Lawsuit challenges St. Louis loans, tax breaks for One City Center project
Written on November 25, 2009
To Val Sklarov, giving tax breaks and millions of dollars in city loans to move a law firm a few blocks across downtown is basically un-American.
But is it legal?
That’s now a question for the courts to decide, after Sklarov filed a lawsuit last week challenging St. Louis city incentives for the redevelopment of One City Centre, the $29 million first step in bringing back a trio of under-used buildings in the core of downtown.
Sklarov and his wife are Chicago real estate investors who own 500 N. Broadway, the building whose largest tenant — law firm Lewis, Rice and Fingersh — has agreed to move into One City Center if it is fixed up. If that happens, Sklarov said, he will be forced into bankruptcy or foreclosure, and so he’s crying foul over about $14.6 million in tax credits and loans to help developer SCR Investments rehab the building, and about a $300,000 loan a city board gave the law firm for moving expenses.
"We’re in America," he said. "They’re not supposed to be using public money to compete with private companies."
Once home to TWA’s corporate headquarters, One City Centre has been deteriorating for years. It’s down to one major tenant. And without city help, it’s hard to see anyone fixing it up cash advance loan. That’s what Barbara Geisman, St. Louis’ deputy mayor for development, told the Missouri Development Finance Board last month when she asked for a $5 million state loan to help finance the deal. If improvements are made, Lewis, Rice and LarsonAllen, an accounting firm now in two St. Louis County offices, would move into the 25-story tower, making it nearly half full. The city’s goal is eventually to get it 90 percent occupied.
But much of that would come at the expense of 500 N. Broadway, Sklarov said, producing just another under-used office building that will need city help. His lawsuit charges that city and state officials acted in an "irrational, arbitrary and capricious" manner by not offering the incentives to all downtown buildings; and that changes to One City Centre’s redevelopment plan, last updated when it was owned by now-defunct Pyramid Construction, never got proper notification or a public hearing.
The lawsuit was filed in Cole County. City officials would not comment until they had seen a copy of it, a spokesman for Mayor Francis Slay said Tuesday.
Filed in: finance.