ST. ANN • Consolidating several St. Louis County offices at the former Northwest Plaza was supposed to save county taxpayers $10 million.
At least, that was the justification in June 2016, when a letter from County Executive Steve Stenger’s interim chief of operations asked the County Council to approve the unprecedented real estate deal — a two-decade commitment to rent more than 150,000 square feet at the renovated mall in St. Ann, now known as the Crossings at Northwest.
The deal came without any competition and emerged from closed discussions between the St. Louis Economic Development Partnership and the owners of the complex, brothers Robert and P. David Glarner, who have made $365,000 in contributions to Stenger’s political campaign — an unparalleled sum in county politics and more than a tenth of what he’s raised altogether.
The move to the Crossings would allow the county to shut down offices with expiring leases or with structural or safety problems, saving up to $10 million over the 20-year lease, Glenn Powers, then Stenger’s interim chief of operations, told the council.
But a Post-Dispatch analysis of the county’s real estate contracts, obtained by the newspaper through public record requests, reveals that the lease does not save money and has the potential to cost millions.
Stenger’s staff could provide no evidence that before agreeing to the Crossings lease, the county conducted a side-by-side analysis of other options, from renovating current offices to renting other locations or building a new office.
Previous public estimates valued the deal at around $50 million, but the newspaper’s analysis shows that taxpayers will pay at least $69 million, and possibly more.
The Post-Dispatch found:
• The deal cost taxpayers from day one. The county is paying more for the Crossings than it was paying for offices it replaced. And expenses will go up nearly 4 percent per year for nine years, then 3 percent for five years.
• Taxpayers are still paying for county offices long vacated. The county moved out of some buildings months or years before their leases terminated and will eat $3 million in rent for empty space in Maplewood, Hazelwood and Northwoods.
• County taxpayers paid the Crossings owners more than $300,000 extra last year to cover its share of the property taxes at the mall, even though the owners’ taxes are already refunded via tax-increment financing.
• The lease offers virtually no opportunity for the county to back out.
Stenger has repeatedly denied that the Glarners’ gifts to his campaign influenced the deal, and said the “Post-Dispatch narrative concerning my campaign contributions is misleading and tiresome.” And, his campaign staff noted, the Glarners have also given to council members, albeit in much smaller amounts. But the combination of a massive real estate deal — and seemingly reciprocal campaign contributions — has cast a long shadow over his reputation as the gifts pile up.
“People will wonder if the offices were located there because of the contributions or on their merits,” said David Kimball, a political science professor at the University of Missouri-St. Louis. “I think given the size of the contributions, it’s fair to wonder that.”
Retired political scientist Lana Stein said the practice of donating to campaigns is part of a political climate in which “you scratch my back, and I’ll scratch yours,” and said the practice casts a shadow over nearly every elected official.
“It’s a kind of corruption, but that doesn’t mean that everyone that takes part is personally corrupt,” she said.
The Glarners said through a lawyer that they have given to Stenger “because they believe he is an effective leader for the region.” They said donations were not tied to the Crossings lease.
The St. Louis County Council voted 6-1 in July 2016 to approve the deal. That night, Hazel Erby, a Democrat who represents the 1st District, criticized the lack of transparency that led to the deal, but said after touring the new office space she “fell in love with it” and didn’t feel her concern about the process “should penalize the boost that this will bring to the economy in … North County.”
Councilman Sam Page, a Democrat who represents the 2nd District, remarked that the county was getting a “better space” for “a great value.”
The lone dissent was from 7th District Councilman Mark Harder, a real estate broker who said he doubted the claim of $10 million in savings. He said he would have felt better if Stenger returned the Glarners’ contributions.
Several county government departments moved into the office last year, including the Board of Elections, the Division of Workforce Development, and a satellite office of the county assessor. The new site is popular with county employees who work there. The site is safe, attractive and high-tech, with plenty of parking and elbow room. And it adds life to a blighted former shopping center the Glarners rejuvenated with tens of millions of public subsidies.
Stenger said the consolidation “is beneficial for taxpayers and county employees” and said he was proud of the benefits the community is seeing from the economic revitalization of St. Ann. His staff pointed to flaws at other locations, from unsafe parking lots to mold.
At $12.98 per square foot, with annual increases and the added burden of insurance, maintenance and taxes, the county did not get a remarkable bargain for office space in north St. Louis County.
A massive office space is available for lease nearby in Bridgeton for about $9 per square foot. And the Glarners have listed another large office space in the Crossings for $10 per square foot, with a term of just five years. The county said the Glarners did $10 million in work to customize the space for county offices, but had no receipts.
Since the council approved the lease, its relationship with Stenger has soured. Now council members say they voted without all the information about how much the deal really cost — part of a pattern in a Stenger administration that reveals information selectively. The council is planning a series of hearings starting this month.
“This is an onerous lease,” said Ernie Trakas, a Republican who represents the 6th District. “Why would the county enter into an onerous lease? There are a lot of questions that we have. These will be ongoing and comprehensive hearings — it’s not going to be fluff. We’re going to try to bring before the committee every relevant individual to help us understand how the process went from beginning to end.”
Page said the moribund former Northwest Plaza had been a “source of great anxiety” for the county and St. Ann. “They really didn’t have a good plan to bring it back, and we were all pretty motivated to try and find a solution, and this seemed like it was a good one,” he said.
“But I made it clear to everyone on the county executive’s staff that this had to be a good deal for the county. It had to save us money, and if it didn’t save us money we shouldn’t do it. They insisted that it did and we gave them the benefit of the doubt.”
In a meeting with a reporter, Stenger’s advisers insisted the effort to move county offices into the former Northwest Plaza started before his election, providing the newspaper with articles and clips showing that former County Executive Charlie Dooley had strongly supported public subsidies for revitalizing the mall with a mix of uses, including government.
Dooley said Friday he never made commitments to move county offices there. “Talk — that’s all it was,” he said. Moving whole departments such as Workforce Development and the Board of Elections was “never in the conversation.”
He harshly criticized the length of the deal. “That makes no sense,” he said. “They paid for nothing.”
It’s not clear to what extent the Stenger administration compared the Crossings deal to other options.
The Post-Dispatch asked a Stenger aide on Jan. 25 for copies of any cost analysis that was done prior to agreeing to a 20-year lease, or for any documentation to support the claim that up to $10 million could be saved. A one-page spreadsheet was provided.
Stenger aides provided a new analysis last week that suggested the Crossings lease would save $8.5 million over 20 years. And, they said a more secure building would save more than $2 million in security over that time.
But the newspaper pointed out an omission on the staff’s analysis. While the cost of the old spaces factored in all expenses, the cost of the Crossing lease omitted a big one: taxes.
A tax error
The county paid $306,000 to the Glarners for its share of the 2017 property tax bill, a proportional share of the $1.3 million the Crossings owners paid in property taxes.
That’s likely to be the smallest bill the county will ever pay; it still could end up owing taxes for last year.
The Post-Dispatch discovered in tax records that the county assessor’s office mistakenly appraised a large portion of the complex — that is currently finished and occupied — at only 3 percent of its taxable value.
Crystal Ulett, the deputy assessor, said her staff had also caught the error and was working on it. It was not clear if the 2017 tax bill would be amended.
“We are not able to say for certain what the increase of the entire property will be at this time because all of our numbers for that are still being worked,” Ulett said.
But the tax bill will make a huge difference in how much taxpayers have to pay for the mall. Even if there were no change, and the county paid $306,000 each year for the next 19 years, the lease would cost $66 million. With the $3 million the county is committed to paying for vacated space, that total is $69 million.
That’s the exact same amount — $69 million — that Stenger’s staff projected would have been spent on the county’s former leases, with annual increases of 4 percent, if it had not moved offices to the Crossings.
But if the county’s tax bill this year went to $500,000, and increased at the same 4 percent used in the county’s model, the taxpayers’ burden would swell to $77 million by the end of 2027.
Of course, the Crossings could be a better deal than moves county officials might have made later on to upgrade offices.
Stenger said in a statement that as a CPA, “of course” he knew improvements to the Crossings would result in increased taxes for the county.
“But those taxes benefit the County, school districts and other public entities, which in turn increases home values for a result that far outweighs incremental increases in our payments as a tenant,” he said.