Just like 2011, and the year before, and the year before that, developer Paul McKee closed out 2012 by receiving a big chunk of tax credits from the state of Missouri.
In two awards over the last 10 days of the year, McKee’s NorthSide Regeneration received $10.5 million in credits tied to the cost of assembling land across 2 square miles of north St. Louis.
That brings the state’s tab for the long-stalled NorthSide project to more than $40 million, a figure that could soon rise if McKee receives another credit for other purchases he made last year.
The developer declined to comment Wednesday, citing an ongoing lawsuit over the project that’s . But since being created in 2007, the Distressed Areas Land Assemblage tax credits have been a crucial part of financing for McKee, and only for McKee.
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They pay back purchase, maintenance and interest costs on buying land in poor urban areas of at least 75 acres. McKee’s NorthSide project is the only development in the state that’s big enough to qualify.
But progress on NorthSide has been slow.
The economy has crunched lending for commercial real estate, and the project’s $390 million tax increment financing package has been bogged down in lawsuits for two-and-a-half years. A have moved forward and McKee . But the “transformation†that the veteran developer first pitched to wary residents nearly four years ago still seems a long way off.
The Missouri Supreme Court could have a big say in where it goes from here. Judges heard arguments on the TIF suit in November and are expected to rule soon.
McKee has said a green light from the Supreme Court would jump-start NorthSide, allowing him to fund road and sewer work and bring in new businesses. A red light, though, could prove costly. As a condition of awarding the credits each of the last three years, the Department of Economic Development has said it will demand repayment if NorthSide’s redevelopment plan falls through. Since the credits are already sold and the proceeds sunk into the project, it’s unclear where McKee might come up with the $20 million.
But for now, he’s bringing the money in.
Much of the credits — $6 million awarded Dec. 21 — paid back his purchase of the Bottle District site north of the Edward Jones Dome. While that deal closed in late 2011, special legislation was needed this fall from the St. Louis Board of Aldermen to include the long-empty 10 acres into NorthSide’s redevelopment plan.
The measure briefly stalled in November, when Alderman Freeman Bosley Sr., who now represents much of NorthSide, said he was never consulted. But a week later, after talking with McKee, Bosley relented, and the .
Other specifics of the award were not available Wednesday — the Department of Economic Development had not yet complied with a Missouri Sunshine Act request from the Post-Dispatch for NorthSide’s application. But the $4.5 million McKee received Monday likely paid the purchase, financing and maintenance costs on roughly 800 properties he already owns in the area.
McKee applied for an additional $4.9 million, which has not yet been issued. That money likely covers similar costs — paperwork delays have held up tax credit awards to McKee in the past before being resolved. NorthSide also closed on several real estate buys at the end of the year, according to city property records, which would likely be eligible for payback under the program. His in February, however, is not.
The Distressed Areas program is capped at $20 million a year and set to expire in August. If that happens, McKee could collect at most $70 million of the program’s $95 million five-year budget.
Occasional efforts to extend it, or expand it to include other projects, have made little progress in the General Assembly. But they could be revived in the legislative session that starts Wednesday, which is expected to focus heavily on economic development.
If there are no changes to the program, though, 2013 could be the last year that McKee gets that big chunk of tax credits for NorthSide.