Developer Paul McKee and his lender, the Bank of Washington, have no claim to the land St. Louis officials plan to hand over next month to the federal government for the construction of a $1.7 billion intelligence agency campus, a St. Louis judge ruled Friday.
It’s the second legal victory city officials have won this month in a multipronged strategy to fend off claims by the developer and his bank to real estate at the site of the largest north St. Louis economic development project in decades.
Paul Puricelli, an attorney with Stone, Leyton & Gershman — the firm that has long represented McKee but is now representing the Bank of Washington — said his client plans to appeal the ruling.
The ruling comes a week after the city won the right to use eminent domain on the land slated for the National Geospatial-Intelligence Agency. Even though the land is already controlled by an affiliate of its own Land Clearance for Redevelopment Authority, the move will effectively clear the title of potential claims by McKee and his bank.
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A lawsuit from the Bank of Washington had clouded the title to the land and required the city to eminent domain real estate controlled by its redevelopment arm.Â
The legal battles began after the city in June declared McKee in default of a 2009 agreement giving him development rights to some 1,500 acres surrounding the NGA following years of deteriorating relations between City Hall and the developer and recent revelations of his use of millions of dollars in state tax credits.
The ruling Friday from St. Louis Circuit Court Judge David Dowd sided with the LCRA affiliate in a separate lawsuit seeking a court order declaring the developer and his bank can’t eventually regain their right to land they agreed to sell in 2016 for the NGA project.
The Bank of Washington had sued the LCRA affiliate in Franklin County, accusing it of fraud for putting McKee in default under its NGA real estate agreement. In addition to damages, it is seeking to reinstate its liens on some of the land sold for the NGA project.
Dowd ruled that because the LCRA has already borrowed money and spent $114 million to acquire a total of 97 acres, clean it and grade it, it couldn’t be returned to the status quo if McKee and his bank were successful in voiding their real estate contract and regaining rights to over half the land.
The bank can seek monetary damages in its Franklin County lawsuit, he ruled, but it can’t rescind only a portion of a contract.
Jack Garvey, representing Northside Regeneration, calls those claims "more heat than light."
“We never questioned their right to pursue (monetary damages),†said Jerry Carmody of Carmody MacDonald, representing the LCRA. “What’s been the focus of our attention has been the rescission claim.â€
Puricelli has said the bank will seek to convince a judge in the separate eminent domain case that it has a claim to the real estate, setting it up for another potential payment from the city. He said the ruling Friday shouldn’t affect that because it won’t be final while it’s appealed.
Carmody said the ruling Friday will give the city’s argument more fuel as it seeks to keep McKee and his lender from reaping any compensation from the eminent domain maneuver, which is designed to avoid another outlay of public money.
“We would say there has been a prior judicial declaration that they have no interest effectively in the property,†he said.
