McKee’s Bottle District Deals Generated Millions in Tax Credits, But No Development

By on August 6, 2018

From St. Louis Post-Dispatch:  In May, during a trial to determine the value of a north St. Louis building acquired through eminent domain, lawyers for the city pointed to unusual real-estate transactions involving developer Paul McKee.

Those transactions — between McKee and the owner of the now-razed Buster Brown building and the owners of the Pierce-Elkay building on North 15th Street — were shams, the city claimed. They were designed to maximize the amount of Distressed Area Land Assemblage, or DALA, tax credits McKee could claim from the state by inflating property values, city lawyers alleged, and conducted without any cash changing hands by using seller-financing, or IOUs, from McKee.

After those revelations, Mayor Lyda Krewson said she was “shocked” and called for an investigation. The Missouri Department of Economic Development, or DED, said it was “very concerned” about the issues raised at trial. And Missouri Attorney General Josh Hawley filed suit to recover some of the tax credits issued on Pierce-Elkay.

In June, a few weeks after the trial, the city declared NorthSide Regeneration — the company McKee created to redevelop a large swath of north St. Louis — in default of its redevelopment agreement, a matter now being contested in court.

But there’s another, far larger deal that shares key similarities with the Buster Brown and Pierce-Elkay transactions.

A Post-Dispatch examination of city real estate records and Missouri DED documents has raised new questions about McKee’s 2011 and 2012 purchase of the Bottle District from companies connected to people at big construction and development firms Clayco and CRG Real Estate Solutions.

Read more.

 

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