TIF application updated, eminent domain use softened

An updated version of developer Paul McKee’s plan for the north side of Saint Louis was made available Wednesday. The proposed $8.1 billion development, outlined in his development company’s application for $397.7 million in tax increment financing (TIF) from the city, would include 4,608 properties. If McKee and the development company, NorthSide Regeneration LLC, manage to acquire all that land, they’ll be the second-largest landholder in the city, in terms of square footage. Only the city of Saint Louis has a larger footprint.

The big news is that this version of the application tiptoes around the use of eminent domain, whereas the previous version allowed for eminent domain, although sparingly. Here is the entire text of the application regarding eminent domain:

“The use of eminent domain will not be allowed pursuant to this Redevelopment Plan. However, the use of eminent domain may be allowed (a) for a public use, as such term is used in Article XXI of the City’s Charter; or (b) pursuant to existing or additional legislation of the Board of Aldermen if the Developer has pursued and exhausted efforts to voluntarily acquire property the Board of Aldermen deems necessary to implement one or more portions of this Redevelopment Plan and deems critical to the Redevelopment Plan’s success.”

Article XXI details how the Board of Aldermen can condemn a property. According to the statute, the condemnation procedure involves a public hearing at which the property owners can argue against condemnation.

“We are not about eminent domain residential,” McKee said at a recent community meeting in north Saint Louis. Aldermen April Ford-Griffin and Marlene Davis both said at the same meeting that they were opposed to the use of eminent domain.

The updated TIF application is quite large. It spans three booklets, and contains more than 200 pages. Of those pages, 80 are devoted to a list of properties included in the proposed development. One booklet is devoted to a financial analysis of the development, and lists additional tax revenue the city can hope to receive — if the development company’s growth assumptions are correct.

For the entire project, the development company predicts an annual rate of return of 11.39 percent, with the city’s help. Without the TIF monies, the development company predicts a lower rate of return, of 6.45 percent.

“This is likely too poor a rate of return to attract private investment,” the application states.

The development company is also asking for other forms of government assistance, which contribute to its estimated rate of return. For example, the development company hopes to receive $85 million in Distressed Areas Land Assemblage Tax Credits, according to the application. Other forms of government assistance being considered are federal and state historic tax credits and Brownfield tax credits. In its previous application, the company estimated those credits to total more than $175 million.

This entry was posted on Wednesday, September 9th, 2009 at 4:09 pm. Both comments and pings are currently closed.