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McKee’s Hazelwood development owes millions in court judgment, taxes

(Maria Altman, St. Louis Public Radio/Mapbox, OpenStreetMap)
The site of the Hazelwood Logistics Center in north St. Louis County.

It’s not the first time.

Developer Paul McKee is facing a $17 million lawsuit over defaulted loans connected to the Northside Regeneration project in St. Louis, and he owes more than $750,000 in property taxes to the city.

But in previously reported but somewhat forgotten news, McKee and his company, Hazelwood Logistics Center, LLC, were ordered to pay a bank $32 million in a federal judgment back in 2011. So far, just a small fraction has been paid. The developer also has lagged behind in paying taxes on the property since the legal wrangling began over the project in 2009.

The Hazelwood Logistics Center is a 151-acre site located near Lindbergh Boulevard and Missouri Bottom Road in north St. Louis County. It was supposed to become an industrial and logistics park but remains mostly undeveloped after problems stalled the project for years.

BancorpSouth, a bank based in Mississippi, filed suit in 2010 against Hazelwood Logistics Center and McKee, claiming $28 million in loans, plus interest, were in default. The original loan for $36 million came from The Signature Bank in 2006, which later merged with BancorpSouth. The loan was only partially paid when it came due in 2009.

In 2011, a federal judge ordered McKee and Hazelwood Logistics to pay BancorpSouth nearly $32 million. Court records show BancorpSouth has recovered only about $125,000 so far.

McKee and Hazelwood Logistics Center blame Environmental Operations, Inc., and two other companies involved in, what they call, the failed environmental remediation of the site. In an emailed statement, McKee’s spokesman Jim Gradl said their claims against Environmental Operations and the other contractors exceed $40 million.

"We are working on a global resolution for the Hazelwood project, which will resolve both the BancorpSouth judgment and the environmental litigation," Gradl said.

BancorpSouth also filed suit in federal court in 2011 against Environmental Operations, Inc.; Geotechnology, Inc.; and the Clayton Engineering Company over the cleanup efforts on the Hazelwood site. McKee’s company filed complaint against all three companies as an intervenor. That suit is still pending.

Meanwhile, the property taxes for the Hazelwood Logistics Center have piled up. Known as the Hazelwood Commerce Center until 2008, the company owes at least $1.5 million in taxes dating back to 2012.

Following the lawsuits, McKee failed to pay property taxes on the site on an annual basis, calling it a “strategic decision.”  The developer has paid enough to keep the land from being sold by St. Louis County at auction. While tax records show the land will be included in the August auction, McKee appears ready to keep it off the auction block.

"As in prior years, we expect the taxes will be paid prior to any tax sale," Gradl said in a statement.

For now, the land in St. Louis County sits mostly vacant waiting for a resolution. 

Follow Maria on Twitter: @radioaltman

Maria is the newscast, business and education editor for St. Louis Public Radio.

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