Costco development brings eminent domain to residents of college town

Only the aisles remain on Richard Court. Until recently, 18 tidy brick homes surrounded this cul-de-sac in University City, but now even the street sign has been removed, replaced with construction fencing and a new sign directing deliveries for a Costco in construction.

It’s not just this street that has changed in the shadow of Costco. Nearby are two nearly identical cul-de-sacs, Elmore and Orchard, both of which are undergoing similar transformations amid the $190 million development known as Markets at Olive.

City officials touted the potential for much-needed tax revenue, and in 2019 the city council committed $70 million in tax increment funding to get the project off the ground.

But as construction continues, residents watching the big retailer rise above their community are increasingly concerned about eminent domain, a legal process that allows governments to force the sale of private property. .

Governments like University City can use this process to free up space for needed public services, like roads or utilities. But in other cases, it can use eminent domain to free up ownership from private developers, even those just looking to make a profit.

For years, University Town officials assured residents that eminent domain would not be deployed against them. In 2018, Mayor Terry Crow say it St. Louis Business Journal that the city “will not use eminent domain on owner-occupied residences. Period.”

But as development progressed, eminent domain was indeed used to buy out several smaller companies. Developers sought to negotiate buyouts with landlords, and residents held firm through years of negotiations and false starts. Today, most of those who maintained homes in the development zone are gone, giving in to the reality of their changing neighborhoods.

However, several owners have dug in their heels – and that’s a problem for developer Larry Chapman, the president of Seneca, a commercial real estate company, and one of the main investment partners who bought the Markets at Olive development in 2021.

A yellow ‘X’ marks a house slated for demolition in University City.

Chapman has a ready-made solution to clear the remaining owners: use eminent domain to force sales, with the price determined by an outside commission. But that tactic is a college town that spent years ensuring residents wouldn’t be deployed.

Still, on June 13, Chapman faced the college town council with a proposal. He told them that the development group had acquired 34 homes on the north side of Olive Boulevard in the first phase of the development area.

Many houses have already been demolished. However, he said negotiations had failed with the last three residents of Elmore and Orchard.

Addressing the council, Chapman said: “What we are asking tonight, and I don’t like it any more than you, is to discuss the eminent domain process on the remaining properties. Sometimes, when the parties cannot agree on the price, the only way is to involve a third party. And that’s what we’re asking tonight.

Chapman continued. He explained that stalled negotiations could not be resolved by simply paying the higher prices demanded by recalcitrant residents. This, he warned, would create future problems for the development as he hopes to buy even 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.

“This is where we’re trying to do the apartment complex, we’ve started working on it. I’ve reached out. I’m going to start meeting with the owners of Mayflower again. Hopefully that will be done later this summer. However, there are smart people out there, some of them are represented by lawyers, they monitor everything we do.

Chapman warned that if other owners think they can get higher prices from the developer, “they will all want the same thing”. And that would be bad.

“It will absolutely kill the project and kill the debt of the project,” he said. “Which, in my opinion, is not in our best interest.

“Never”

An advertising sign "Coming soon!  Wholesale Costco" is shown attached to a fence.  Behind are the remains of Jeffrey Plaza, which housed beloved restaurants.
Jeffrey Plaza, shown here surrounded by a new fence and sign, once contained several beloved international restaurants and grocery stores.

If you are driving south from what was once Richard Court, pass the once-vibrant international restaurant district known as Jeffrey Plaza, then walk through Olive, you will come to Mayflower Court. Like Richard, Orchard and Elmore to the north, this cul-de-sac features 18 brick homes.

The house at the back, with its flowery garden and distinctive blue shutters, belongs to Nichole Angieri.

As Chapman suggested at the June council meeting, Mayflower residents are closely monitoring development progress. She said the reunion left her with a sickening feeling.

Throughout the years of continuous development, that had been the only certainty she relied on: this eminent domain would not be used to bring her home. Now the developer was telling the council that was not true.

“Before we even entered into negotiations with the previous developer, we made sure to obtain in writing and verbally from our councillor, our city manager, our mayor, that this eminent domain would not be used on private homes “, she said. Saint Louis live. “It was a very specific request. It was the one that was guaranteed to us again and again. And I’m talking about those people who meet me on my porch, standing in the backyard. With our neighbors sitting in my living room face to face. I was told that under no circumstances would eminent domain be used against private homes.

But circumstances have changed. In 2018, after two years of talks with the former Markets at Olive developer, Angieri said she and other Mayflower residents had reached deals that would sell their homes to Novus Development.

Then, she claims, Novus didn’t show up to keep his promises. Three years later, with a new investment group taking over the Markets at Olive project, Angieri suggests that the people of Mayflower are reluctant to return to the negotiating table.

“At the moment [in 2018] everyone in the neighborhood had reached a mental, emotional, and financial stage 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 request from the new developer, basically the block didn’t feel like engaging in that kind of stuff anymore.

Angieri is far from alone in feeling misled by the previous developer. Bob Mepham, founder of Bob’s Seafood, says Novus made several offers to him, but “they weren’t real.”

University City Town Manager Gregory Rose sits in his office wearing a suit.  Behind him is a detailed map of the city.
University town manager Gregory Rose insists the town has not changed its position on eminent domain. “Our preference is for the developer and owner to be able to agree on the value of each property.”

Bob’s Seafood was eventually sold through eminent domain, a process that first involves the city condemning a property. An external commission then determined the price. Mepham was forced into retirement after more than 40 years of activity.

“They come up with a plan. Sometimes they use ‘highest and best use’ as an excuse to take someone’s property and put it into something that they think will give them more tax revenue,” he said. . “It looks like corruption.”

As for University City, City Manager Gregory Rose said Saint Louis live 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 the use of eminent domain “as determined by City Council in its sole and absolute discretion.”

Rose said the city does not want to use eminent domain in any way and asserts that the cases currently 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 on Olive Development State Markets“The City will not use eminent domain under the TIF Act to condemn residential owner-occupied properties. The City may use eminent domain for other properties, but only when necessary after efforts important for acquiring property through private negotiation have been exhausted.”

An eminent domain dominates the residents of U City

Rose noted that the developer has successfully negotiated sales with more than 50 owners.

“Our preference is for the developer and owner to be able to agree on the value of each property. And let’s face it, in most cases it happened,” he said. “As far as eminent domain is concerned, the board has made it clear that they are extremely reluctant to use it. But they believe 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 hope they won’t have to use it.

As Mayflower residents wait for the developer to resume negotiations, they can do little but stand ready to receive the offer for the homes they really don’t want to leave.

Rose also said Saint Louis live that the developer will not need to use eminent domain on any of the properties targeted at Elmore and Orchard. This owner agreed to a sale price.

Negotiations on the remaining two homes, Rose said, are “very close.”

Saint Louis live” tells you the stories of Saint-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 sound engineer is Aaron Dorr.