ST. LOUIS • A company partially owned by the attorney who helped write the Missouri tax credit law that largely benefited his longtime client, Paul McKee, sold less than an acre of vacant ground north of downtown to the developer for $463,000, triggering the issuance of $230,000 in state tax credits.
The 2012 transaction, between Alter Realty Co. and McKee’s NorthSide Regeneration, is another example of how McKee turned to companies affiliated with close associates and used seller-financing to trigger the issuance of tax credits under a now lapsed state program.
Stone Leyton & Gershman partner Steve Stone, McKee’s longtime attorney who helped write the 2007 Distressed Area Land Assemblage tax credit law, was listed as the only member of the board of directors of Alter Realty in Missouri secretary of state business filings dating back more than a decade. Those records also list Stone as president, vice president, treasurer and secretary.
The transaction was detailed in Missouri Department of Economic Development, or DED, documents released last week to the Post-Dispatch.
Like transactions involving Bottle District properties, as detailed in the accompanying story, the sale of the seven Alter Realty lots near the old Carr School at Biddle and 14th streets relied on seller-financing, meaning McKee essentially wrote an IOU to obtain title to the property. He reported it as a $463,000 sale to the DED, which issued him tax credits based on 50 percent of the reported purchase price.
City property records indicate the land is appraised at a combined value of $48,100.
In an emailed response to questions to Steve Stone from the Post-Dispatch, Stone Leyton attorney Paul Puricelli said Alter Realty was wholly owned by another of Stone’s family’s companies, Stone & Alter Real Estate. The statement said Stone only owned 25.4 percent of Stone & Alter at the time of the December 2012 sale and that Stone “was not involved in the negotiations with Paul McKee.”
The law firm sent tax return documents to the Post-Dispatch from 2012 indicating Stone owned 25 percent of Stone & Alter.
The statement said Sidney L. Stone, Steve Stone’s late father, “managed the day-to-day operations of both Stone & Alter and Alter Realty” and handled the negotiations with McKee. Steve Stone had “no ability to influence Sid’s negotiations, both because Steve owned only a minority interest in Stone & Alter and because, to put it bluntly, that is the way Sid managed his business affairs,” according to the statement from Puricelli.
“As was Sid’s practice, Sid negotiated the sale of the Alter property directly and at arms’ length with Paul McKee,” the statement said. “Frankly, Sid felt that the timing was not right for a sale of Alter Realty’s land holdings, that (NorthSide’s) assemblage would create more value for all the real estate within the redevelopment area in the years to come. Sid resisted a sale and negotiated a hard bargain.”
Real estate records show Sidney Stone signed the property transfers and seller statements on behalf of Alter Realty. In those records, he listed his position as vice president.
He died four months after the sale closed, in April 2013. He was 90.
The note McKee signed over to Alter Realty to obtain the property has passed its initial maturity date, originally in December 2015.
Puricelli’s statement on behalf of Stone says that Alter Realty agreed to extend the maturity date of the loan to July 1, 2019. The statement says modification agreements and seller-financed transactions “are very common throughout the commercial lending industry.”
“Stone & Alter (and Alter Realty) believed, and continue to believe, that (NorthSide’s) attraction of (the National Geospatial-Intelligence Agency’s western headquarters) to its redevelopment area will put (NorthSide) in the position to pay this obligation in full,” the statement concludes.