Eminent domain looms over University City residents as Costco nears completion
Only the driveways remain on Richard Court. Until recently, 18 tidy brick homes ringed this cul-de-sac in University City, but now even the street sign has been removed, replaced by fencing and a new sign directing deliveries for an under-construction Costco.
It’s not just this street that's changed in the shadow of the Costco. Nearby are two nearly identical cul-de-sacs, Elmore and Orchard, that are undergoing similar transformations for the $190 million development known as Market at Olive.
City officials have touted the potential for tax revenue, and in 2019 the city council committed $70 million in tax increment financing to get the project rolling.
But as construction continues, residents watching the big-box retailer rise above their community are becoming increasingly worried about eminent domain, a legal process that allows governments to force the sale of private property.
Governments like University City's can use this process to clear space for needed public services, like roads or utilities. But in other cases, they can use eminent domain to clear property for private developers, even those just out to make a profit.
For years, University City officials have assured residents that eminent domain would not be deployed against them. In 2018, Mayor Terry Crow told the St. Louis Business Journal that the city “will not use eminent domain on any owner-occupied residences. Period.”
But as the development progressed, eminent domain has indeed been used to buy up several small businesses. Developers sought to negotiate buyouts with homeowners, and residents have held on through years of negotiations and false starts. Today, most who maintained homes in the development area have left, relenting to the reality of their changing neighborhoods.
However, several homeowners have dug in their heels — and this is a problem for developer Larry Chapman, the president of Seneca, a commercial real estate firm, and one of the key investment partners who purchased the Market at Olive development in 2021.
Chapman has a ready solution to clear the remaining homeowners: Use eminent domain to force the sales, with the price determined by an outside commission. But this tactic is one University City had spent years assuring residents would not be deployed.
Yet, on June 13, Chapman faced the University City council with a proposal. He told members that the development group had acquired 34 homes on the north side of Olive Boulevard within the first phase of the development area.
Many of the homes have already been demolished. However, he said negotiations had broken down with the last three residents on Elmore and Orchard.
Addressing the council, Chapman said: “What we're asking for tonight, and I don't like it any more than you do, is to discuss the process of eminent domain on the remaining properties. Sometimes when parties can’t agree on price, the only way is to get a third party involved.”
Chapman explained that stalled negotiations couldn’t be resolved by simply paying the higher prices demanded by the holdout residents. Doing so, he warned, would create future problems for the development, as he’s hoping to buy up more homes for the second phase of construction.
“We still haven't acquired the properties on Mayflower. And we really want to do that,” he said.
“That's where we're trying to do the apartment complex, we started working that up. I've reached out. I’m going to start meeting with the Mayflower owners again. We hope to get that done later this summer. However, there are some smart people over there. Some of them are represented by counsel, they're watching everything we do.”
Chapman cautioned that if the other homeowners believed they could get higher prices from the developer, “they’re all going to want the same thing.” And that would be bad.
“It will absolutely kill the project and kill the project dead,” he said. “Which I don't think is in our best interest.”
'Under no circumstances'
If you drive south from what was once Richard Court, past the once-vibrant international restaurant district known as Jeffrey Plaza, and then cross Olive, you’ll arrive at Mayflower Court. Just like Richard, Orchard and Elmore to the north, this cul-de-sac features 18 brick homes.
The house near the end, with its blooming front yard garden and distinctive blue shutters, belongs to Nichole Angieri.
As Chapman suggested during the June council meeting, the residents of Mayflower are closely following the development progress. She said the meeting left her with a sickening feeling.
Throughout years of ongoing development, this had been the one certainty she relied on: that eminent domain would not be used to take her home. Now, the developer was telling the council that this wasn't true.
“Before we even entered any negotiations with the previous developer, we made sure to get in writing and verbally from our councilman, from our city manager, from our mayor, that eminent domain would not be used on private homes,” she told St. Louis on the Air. “It was a very specific request. It was one that was guaranteed to us over and over again. And I am talking about these individuals meeting me on my front porch, standing in the backyard. With our neighbors sitting in my living room face to face. I was told under no circumstances would eminent domain be used against private homes.”
But circumstances have changed. In 2018, after two years of talks with the previous developer of Market at Olive, Angieri says she and other residents on Mayflower had agreed to deals that would sell their homes to Novus Development.
Then, she says, Novus didn’t show up to make good on its commitments. Three years later, with a new investment group taking over the Market at Olive project, Angieri suggests the residents of Mayflower have little willingness to return to the negotiating table.
“At that point [in 2018] everyone on the block had gotten to a mental, emotional and financial place to make that decision. And then without any warning, without any explanation, it just didn't happen. And so in 2021, when we got another inquiry from the new developer, basically, the block had no appetite for engaging in this sort of thing again.”
Angieri is far from the only one who felt misled by the previous developer. Bob Mepham, founder of Bob’s Seafood, claims Novus gave him several offers, but “they weren’t real.”
Bob’s Seafood was ultimately sold through eminent domain, a process that first involves the city condemning a property. An outside commission then determined the price. Mepham was forced into retirement after more than 40 years of business.
“They come up with some scheme. Sometimes they use ‘highest and best use’ as an excuse to take somebody's property and put it in something they think will give them more tax revenue,” he said. “It seems like corruption.”
As for University City, city manager Gregory Rose told St. Louis on the Air that the city has not changed its policy on eminent domain. In fact, the redevelopment agreement the city first signed with Novus in 2019 allows for eminent domain to be used “as determined by the City Council in its sole and absolute discretion."
Rose said the city does not want to use eminent domain “in any instance” and asserted that the cases now being pursued by the developer do not represent the broken promise described by Angieri and other residents. (On the city’s official website, an FAQ section about the Market at Olive development states: “The City will not use eminent domain under the TIF law to condemn owner-occupied residential property. The City may use eminent domain for other properties, but only when necessary after significant efforts to acquire property by private negotiation have been exhausted.”)
Rose noted that the developer has successfully negotiated sales with more than 50 homeowners.
“Our preference is that the developer and the property owner would be able to reach agreement on the value of each property. And let's face it, in most cases, that has occurred,” he said. “Regarding eminent domain, certainly the council has been clear that they're extremely reluctant to use it. But they do believe that there are appropriate times when they should be allowed to consider it. At this point, eminent domain for owner-occupied housing has not been used. And they are hopeful that they won't have to use it.”
As residents on Mayflower wait for the developer to restart negotiations, they can do little but stand by to receive the offer for the homes they don’t actually want to leave.
Rose also told St. Louis on the Air that the developer will not need to use eminent domain on one of the targeted properties on Elmore and Orchard. That homeowner has agreed to a sale price.
The negotiations on the remaining two homes, Rose said, are “very close.”
“St. Louis on the Air” brings you the stories of St. Louis and the people who live, work and create in our region. The show is produced by Miya Norfleet, Emily Woodbury, Danny Wicentowski and Alex Heuer. Avery Rogers is our production assistant. The audio engineer is Aaron Doerr.