JEFFERSON CITY â A state senator from western Missouri wants to bring back a tax credit that helped developer Paul McKee assemble more than 200 acres of north St. Louis real estate before the controversial program, which faced allegations of fraud and abuse, expired in 2013.
Sen. Denny Hoskins, R-Warrensburg, filed a bill this month to reinstate the Distressed Area Land Assemblage Tax Credit, a program tailored for McKeeâs NorthSide Regeneration project when legislators first created it in 2007. Over the next six years, $43 million of the $47 million in credits the program distributed went to NorthSide, with the remainder sent to the entity overseeing Joplinâs redevelopment after the 2011 tornado.
âEven though Iâm from the west part of the state, I want to make sure that St. Louis city is one of the economic hubs of the state, and I want to make sure it continues to grow and prosper,â said Hoskins, who is running in the Republican primary for Missouri secretary of state.
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Nick Dunne, spokesman for Mayor Tishaura O. Jones, said the city was not involved in advocating for the programâs return and only became aware of the legislation after the bill was filed.
Hoskins said over the summer he toured the area around the under-construction National Geospatial-Intelligence Agency, where McKee still owns some 1,600 parcels and 200 acres and saw how NorthSide used the program to assemble much of the site where the NGA decided to build.
NorthSide put together about 40% of the site where the NGA located and made the initial pitch for the intelligence agencyâs campus. But NorthSide had purchased a sizeable chunk from the city itself, and St. Louis officials then had to buy back land it had sold to NorthSide just a few years prior to finish acquiring the other half of the site for the NGAâs future campus.
Then, in 2018, there were allegations of tax credit fraud.
The Post-Dispatch and lawyers for the city ultimately revealed at least $11.7 million in âpaper-onlyâ transactions where NorthSide acquired property for no money down. Those included transactions with the family of McKeeâs lawyer, Steve Stone, and with past development partners Bob Clark and Larry Chapman, whose companies split with NorthSide $9 million in tax credits from a no-money-down transfer of the undeveloped Bottle District downtown.
The FBI investigated the deals in 2018, but a five-year statute of limitations on wire fraud had elapsed and no charges were ever brought. Former Missouri Attorney General Josh Hawley sued NorthSide that year for tax credit fraud.
But shortly after he succeeded Hawley as attorney general, now U.S. Senator Eric Schmitt settled the case for $324,000 and agreed to waive all future claims against NorthSide.
Schmitt had accepted some $150,000 in campaign contributions over the years from Stoneâs companies and entities tied to McKeeâs lender, Bank of Washington, and its CEO, L.B. Eckelkamp. Schmitt, who also served in the Legislature, also was one of the last legislators to try and revive the distressed area land assemblage tax credit, carrying bills backed by McKee, his lawyers and the bank.
Hoskins, like Schmitt did, chairs the Missouri Senateâs economic development committee. Hoskins noted he is a certified public accountant and said the billâs language could be strengthened in committee to address any concerns from his colleagues about fraud and abuse.
âIâm open to any and all taxpayer protection measures to make sure thereâs no fraud in the program,â Hoskins said.
Hoskinsâ bill as written makes no changes to the programâs language except to extend the sunset date from 2013 to 2030. The provisions that made NorthSide the only eligible developer remain, though Hoskins said he has also spoken to other developers elsewhere in the state who could be interested in the program.
âAny bill that goes through my senate economic development and tax policy committee needs to make sure we take care of rural Missouri,â Hoskins said. âCertainly that is my intention that this program can be used across the state of Missouri.â
But criteria in the bill make it difficult for areas outside of the stateâs cities to qualify, particularly a provision requiring an average of four lots per acre across an eligible development area, which must be at least 75 acres in total.
NorthSide itself no longer meets one of the criteria â a valid redevelopment agreement. Former Mayor Lyda Krewsonâs administration canceled the cityâs agreement with NorthSide after the tax fraud allegations. NorthSideâs lender, Bank of Washington â represented by Stoneâs firm â is still suing the cityâs economic development arm over the cancellation of the development agreement. The five-year-old lawsuit is scheduled to go to trial Sept. 30 and could potentially reinstate the development agreement.
But McKee says he doesnât plan to use the land assemblage tax credit even if it is brought back. Other developers could assemble qualifying sites if the legislation passes, he said in an email. He said Hoskins visited the area because he was interested in economic development around the NGA.
âI explained what a significant role the distressed area land assemblage tax credit played in assembling the land and he became very interested in how it could play a role across the State and in other Cities including other parts of St Louis!â McKee wrote.
The legislation is