Hitting the "Reset" Button the McKee Development Plan

Real Estate Development is a complex animal with many moving and often divergent parts. Despite the inherent complexities, that set each project apart, there are several ingredients that ring true of any development project regardless of their size and scope For example; the developer has to cobble together a financing package that inspires confidence with his bankers. In addition, there is a political dimension that has to be accounted for. As land use, property acquisition, availability of public funds and tax credits all require the support of the political class. In addition to the financial and bureaucratic reality, there has to be community “buy in” which in the best case scenario, starts long before the first loan application is made, or shovel has been planted. And finally as those who envisioned the Ball Park Village to accompany the new Busch Stadium discovered, the state of economy in general and the commercial and retail market in particular always has the potential to wreak havoc with the most grandiose of visions.

And if the economic hurdles weren’t high enough, there are also social and cultural considerations that cannot be ignored. Especially in St Louis where racial polarization and distrust seem to be engrained in our civic DNA, therefore any developer with plans for North St. Louis, but fails to include this communities’ social profile in his planning, is subject to a rude awakening. What that means is that accounting for a long standing feeling that North St Louis has consistently gotten the short end of the stick is for a developer, “job one”. Secondly a developer that does his homework would be aware that many in the African American community hold a general distrust toward “outsiders” who they believe come to their community with a singular drive for profit with little regard for the needs of the community. Because many of these “outliers” gained entrance into the community by first establishing their bonafides with African American leaders, this distrust may also extend those same leaders who paved their way. In either case those concerns will continue to be a factor in how receptive the African American community is toward any major development plan. North city feels it has been burned too often by failed development plans and therefore their desire to impose their will on the development project of West County developer Paul McKee is rooted a history of failed promises. And because Mr. McKee’s failed to gain community support on the front end, his development vision has become the cause célèbre for community activists and residents.

As this billion dollar battle over the future of five hundred acres of prime city real estate grinds forward, there was little doubt that one of the battlegrounds would be the courts. As such, the North side development plan ended up in the court room of circuit judge Robert Dierker. Judge Dierker’s recent ruling which essentially served as a judicial “thumbs down” for the development project has put a huge dent in McKee’s plan. Struck down by judicial gavel was the controversial tax incremental financing or TIF part of the plan that was approved by the Board of Alderman in October. Judge Dierker’s decision was based on his opinion that the statutes that govern TIF applications should not have been applied to the Northside Development Plan. While not as complex as those exotic Wall Street financial instruments like derivatives, and default swaps, TIFs were started in California in the fifties to creatively attract financing to a development. Since the seventies TIFs have increased in usage to compensate for the reduction in federal development funds. The premise of a TIF is the tax revenue of undeveloped parcels will increase once those parcels have been fully developed, and the a portion of those increases can then be used to pay for public improvements that the municipality may see as desirable, but without the TIF would not have the money to pay for without increasing taxes. In making his ruling, Judge McKee smacked down the Board of Alderman for overreach, and therefore sent Paul McKee scurrying back to the drawing board. Whether Mr. McKee can truly deliver on hi vision without the TIFs remain to be seen.

Meanwhile opponents of the development project cheer the ruling but they have also cited the potential for massive housing disruption via eminent domain as a reason to oppose the bill, McKee’s promises of equitable treatment notwithstanding. Others, who opposed the plan, have raised the specter of gentrification, which has been a long standing code word that has provoked fear in depressed communities. Yet as these battle lines were drawn, blurred, and redrawn, the fact remains the status quo i.e. an underdeveloped community with boarded up buildings and vacant lots is not a tenable solution. Which means a “win win” solution will require both sides to revisit their lines in the sand and find some meeting of the minds that will allow something positive to happen.

As I have watched this issue unfold I am reminded of the health care battle that took place last summer. President Obama saw the insurance industry and their supporters as proponents of the status quo, as his health care plan would impact industry profit margins. As a result, opponents of health care adopted a strategy of fear using terms like socialism, and “death panels” to arouse unenlightened passions. President Obama often conceded there were some troublesome aspects of the legislation and often encouraged legitimate debate – on the merits. What President Obama got in return was an almost intractable status quo intent on effectively throwing the baby out with the bath water. Over the past eighteen months, I have seen some interesting parallels in the health care debate and the McKee Development plan. In both cases, those in opposition talked on how they wanted change, and were only opposed to it on merits, yet in both cases they used fear, and scare tactics to rouse support. In both cases the opposition often was framed around the word no, with very little offered as a viable alternative. And ultimately, just as it was in health care, what is needed is for the emotional volume to be turned down, so that real proactive, and solution based discussions can take place.

Is Paul McKee the perfect developer? He would probably be the first to tell you no, and acknowledge that he has made mistakes in the roll out of the plan which have served to undermined his efforts. But then again, recent history of development in North St Louis will reveal a long line of dubious development deals that lacked the type of communal “due diligence” that is taking place now. Which begs the question why some who in the past were avid supporters of development projects that had even more red flags then this one, now are strident in their opposition of this plan? That said, Judge Dierker's decision ultimately provides an opportunity for both sides to hit the proverbial “reset” button. The glare of the spotlight on the plan has revealed some flaws in the project that need to be attended to, yet for those to oppose the plan and refuse to work with Mr. McKee, exposes them in the minds of some as obstructionist with their own axes to grind. In addition to hitting the “reset” button, Judge Dierker’s ruling provides an opportunity for all stakeholders to sit back down at the table and grind out their differences.

As with all multi million dollar ventures, this one has attracted both those who should be at the table as well as those who shouldn’t be there. Unfortunately for the process, what this project has not attracted is an honest broker, one with no “skin in the game” who can galvanize community support, while making sure the communities’ concerns are assuaged. That middle man should have enough gravitas with both sides to remind them that this development project needs to happen. For a city with a damaged psyche, we should be striving to lug a cumbersome, but needed project over the finish line. We need trusted leaders to provide context and perspective and remind this community on where we have been, and were we are going as a community, and how great communities find a way to get hard things done.

Over one hundred years ago, St. Louis hosted both a World’s Fair and the 1904 Olympic Games. One hundred years ago, the “Gateway to the West”, was one of the crown jewel cities of an emerging nation. The twenty century however has not been kind to St Louis as witnessed by the decades of decline which included significant population loss, the exodus of major corporate headquarters, and an overall diminishing of civic pride. Yet, despite all those “negatives” there appears to be a new pulse of revival as evidenced by a more livelier downtown nightlife, emerging neighborhoods like South Grand, the expansion of the Loop, the hosting of the NCAA Men’s Final Four in 2004, and the Baseball All Star Game in 2009. The fact that St. Louis is a major contender for the 2012 Democratic National Convention speaks volumes to the hard work done by many to reverse the trends. This revival would not be possible without a combination of vision, cooperation, and a willingness to work through tough issues.

Yet North St. Louis stands out as a source of derision, and division, due in large measure to a history with dysfunction, poor planning, and a poor political leadership. In addition, this project exacerbates what seems to be an irreconcilable chasm between many in North St. Louis and current Mayor Francis Slay. Mr. McKee’s development project is not a panacea for all that ills this community, and while massive in scope, it does not include other depressed areas like the Ville, Greater Ville or Walnut Park. Ultimately one would hope that Mr. McKee’s project can serve as a template for impactful development and unleash a critical mass of revival that could spread further North to other afflicted areas. Time always is of the essence, although Mr. McKee says Judge Dierker’s ruling notwithstanding, he plans to forge ahead. Hopefully he stays true to his word, as in the Obama Health care plan, we should be mindful that if we miss this opportunity, the legacy may be another generation of neglect in North St. Louis as the rest of the city moves on.