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The ruling is a setback for Paul McKee, whose NorthSide Regeneration development company owned property within the NGA footprint, and McKee’s lender, the Bank of Washington.

“This is what the federal government asked us to do, and it was necessary for us to do this to satisfy their requirements and regulations,� said Jerry Carmody, an attorney with Carmody MacDonald, the law firm that represents the city agency that has assembled the acreage for NGA project.

“This should put to rest any title issues that the federal government would have regarding the site,� he said.

Lawyers representing the city of St. Louis, the Land Clearance for Redevelopment Authority and the Bank of Washington argued in court Tuesday over whether the bank could stand in the way of the city’s ability to condemn its own land before handing it over to the federal government for the $1.7 billion intelligence facility.

St. Louis Deputy Mayor for Development Linda Martinez testified in court that the bank’s involvement could adversely affect the city’s ability to deliver a clean title as it approaches a Nov. 14 deadline to transfer land to the NGA.

Without clean title, the federal project could be in jeopardy, so the city used eminent domain on land already owned by its economic development arm to remove any future claim to it.

“There is the danger that Bank of Washington’s fantasies could materialize and institute a lien against a major (Department of) Defense installation,� Bob Dierker, an attorney for the city, said Tuesday morning.

But the ruling from St. Louis Circuit Court Judge Michael Stelzer both denied a motion to dismiss the eminent domain proceedings filed by the bank and granted the condemnation action, clearing it of potential future claims from the Bank of Washington.

In June, the city moved to terminate McKee’s development rights, granted in 2009, to over 1,000 acres surrounding the NGA land following new details this spring on McKee’s use of some $43 million in state tax credits issued as part of his purchase of hundreds of acres of north St. Louis land. McKee and the bank have argued that without their efforts assembling land in north St. Louis, the NGA never would have considered the area.

In July, the Washington, Mo.-based bank sued an LCRA affiliate in Franklin County, seeking to reinstate its liens on the NGA land. By putting McKee in default, the bank claims the LCRA breached an agreement struck with the bank and McKee as part of the agency’s purchase of dozens of acres the developer owned within the NGA footprint.

The St. Louis Board of Aldermen last month passed an ordinance allowing the use of eminent domain but the bank quickly filed a motion to dismiss the eminent domain lawsuit.

It accuses the city of trying to do an end run around the bank’s Franklin County lawsuit and that the city and LCRA did not conduct good faith negotiations before moving to condemn the land.

Paul Puricelli, an attorney with Stone, Leyton & Gershman, the firm that has long represented McKee and is now representing Bank of Washington, called it a “collusive effort� between the city and LCRA. He argued the city should have filed its suit specifically challenging the bank’s potential claims to the land. That would have forced it to negotiate with the bank rather than a related party.

“They don’t have any dispute with (LCRA),� he said Tuesday evening. “Their only dispute was with us, but I don’t think they wanted to make us a good faith offer.�

Puricelli said any appeal would wait until after a jury trial sets a value to the land. He said the bank would “absolutely� submit a claim on the land as the eminent domain process first moves to a commission that will set its value.

Carmody, though, said the bank and NorthSide’s bid to win some compensation from the eminent domain action is a process that can play out separately. Meanwhile, the title would be cleared once a commission is appointed and the city pays LCRA for the land.

Deputy City Counselor Michael Garvin said the city believes the title can be officially cleared by the federal government’s deadline.

The next skirmish will be over whether the bank and McKee receive payment. The city already agreed to pay $5.4 million to acquire the land from McKee and the bank. Carmody said the LCRA believes it “is entitled to 100 percent of� what the eminent domain commission awards.