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Back to plan A?
(by Rebecca S. Rivas - May 14, 2008)
Three Clayton property owners made a stand against eminent domain last year, arguing that the city of Clayton cannot take land from one business and give it to another, larger one just because it needs it.
In April, these three owners on the 7700 block of Forsyth Boulevard sold the same land they fought to protect to Barry Pessin, who owns and manages several senior-living communities in St. Louis.
One of the owners, Dan Sheehan of Dolan Realtors, said he was happy that someone sat down to negotiate a fair price without threatening to move him by eminent domain.
Whether it is Centene or some other developer, it seems that someone will always try to acquire his property, he said.
“The bottom line is that there’s an element of civic responsibility involved,” Sheehan said. “It’s not fair to keep the tenants in an uncertain state. Barry Pessin is giving them time to move, and he offered a fair price. It made sense to move at this time.”
The closing date is set for September, said Debbie Pyzyk of Kohner Properties, who also agreed to sell. The third property owner, David Danforth, could not be reached for comment.
Many people have been waiting to hear if Centene Corporation will buy that land and continue its original 2005 plan for a $250 million expansion of its headquarters in Clayton — or if it will move out of the St. Louis region completely. The signs are that Centene will remain in Clayton and revive the 2005 plan.
On May 6, the city announced that Centene has proposed a slightly modified version of the initial plan: to build a 560,000 square-foot office and 30,000 square feet of retail space on the plot of land that the three owners just sold. This development would take up a little less than a full city block.
“While we are cautiously optimistic that the mutual needs of Centene and Clayton can be met, it’s never a deal until it’s done,” said Clayton Mayor Linda Goldstein.
The city held a public forum on May 13 about the Centene project, but because of the timing, the West End Word was not able to include the information from the meeting in this story and still meet press deadlines.
Centene manages various states’ medical programs for the poor and disabled, most prominently Medicaid, and last year it reported $2.9 billion in net revenue. Its headquarters have been located in Clayton since 1997, and the new headquarters is sketched for the block west of Hanley Road, between Forsyth and Carondelet avenues.
In 2005, Centene planned to build its expanded headquarters on the property it owns and the neighboring property owned by Pyzyk, Sheehan and Danforth. When the owners didn’t sell, Clayton’s Board of Aldermen passed an ordinance deeming the owners’ properties blighted, even though the buildings were occupied and in good condition. The St. Louis County Circuit Court ruled in January 2007 that Centene could use condemnation to acquire the properties for its expansion project. However, the Missouri Supreme Court gave a final ruling in favor of the property owners last June. It was the first time in Missouri history that the state’s Supreme Court overruled a local government decision regarding blight.
After the ruling, Centene decided to move its headquarters to the city of St. Louis’ Ballpark Village, where company officials said it would create 1,200 jobs and a 700,000 square-foot office and retail space.
Centene and the Ballpark Village developers had not reach an agreement, it was announced in March, and the move downtown was called off. Once that deal collapsed, talks with Clayton restarted.
Centene would not comment on the specifics of the current expansion plan.
Pyzyk said her decision to sell her property had nothing to do with Centene. She said Pessin’s broker walked into her office in March.
“They thought the land was still worth doing a development project,” she said. “They gave me a great offer. It was good, so I agreed. There’s not a story connected to Centene on my part.”
Sheehan said that Centene’s purchase of the land did come into discussion with Pessin. However, it didn’t matter to him as long as the negotiations were fair, he said.
Pessin said he bought the properties as an investment but would not comment on his plans for the property.Ken Fields, spokesman for Centene, said that nothing is set in stone. The company “will continue to evaluate other potential options for the location of our world headquarters, both in and out of the St. Louis region.”Both the cities of St. Louis and Clayton have offered Centene large incentive packages to develop in their areas.
To keep Centene in the state, Gov. Matt Blunt has said the state will work with Clayton and offer Centene $19.1 million in Quality Jobs tax credits, a sales-tax exemption on personal property and $8 million in BUILD tax credits. The Missouri Development Finance Board will oversee the BUILD funding.
“Our proposal is a sound investment in the St. Louis region’s economic future,” Blunt said.
The expansion would create 836 jobs in Clayton, paying an average of $74,700, according to the governor’s office. The city said that by 2015, the employment count could be 1,230.
Centene has also proposed to build a green facility, which would be certified by the LEED rating system as environmentally sound.
The city has offered partial tax abatements on real and personal property. It will also establish a community improvement district, which would allow the building’s retailers to impose a 1 percent retail sales tax on goods.
In 2005, the city of Clayton aggressively fought to keep the Centene project because of the jobs and tax income it brings to the city. This was also the city’s argument for using eminent domain to take over the properties that it said were underutilized.
“Without incentives and economic tools, sometimes including the use of eminent domain, aging inner-ring cities with dense commercial areas will be at a great disadvantage to attract corporate headquarters and large retail projects,” read the statement issued by the city shortly after the June 2007 court decision was announced.
Now the specifics of such incentives as they apply to Clayton are a hot topic of discussion and will be for months to come.
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