JEFFERSON CITY — A measure that could force ÃÛÑ¿´«Ã½ taxpayers to pay off developer Paul McKee’s lender should the city acquire his property through eminent domain was roundly criticized at a state Senate committee hearing Tuesday.
A tailor-made government bailout for one bank is how Peter Hoffman, managing attorney at Legal Services of Eastern Missouri, characterized the bill, which is sponsored by Sen. Nick Schroer, a St. Charles County Republican.
“(It’s) a special piece of legislation designed to compensate one single lender who provided a questionable loan to a disreputable developer,†Hoffman told the committee. “Now that the development has failed … it has come to Jefferson City asking for a bailout.â€
“Requiring taxpayers to bail out failed real estate development sets a bad precedent for community projects throughout the state,†Hoffman said.
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Hoffman helped craft the that grants the city the authority to take some of McKee’s properties through eminent domain. Those properties are mostly clustered around the new National Geospatial-Intelligence Agency campus, which is nearing completion.
At the hearing, Hoffman didn’t name McKee’s company, NorthSide Regeneration, or his lender, Bank of Washington. But others did, including the city’s top development official.
“McKee has left the properties he has acquired in a state of disrepair. They’re vacant and overgrown. The buildings that were once standing are now fallen. They are a breeding ground of crime and unsafe conditions,†said Neal Richardson, president and CEO of ÃÛÑ¿´«Ã½ Development Corporation and executive director of the city’s Land Clearance Redevelopment Authority, or LCRA.
The LCRA is eliminating blight and spurring redevelopment and can use eminent domain to this end.
“In the cases of the vacant property, if it’s owned by NorthSide Regeneration, you have the whole wall that’s falling down and a toilet hanging out,†said Sheila Rendon, a lifelong resident of the ÃÛÑ¿´«Ã½ Place neighborhood.
“We never asked for our neighborhood to be targeted for crime, arson, drug use, homicide,†Rendon said. “That’s what these properties are being used for.â€
Jerry Carmody, an attorney who represents the LCRA in ongoing litigation with Bank of Washington and worked on the NGA land acquisition, said it would have been impossible to acquire the 100 acres needed for the NGA project under the terms of Schroer’s proposal. The city would not be able to afford the properties if it was also responsible for the mortgage debt.
Carmody said Schroer’s proposal was directly connected to McKee’s NorthSide Regeneration project:
“The Bank of Washington lent millions and millions of dollars to acquire properties for the NorthSide Regeneration project,†said Carmody. “So we’ve got the bank and we’ve got NSR sharing the proceeds, getting the money and handouts — subsidies, tax credits. Now we just want to say, ‘Let’s have all the liens paid for.’â€
No one testified before the committee in support of the bill.
Schroer told the committee the bill was intended to “mitigate the financial risk borne by banks in blighted areas.â€
“When a city seizes property owned by a developer without adequately compensating for the mortgage lien, the burden of financial loss ultimately falls squarely on the bank,†he said.
Schroer argued this creates a disincentive for banks to invest in communities in need of revitalization.
The St. Charles County Republican originally filed the legislation after the ÃÛÑ¿´«Ã½ Board of Aldermen approved a new redevelopment area surrounding the NGA, which allows the city to acquire unoccupied land and properties with code violations.
Bank of Washington could lose out on repayment if the LCRA acquires NorthSide Regeneration properties by eminent domain and the land is valued at less than the bank is owed.
Tuesday’s hearing was scheduled after an earlier attempt by Schroer to advance his measure as an addition to a larger bill, which led to a heated argument on the Senate floor between Schroer and Sen. Karla May, D-ÃÛÑ¿´«Ã½.
“These big-time developers come in and get millions of taxpayers money — millions — and do nothing to the land, and try to wait for some other things to happen in order for them to get a big payday,†May said at the time. “And then large tracts of our community look like Third World countries.â€
This legislation is Hous Added after the legislative term ended: The bill did not have a vote in committee after the April 2024 hearing.
View life in ÃÛÑ¿´«Ã½ through the Post-Dispatch photographers' lenses. Edited by Jenna Jones.
