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Paul McKee got his tax credits.

In the final hours of 2009, Missouri officials awarded the developer $19.6 million, a key piece of financing for McKee’s ambitious plan to rebuild a big chunk of north St. Louis.

The funds come in the form of tax credits that pay McKee back for buying hundreds of properties across two square miles of the city’s north side over the last few years. He now plans to sell the credits to investors and use the cash to pay down debt.

McKee has said time and again that the credits are crucial to getting his $8.1 billion NorthSide project off the ground this spring. He pushed St. Louis officials to approve a redevelopment plan in time to submit an application to the state for 2009. In recent weeks, McKee has been scrambling to meet the Department of Economic Development’s requirements.

"Finally we have arrived," the developer said in an e-mail Monday.

"The credits play a huge economic role in the success of the Northside (project)."

McKee actually applied for roughly $25 million for 2009, said department spokesman John Fougere, but the program is capped at $20 million a year. In all, the developer hopes to tap $83.6 million in those credits over the next five years.

They were awarded through the Distressed Areas Land Assemblage Tax Credits program, which Missouri lawmakers created in 2007 to reimburse developers for assembling large tracts of land in poor urban neighborhoods.

McKee is the only developer in Missouri known to have acquired enough land to qualify, and he has been widely seen as the prime beneficiary of the credits since their inception free business cards. McKee’s was the only request the state received under the program in 2009, Fougere said.

The program has drawn legal fire from critics of McKee. Two north St. Louis residents filed a lawsuit in Cole County challenging the distressed areas tax credits, calling them an improper use of state money because they give incentives not for job creation but simply for the assembly of land. That case is set for trial Jan. 27.

In his application, McKee reported that his NorthSide Regeneration LLC has spent $25.1 million buying properties and plans to spend $66 million more. It also projected $1.7 million in interest costs and $415,000 for maintenance annually.

McKee said the $19.6 million he received Thursday will be used to pay down debt — his companies have borrowed $27.6 million from the Bank of Washington, in Washington, Mo., to fund NorthSide so far. That will then make it easier to finance new projects on the land. He is also negotiating nearly $400 million in tax-backed financing with the city of St. Louis, to pay for new roads, sewers and other infrastructure across the project area.

A redevelopment deal signed in November gives him until April 1 to reach the first of those deals with St. Louis aldermen.

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