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Corporate Welfare / Subsidies

McKee’s Northside Plans Fail, City to Buy Land for NGA

By Joseph Miller on Jul 7, 2015

Back in 2009, city government had grand plans for a massive redevelopment of North Saint Louis City. To that end, Northside Regeneration LLC (led by developer Paul McKee) cashed in tens of millions in state subsidies to buy private property and received hundreds of city properties for very low prices. The hope was that Northside LLC would use those properties, along with hundreds of millions in promised local tax breaks, to bring new residential and business developments to North Saint Louis City.

Six years have passed without even the initial parts of the plan coming to fruition. With Paul McKee encountering legal issues it was doubtful whether it ever would. And now, finally, it seems that the city is giving up on McKee. Unfortunately, they’re not giving up by withdrawing the promise of further tax incentives, but by buying many of Northside’s properties to give to a federal agency.

This buyback is part of the city’s efforts to retain the National Geospatial-Intelligence Agency (NGA), which is considering leaving Saint Louis City. To keep the agency, the city plans to gift it a new site in North Saint Louis City, an area where Northside LLC was supposed to bring new development. According to St. Louis Public Radio, the proposed NGA site contains 360 Northside-owned properties. Northside LLC purchased 260 of those properties from the city for a total of $600,000 between 2009 and 2011. The rest were bought from private owners, but Northside LLC received reimbursement from the state to the tune of $3.5 million.

To assemble the land for the NGA site, the city plans to mortgage existing city property to purchase the aforementioned Northside properties for $20 million. Perhaps relieving Paul McKee and Northside LLC of a large chunk of the city will be good for the region in the long run, but all these actions leave a number of important questions unanswered:

  1. With much of the property originally slated for the Northside Redevelopment Plan now being bought back, what is the status of the remaining properties and tax subsidies?
  2. Will the city be able to buy back the land at the price they sold it, or will McKee (or his creditors) profit from the transaction?
  3. Will Northside LLC be forced to return the state tax subsidies it received to buy private land?

More on this to come. 

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Joseph Miller

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