A Decade of NorthSide: Land Assemblage, Abandonment and Vacancy

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1201 Cass Avenue - St. Louis, MO

On May 22 of 2005 I was in final negotiations to purchase the property at 1201 Cass Avenue, known as the Brecht Butcher Supply Company Buildings. It would have been my second property and I was excited about the potential. A gorgeous 100,000+ sf building just north of downtown St. Louis. Built in the late 1800’s, the building was well preserved with original historic architectural detail both inside and out. It still had running water, electric, a working elevator, and even a functioning sprinkler system.

I had tentative acceptance from the seller and was awaiting paperwork to seal the deal. Hours went by and I hadn’t heard anything. Finally the seller called and said, we’re sorry but we just received another offer for over twice as much and although we wanted to sell it to you, we can’t pass up the other offer.

The building sold, then sat vacant. A project that would have moved forward, sat motionless. Fifteen months later the building burned to the ground. The center building burned October 6, 2006, the city’s Building Division issued an emergency condemnation October 10, and a demolition permit for all three buildings October 31 of that year, turning the complex into another vacant lot.

1201 Cass Avenue - St. Louis, MO

I found out a few years later, thanks to the work of Michael Allen (Preservation Research Office), that the buyer with the higher offer was Paul McKee, who was assembling land for what would come to be known as NorthSide. As we now know, this was not an isolated incident. It’s one of many that make up a pattern of systematic destruction (AKA “Land Assemblage”).

Politicians and McKee proponents told us that the north side was a wasteland and that the only solution was to start over. I didn’t believe it then and I don’t believe it now. The north side was already beginning to see grassroots regeneration on it’s own before that momentum was halted by McKee. In addition to the damage done to properties he acquired, there’s been considerable collateral damage to quality of life and property values of adjacent properties.

It’s clear that McKee only ever valued the land. Not the buildings, people, history, or culture of the north side. The NorthSide development project is 1,500 acres, within which McKee purchased approximately 1,000 lots via shadow companies. The City of St. Louis then sold him approximately 1,000 more. As McKee continues to default on his debts and obligations, and communities are left in the wake of his debris piles, what is our recourse? Where do we go from here?

1201 Cass Avenue - St. Louis, MO

1201 Cass Avenue - St. Louis, MO

1201 Cass Avenue - St. Louis, MO

1201 Cass Avenue - St. Louis, MO

1201 Cass Avenue - St. Louis, MO

1201 Cass Avenue - St. Louis, MO

1201 Cass Avenue - St. Louis, MO

1201 Cass Avenue - St. Louis, MO

1201 Cass Avenue - St. Louis, MO

1201 Cass Avenue - St. Louis, MO

1201 Cass Avenue - St. Louis, MO

1201 Cass Avenue - St. Louis, MO

1201 Cass Avenue - St. Louis, MO

1201 Cass Avenue - St. Louis, MO

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  • tbatts666

    Paul McKee’s plan was too big to work.

    I met McKee once, and I think He had his heart in the right place. He had experience making mono-cultural places off the side of freeways successful. Unfortunately His places are likely doomed to fail as those locations seem to be characterized by a reliance on single employers. (big company fails and takes the entire community with it).

    He thought his skills would work in northside.

    McKee wanted to save his soul with northside. He put his money in the project, he put his skin in the game.

    what northside needs now is incremental, small scale development. We need many many small entrepreneurs taking risks, And policy shifts that make that kind of development happen.

  • Didn’t McKee also receive tax subsidies for the north side projects?

  • onecity

    Two words: Code enforcement. Two more words: stiff fines. Two final words: condemnation sale.

  • John R

    That photo of the view from the roof just makes me sick.

  • Mike F

    There is a special Circle of Hell waiting for Paul Mckee and other speculators.

    Parasites.

    • JZ71

      At least the speculators are trying, in spite of long odds. If you really want to place blame, look at the city and the LRA (sitting on hundreds of vacant sites and vacant properties) and look at all the owners and tenants who have either chosen to leave the city (over the past 75 years) and/or new ones (who choose to locate anywhere but in the city). All these places are vacant and decaying because people can’t be bothered with them, with the crime, with the earnings tax and with the upcoming $15 minimum wage, not because speculators are trying to make a buck! Developers may be greedy SOB’s, but they’re not stupid – if they can make money on a deal, they will. The only reason why all these vacant properties remain vacant is FEW PEOPLE WANT THEM!

      • rgbose

        So McKee was not stupid in taking on properties no one wants, even though someone wanted the one in this post?

        • JZ71

          If Deem and McKee both wanted this (or any) property, the buyer willing to pay the most almost always ends up owning it (as happened here). If Deem didn’t want to beat McKee’s top price (which was twice what Deem was apparently willing to pay), he has only himself to blame. And no, what happens to the property after the transaction closes should have no bearing on the seller’s choices. But if it does, it CAN be made a part of any contract (if both sides agree).

          I get it, it’s depressing and frustrating to see quality craftsmanship like this being destroyed, but it all boils down to $$$$. If it’s truly that important, “show me the money!” Don’t expect sellers to take pity on your poor financial position and wishful thinking. At least McKee was (and is?) willing to put his money behind his vision (as much as we might not agree with it), in spite of “competing” offers. You and others may not agree with it, but what most sellers do agree with is top dollar for whatever they’re selling! And as far as McKee being “stupid” or not, only time will tell.

          As far as the taxpayers being used by McKee to “inflate property values”, it’s more a case of unequal access to capital (and a separate discussion). It appears that the private seller, here, got exactly what they wanted – top dollar. While I’m certainly no fan of the government “playing favorites”, the key to revitalizing any neighborhood is increasing property values. That requires planning, that requires holding property owners accountable for Code violations and that requires dealing far more aggressively with trespassing and vagrancy – the building didn’t burn down because McKee had the water turned off, the building burned down because vagrants started a fire! Yes, McKee should have done a better job of securing and managing, but the primary cause was “stupid” vagrants, not a “stupid” speculator!

          • John R

            The only person with a poor financial position in this story is Paul McKee, not Jason Deem. And nobody is blaming property owners for accepting the higher bid; however, many are disgusted with the “Distressed Areas Land Assemblage Tax Credit Act” that was specifically crafted to underwrite this type of nonsense.

          • Alex Ihnen

            Right. The issue is that the higher selling price was subsidized by me and you. The sale didn’t increase property values because it wasn’t a real price. Handing someone millions of dollars to buy buildings that do have a legitimate market price (someone willing to buy and utilize the building), is crazy. Now, if McKee had bought this property a decade ago, put together a deal for a hotel tower, retail, residential, or new office space, then torn it down and built something else…well, maybe some wouldn’t have wanted to see the building go, but it would have been something. We all understand the tax credits to be a market distortion. In this case, the big pile of money was put in one person’s hands and the result has been devastating.

          • JZ71

            I both agree and disagree. “We all understand the tax credits to be a market distortion”, but that applies to Historic Tax Credits, as well – they “distort the market”, increasing the values of buildings that are just old, at the expense of investment in the construction of new, ground-up projects. It all depends on your perspectives and priorities. When McKee acquired this property, a decade ago, in 2005, it was 4 years prior to getting any “subsidies” from the taxpayers. He bought it at the peak of the market, paid top dollar, and carried them until 2009, when the certification was approved: http://showmedaily.org/Certificates%20of%20value/Part4of6.pdf . McKee took a gamble, and won – the taxpayers, “me and you”, did hand him a big check, but there were no guarantees when he closed. The higher selling price wasn’t directly subsidized, but it was “subsidized” much later on (much like how individual home mortgages are “subsidized” and new developments are “subsidized” with TIF’s).

            I’m sure that the author of this piece would have been a much better steward of this property than Paul McKee, but glossing over the fact, ten years later, that McKee was willing to pay twice as much as the author was, in 2005, just sounds like sour grapes: “Finally the seller called and said, we’re sorry but we just received another offer for over twice as much and although we wanted to sell it to you, we can’t pass up the other offer.” Heck, I’d be bummed, too, especially seeing it burned and, ultimately, demolished. But the simple answer isn’t blaming McKee or the process, the simple answer would have been finding a way to match McKee’s offer! McKee has not created a monolithic land assemblage – it looks more like Swiss cheese on a map – and he seems to be more than willing to work around established, successful uses (unlike the stadium authority, but that’s a whole ‘nuther discussion). Yeah, his financial pro forma was different than Deem’s, but both are developers and speculators, and both want to buy low and sell high. Just because one is more willing to wrap themselves in historicism than the other doesn’t make them better people or better developers!

          • John R

            Sure he gambled that his legislative play would pay off but it wasn’t much of a risk. You get what you pay for out of Jefferson City.

          • JZ71

            And I, too, have little affection for the DALATCA, just like how I have little affection for Historic Tax Credits. Underwriting “this type of nonsense” depends on one’s perspective.

          • John R

            Only one of those was crafted for a single person to enable them to speculate on a tremendous scale by providing reimbursement for 50% of land acquisition and other perks, (thus enabling that person to offer double what more reasonable developers would bid on properties if need be, as here.) Meanwhile, only the other has been broadly used to improve tens of thousands of historic properties across rural and urban Missouri. I have no problem if someone doesn’t support HTC’s, but clearly the program isn’t nonsense.

          • Alex Ihnen

            Correct. Historic Tax Credits have utterly transformed St. Louis – and KC, and many other places in Missouri – AND it’s only used when a building is put back into productive use.

      • moorlander

        Hard to blame LRA.

        • Is it? Without a comprehensive plan in place, LRA’s primary purpose should be to remove abandoned properties from its property rolls for active redevelopment, first and foremost. If they’re turning down legitimate offers to speculate on a “speculator”, then that’s an inherently flawed (and dangerous) system.

          In this particular instance, Jason wanted to purchase the property for a real, near-term redevelopment. At the very least, LRA could have given him the “right of purchase”, during which he and his company would be responsible for basic weather-proofing/maintenance while fully fleshing out funding/development plan(s). If properly maintained, prepared and filed within a pre-set amount of time, then LRA should complete the transaction. That’s a strong display of ownership by both sides.

          It isn’t rocket science. Carte blanche was never a term of Mckee’s support from the City nor of his Land Assemblage tax credit. And first rights shouldn’t be an acting principle in his dealings with LRA.

          • Alex Ihnen

            In this case, Jason wasn’t buying from the LRA – at least that’s not my understanding.

      • Alex Ihnen

        In my opinion, this story points to something very different. Here, a responsible buyer wanted to purchase a building, invest in the city, and create jobs and revenue. The City (and state) subsidized and enabled a speculative buyer to gain control on it and let it burn and be demolished. Surely the biggest issue is a lack of a market for these properties. But in this case, there was a market, our leadership inflated the price with our tax money. Imagine if this building had been rehabbed, that would have created a market around it. Hindsight may be 20/20, but there are many examples of McKee being handed, or helped in getting, property that has deteriorated, when there were other options.

  • Susan St. Louis

    Argh! you are breaking my heart.