ST. LOUIS — After an often tense hearing, a St. Louis Board of Aldermen committee narrowly advanced a controversial bill on Wednesday that could provide as much as $8 million in subsidies for a planned health care facility affiliated with developer Paul McKee.
The 4-3 vote to move the bill out of committee underscores the political sway the developer and his allies still hold in City Hall even after Mayor Lyda Krewson’s administration moved to cancel a 2009 development agreement covering 1,500 acres of north St. Louis.
Board of Aldermen President Lewis Reed, who does not always attend meetings of the Housing, Urban Development and Zoning Committee, cast a key vote in favor of advancing the bill.
Reed said afterward he was interested in an informational presentation about affordable housing that city staff gave. Asked whether he was confident the health care campus was feasible, Reed said he was “confident” sponsor Alderwoman Tammika Hubbard — long a supporter of McKee’s NorthSide Regeneration project — “has done her homework.”
Hubbard’s bill amends an ordinance approved in early 2017 that authorized the use of $8 million in tax increment financing funds for the health care facility, which is planned for the corner of Jefferson and Cass avenues on the site of the former Pruitt-Igoe housing complex. The new language adds new investors and changes the dates for commencing and completing the project.
But, as the head of the city’s economic development arm, Otis Williams, told the committee, “a lot has changed in the last two-and-a-half years.”
In June 2018, citing a lack of progress and decaying buildings, the mayor’s office said it was voiding McKee’s larger development agreement that gave the developer considerable control over a large section of the north side. The move triggered lawsuits that are still playing out in court.
At the time, questions swirled about NorthSide’s use of a state tax credit project that gave it $43 million in credits for its purchase of hundreds of properties in the area. Then-Missouri Attorney General Josh Hawley filed a lawsuit accusing NorthSide of tax credit fraud and seeking repayment of $2.6 million in tax credits. His successor, Attorney General Eric Schmitt, settled the suit in June for $324,000.
At issue Wednesday was the amount of TIF subsidy being sought for the health care facility. The first phase of the project is a three-bed urgent care McKee has talked about since 2014 that, along with infrastructure improvements, the developers say will cost around $21 million. That first phase alone would qualify for the bulk of the requested TIF — $6.4 million — according to the draft development agreement.
Up to $4.6 million of that could come from the larger NorthSide TIF beyond the site of the health care facility, an area expected to develop after the $1.7 billion National Geospatial-Intelligence Agency’s campus opens there.
Money that had built up over the last decade in the TIF fund was just used last week to make a $1.8 million TIF payment to McKee-affiliated companies for the completed GreenLeaf grocery store and Zoom gas station along North Tucker Boulevard. About $863,000 remains in the fund.
McKee’s attorneys said that a planned second phase would make the health care project a total investment of $73 million, with dozens of hospital beds and a medical school.
Williams, executive director of the St. Louis Development Corp. (SLDC), said there was “no evidence that phase two is feasible.” He said his office supports an amended TIF with a smaller subsidy for the first phase, or the proposed TIF “contingent upon the second phase actually getting funded.”
At least four lawyers from firm Stone, Leyton & Gershman — which represents both NorthSide Regeneration and one of its biggest creditors, Bank of Washington — were present for the hearing.
NorthSide lawyer Darryl Piggee, a former chief of staff to Rep. William Lacy Clay, insisted investors were waiting to go and that work could start on the second phase as soon as the first phase is complete.
“The investors haven’t considered doing phase one without phase two,” Piggee said.
Questioned about financing sources, Piggee at first didn’t want to reveal some of them because of “people behind the curtain” and said city officials have tried to undermine them in the past. Later, the group relented and said Central Bank of Kansas City would be involved in a new market tax credit transaction to help finance the project.
Mark Vincent, the longtime attorney for Franklin County and now an investor in the project, said United Bank of Union, Sterling Bank and the St. Louis-Kansas City Carpenters Regional Council would provide a combined $8 million in loans for the first phase. Carpenter’s union official Shannon Weber was in the audience during the hearing.
“As soon as you guys say go, we can close in 60 days,” Vincent said.
NorthSide lawyer Joseph Dulle said their side had waited eight weeks for a response from SLDC about their proposal, to which Williams, from the audience, exclaimed: “No.”
The final vote came after committee chairman Joe Roddy said he wanted to hold the bill so SLDC and the developer could spend more time bargaining.
Reed then asked that Aldermen Jeffrey Boyd be included in meetings if there is more bargaining. Boyd, who does not represent the area, earlier in the hearing said he thought the city’s cancellation of NorthSide’s development agreement was “arbitrary.”
“I cannot comprehend why SLDC has not made movement on this in some type of cooperative way before now,” Boyd said.
Williams, from the audience, stood up: “Do you want me to answer that?”
“No,” Boyd replied.