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Crystal City mine on verge of becoming retail development

Crystal City mine on verge of becoming retail development

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Crystal City • A harmonious partnership thrived for decades between the sand mine where Tom Kerr wants to build an underground entertainment district and the neighboring site where Jim Kennedy wants to build an iron ore smelter.

The mine, dating to the late 1880s, provided sand to the glass factory that stood across Plattin Creek on the proposed smelter site.

But today, their proximity may be a less than favorable arrangement as the two men try to bring their ambitious plans to fruition.

Kerr, president and owner of the Fiesta Corp., paid $850,000 for the sand mine in 2007. He estimates he has spent about $2 million on it, including ripping out old rail lines and installing enough electricity to provide dim lighting in the dark mine.

The Jefferson County Council late last month gave Kerr the zoning change he needs to push his project forward. But getting to that point has been fraught with problems stemming from the proposed smelter, a project also hitting hurdles.

Kennedy, president of Wings Iron Ore Co. of Sullivan, has struggled for several years with plans to build and operate a smelter on the city-owned site of the former Pittsburgh Plate Glass plant, which was shuttered in 1990.

Kennedy signed a 100-year lease with the city in 2007 to build the smelter — the same year Kerr bought his mine just a few hundred yards away. Kerr filed suit that year against Kennedy's company and the city to gain an easement for a road leading to his mine.

The sides have hammered out a tentative settlement to the access issue. But that doesn't mean the two projects will happily co-exist. Kerr had hoped to use Kennedy's smelter site to build a hotel, marina and parking garage. As it stands, Kerr will have to attract restaurants and clubs to his mine with an industrial operation potentially next door.

"I'd love for it not to be there, but I don't own the property and he does," Kerr said of Kennedy's plans.

City raises concerns

Currently, swallows share the sandstone mine with five volleyball nets (sand courts, of course) and a pole-vaulting pad used by a club. Neon Budweiser signs hang on the sandstone walls above tables where spectators watched a martial arts cage fight last fall.

A concrete floor covers the sandy ground near the entrance to the 200-acre mine — about the size of the Washington University campus. Ceilings as high as 40 feet tower above the sand-covered floor that is at spots 300 feet below ground.

The mine sits just outside the Crystal City limits, and the city asked Jefferson County officials to reject the zoning change, citing a lack of details in Kerr's plans.

City officials worried that the "entire civic burden" of the project — such as providing emergency services — would fall on Crystal City while creating no direct revenue for the city, according to a March 24 letter from City Administrator Andy Hixon to the Jefferson County Planning and Zoning Division.

The letter cited the city's concerns that too much about the project was unknown. For example, a chemical processing plant could sit next to a restaurant inside the mine. (Kerr says that will not happen.)

"With no restrictions in place, this is a very real possibility," the letter states. "Once again, fear of the unknown."

Crystal City Mayor Tom Schilly, a strong supporter of the smelter project, declined to comment on Kerr's project, as did Claudia Kim, administrator of the Twin City Area Chamber of Commerce.

It's unclear what effect a smelter could have on Kerr's complex.

In an agreement with the city, Kennedy promised no coal would be burned at the smelter and diesel-fueled trucks would idle no longer than five minutes on city streets.

The smelter is to be built and running by the end of 2012, under the terms of Kennedy's lease with the city. Kennedy has said that won't happen. Lawsuits and difficulties obtaining financing have held up the start of construction.

But Kerr is hopeful he'll have tenants in his mine by the end of this year. He wants to lease out about 150 lots. He stopped short of calling it an underground mall, but the concept is the same. He wants to attract restaurants and dance clubs. He hopes sports also will be a big part of the complex, offering everything from skateboarding and off-road biking to senior citizen competitions in shuffleboard and bowling.

Kerr hopes to put a well-ventilated parking garage in the mine, as well as offer off-site parking with shuttle service. The site is about 30 miles south of St. Louis.

A venture of such magnitude needs to have focus, said Robert F. Buchanan, a director at the small equities research firm Avondale Partners in St. Louis.

"The question I would have is what is the one compelling draw for the consumer?" he said.

Buchanan said finding tenants to fill such a huge space could be difficult at a time when there's a surplus of space available for lease.

Underground elsewhere

A handful of cities offer subterranean business districts. Kansas City's SubTropolis, which touts itself as the world's largest underground business complex, is made of limestone. It houses movie reels and commemorative stamps as well as a U.S. Environmental Protection Agency office.

Tenants at Rock City — a limestone quarry in Valmeyer that once housed a mushroom farm and stored food, water and medical supplies during the Cold War — include a restaurant supply company and a 200,000-square-foot refrigerated warehouse.

Rock City has roads, street lights, sewer lines, fire hydrants and electric and phone service, funded in full or in part by federal grants. About 500,000 square feet of the old mine is used to store government records.

"I think they're all a little different, but it's certainly worked out well for us," said Joe Koppeis, developer of Rock City, said of underground developments.

He said the average temperature inside is 58 degrees and bumps up to about 60 when people are there, eliminating the need for heating and cooling systems (although the space needs to be dehumidified during summer).

The Crystal City Underground is to be built beneath the River Hills subdivision, where Kerr lives. Most of the mine's ceiling is about 200 feet below the houses, he said.

None of those neighbors voiced opposition to the Jefferson County Council about Kerr's plan. About a third of the dozen or so people who came to the council meeting in support were subdivision residents.

Richard Townsend, who lives on the peak of a knob that would overlook the complex's entrance and who serves on the Twin City Area Chamber of Commerce, said he does not expect the mine to be an eyesore or an inconvenience.

He also said the mine will be good for the county's tax base.

Said Townsend, "I love to see work and jobs coming to Jefferson County."

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