since it secured development incentives from the city.
Green Street has worked closely with SLDC on other projects, such as developments in the north riverfront area, big investments in the Grove entertainment district, and the redevelopment of the old Carondelet Coke site into a Green Street owned business park.
SLDC Director Otis Williams said his office continues to work with Green Street on the Armory and that the agency makes sure it protects itself to get its money back.
In their suit, filed last month, Green Street investors Lazlo and Moyle allege that “several business disagreements” emerged between them and Green Street in late 2019. They entered into a side agreement Oct. 30 so Green Street and CEO Phil Hulse could buy them out. They say both sides agreed that Lazlo’s stake in the project was valued at $2.3 million.
Moyle and Lazlo allege that they found a buyer interested in acquiring the Armory project but that Green Street and Hulse “stated they had no interest whatsoever in parting with the underlying project at any price.”
They also allege that Green Street in mid-April purchased another building for $5.75 million. That purchase, Lazlo claims, shows that Green Street had “sufficient funds to perform said obligations.”
The investors’ attorney, Jim Bennett of Dowd Bennett, said the investors “hope this is just procedural and will be behind us soon.”
“We are proud to be a part of this project and we want the best for the iconic Armory District and the St. Louis community,” Bennett said in a statement.
Green Street, represented by attorneys at SmithAmundsen, has not filed a formal response. Green Street declined to comment on the litigation but said the firm maintains a $500 million development pipeline over the next five years.
“Green Street, under the leadership of Phil Hulse and Kevin Morrell, was and is uniquely positioned and qualified to undertake and complete this crucial component of the ongoing revitalization of Midtown and the Grove,” said Green Street spokeswoman Liz Austin. “The unique mixed-use redevelopment of the Armory progresses forward, unabated by COVID-19 or other minor hurdles.”