Part of a running series on why St Louis' major newspaper is doing a disservice to the city and the region.
This article from yesterday's Post-Dispatch is amazing. It's the second hit piece that the paper has had on a developer who has purchased a variety or properties in the city of St Louis. Not mentioned in the article is the fact that most of the neighborhoods in which his properties are located are in conditions slightly better than properties in Baghdad or Mogadishu:
Developer pays city to 'treat' eyesoresWhat an @SSHOLE!!! He pays his bills and therefore the city isn't allowed to seize his land! Man, it's almost as if the city would prefer it if instead of being a wealthy developer, he was some poor, inner city family without any assets so they could get their hands on the land and sell it at a huge profit. How dare this guy mess up their real estate racket!
By Jake Wagman
ST. LOUIS POST-DISPATCH
Monday, Jul. 30 2007
ST. LOUIS — It's a pattern the city has seen over and over on unkempt vacant lots: City workers mow the lawn, clear the trash, send the bill, get no payment back, go to court, take the land.
Then the city hopes to find a buyer who will do something positive with it.
But prominent developer Paul J. McKee Jr. and his collection of more than 500 properties in northern St. Louis are different.
He has acres of land. Yet he pays his bills — more than $260,000 to the city since 2004.
And by paying, he keeps the land, meaning the city essentially acts as the maintenance and demolition crew on his properties.
Meanwhile, McKee's properties continue to generate complaints from neighbors and city officials, who say they are havens for crime and neglect. They are also irked because McKee has not publicly detailed what he plans to do with the land.
Is McKee required to publicly declare what he plans to do with the land?
No less frustrating, they say, is that the city continues to cut the grass, pull weeds and haul trash away from the properties.
Mary Kasten, a resident of the Old North St. Louis neighborhood, lives across from a McKee-owned vacant building where the windows are boarded up and city workers have hauled away debris.
"The city keeps that property up — and it makes me mad," Kasten said. "We work every day and pay taxes. And you know, I just don't think it's fair."
Actually, McKee has to pay the city to perform those services, but Kasten thinks that she is paying for the upkeep through her taxes. I'm sure Wagman and the city aren't going to dispel that myth since it wouldn't benefit them politically if Kasten were knowledgeable about what was actually occurring.
And for those who have never been to St Louis, North St Louis is one of the worst part of towns. Kasten may be complaining about a McKee property, but there are plenty of other dumps that surround her. Here's a satellite view of her neighborhood, showing her proximity to I-70 and the multitude of vacant lots, boarded up homes, etc.
Although he has shelled out thousands of dollars for upkeep, the payoff for McKee could be substantial. A bill pending in Jefferson City, one that McKee's lawyers helped write, could result in a tax credit windfall on his properties.WingHaven in O'Fallon, MO is a great community and one of the reasons that O'Fallon was voted one of the Top 50 Best Places to Live in the country by Fortune Magazine. And, of course, the city of St Louis doesn't need any help from some developer - since they're doing such a bang-up job in turning the city around, what with the highest murder rate in the country, etc, etc.
McKee defends his actions, saying that his own workers also take care of the land and that he has a policy of paying the city promptly for its services.
"The city's crews have for decades cut grass and weeds to the city's standards on vacant lots belonging to the city and scores of property owners," McKee's lawyer, Steven Stone, said in a statement.
McKee has developed several residential and commercial properties around the area, including the WingHaven community in O'Fallon, Mo. He also is chairman of BJC HealthCare.
Over the past several years, McKee has bought up property throughout the Old North St. Louis neighborhood. McKee made the purchases through a string of connected holding companies that, at least until recently, allowed him to operate anonymously.
A possible reason for those acquisitions emerged earlier this year, when the Legislature approved a plan that would have provided tax credits for developers who gather large portions of land in distressed areas. Tax credits can pump cash into construction when developers sell the credits to wealthy individuals or companies.
Another possible reason is that McKee wanted to make sure that the city didn't seize the properties (because they were blighted) and sell them to him at inflated rates. Instead, he paid the actual property owners for the properties and the city is ticked that they didn't get any new revenue.
The legislation, criticized by those felt it was tailored for McKee, was rolled into a larger economic development bill that was vetoed by the governor. But Republican leaders in Jefferson City have proposed a revised version of the tax credit plan that could be debated at a special session in upcoming weeks.
McKee's properties — mostly abandoned buildings and empty lots — have been
cited repeatedly for peeling paint, missing windows, crumbling porches and
collapsed walls. The city's Building Division has sent violation notices for at
least 200 of his properties.
The president of the Old North St. Louis neighborhood organization has said
that McKee's properties are "synonymous with neglect and abandonment." A city
neighborhood stabilization officer, who patrols and makes reports on problem
properties, identified about a dozen McKee properties as being linked to
crimes, including drug dealing and prostitution.
Actually, Old North St. Louis is synonymous with neglect and abandonment, as well as drug dealing and prostitution.
Mayor Francis Slay has defended his administration's enforcement of problem-property laws on McKee's land, saying the developer has not received special consideration.
Slay has met several times with McKee, who talked in general terms about commercial and residential development on the properties, according to the mayor's office.
"Anybody can come into our city and buy property," Slay said recently. "We treat him, and we've been treating him, like we treat everybody else."
The Mayor is being reasonable, it seems. This means that the true source of this hit piece is one of the infamous alderman of St Louis, who didn't get his cut of the racket.
That, a city attorney suggests, is part of the issue: McKee's deep pockets have allowed his companies to escape the usual remedy the city has for nuisance landlords. Matt Moak, associate city counselor in charge of the problem property unit, called McKee's companies "a different animal."
"They are above the law in the sense — only in the sense — that they've got the money to pay whatever the court throws out," Moak said.
And this is a bad thing? He is getting "special treatment" because his property isn't being seized - because he's paying his bills?
What kind of warped world am I living in?!?
$37,422 STILL OWEDThe nerve of that guy!!! Doesn't he know how things are done around here? I'll let McKee in on the process:
When a vacant property becomes a safety hazard or an eyesore, the city will haul debris away or cut the grass. If it's an empty building that has become a safety hazard, the city will contract with a private demolition crew. In either case, the city sends the landowner the bill.
Landowners often do not pay — a hefty demolition fee can be more than the property itself is worth. The city will then move to foreclose on the land, in hopes of later passing on the property to a buyer who will build on or develop it.
McKee's companies, though, almost always pay the bills.
- Do some basic maintenance on an abandoned or dilapidated home.
- send an exorbitant bill to the homeowner. If they fit the city's demographics, they'll be poor and unable to pay a dime
- After they haven't paid, seize the property and kick the people out
- hold the property forever until someone has the cojones to invest in the area. Since the entire neighborhood is a high-crime area, best bet is to get Lacy Clay and any other cronies to start lobbying the federal government for yet another HUD project in the City.
- Sell the land at a huge profit (since acquisition cost was almost nothing)
Take a property in the 1700 Block of Elliot Avenue, here in 2004 the city charged $8,800 to demolish a building owned by a McKee holding company, Blairmont Associates. After the bill went unpaid for two years, the city oved to seize the property in August.
But, according to Moak, just as the city was about to file a foreclosure lawsuit — a final "courtesy letter" had been sent — the company paid the bill.
"Most property owners get the bill and they throw it in the shredder," Moak said. "Blairmont just writes a check."
That jerk... paying his bill. Let's take a look at the 1700 block of Elliot Avenue. Vacant lots and dilapidated properties abound. There are also vacant lots everywhere in this Old North St Louis neighborhood. By the way, note that the streets are all named after presidents. This is a very dangerous part of town. The few businesses in this area have metal fences with concertina wire on their roofs to keep people from stealing anything of even marginal value.
City records show that McKee, as of last week, has been billed $298,440 since 2004. He has paid most of that bill, but McKee currently owes $37,422, of which $14,464 has been due for longer than 90 days and been sent to a collection agency.
Stone said that his client was unaware of the overdue payments and that he would take the "matter up with the city immediately."
"We have a policy of paying promptly," Stone said in the statement. "We suspect the city is pleased with our payment performance. In fact, we suggest you ask them."
He's right, according to Forestry Commissioner Greg Hayes, whose department does the maintenance on vacant properties.
"Our collection rate with Mr. McKee's companies is nearly 100 percent," Hayes said. "Our collection rate with everyone else is 20 percent."
This further points to some alderman (or perhaps some other developer) who is the source of this negative story.
PAYING A PREMIUM
McKee isn't saving money by having the city perform the upkeep on his properties. On demolitions, for instance, the city bids out the work and adds 10 percent to the cost when billing the property owner.
Likewise, several lawn care services say they would charge less than the city's cost for cutting the lawn around an abandoned building: $108.
"That's a little bit more than we would probably get — or anyone else for that matter," said Steve Beauchamp, who runs Steve's Lawn Care in Florissant.
For a vacant lot, the city charges less, about $32 for an average lot.
Either way, McKee hires private contractors to board up and secure his buildings in the city, according to his lawyer.
"Mr. McKee does not rely solely on the city," Stone said.
Even if McKee is overpaying for maintenance, he might be able to get back some of those costs, if legislators oblige. The original version of the tax credit bill would have allowed the developer to use tax dollars to wipe out half the acquisition costs — including maintenance and demolition fees — up to five years after the property is acquired.
Whether the Legislature will resurrect that portion of the measure is unknown.
But Rep. Paul LeVota, D-Independence, the incoming minority floor leader, believes a version of the tax credit bill is likely to pass, one that would reduce the number of required acres in half, from 100 to 50. That, LeVota said, could make the tax credit available to developers around Missouri.
"Not just a cash grab for one person," LeVota said.
If McKee holds these properties and can wipe out the acquisition costs for them (assuming the bill passes within 5 years, something that is not guaranteed), he still will have paid something for them. Which means that he still has some idea on how to make money on these properties in N. St Louis. In all likelihood, he's planning on either selling the money to another developer (perhaps what I would recommend) or he might actually be planning on putting an actual development in this blighted community.
I hope for the latter, but given the way that the paper and the local politicians are treating him, I wouldn't be surprised that (if the bill passes) he simply dumps the properties for a modest profit instead of going through the hard work of developing it. Not that he doesn't know what he's doing when it comes to development - Winghaven certainly proves that he does, with its unique combination of various price levels for homes, local businesses, and local schools. No, the hard work in developing this area will not be the construction, but the greasing of palms and convincing the local politicians that improving the area is a good thing.
ARC: St Wendeler