Home » Real Estate » Recent Articles:

Not all residents are happy with the King

Some owners of lofts in the King Bee building on Washington Ave have taken their complaints to court.  From a current RFT article:

In 2006 building and fire inspectors confirmed several problems: a furnace system without proper ventilation; a four-story staircase with several air conditioners stored on landings, also improperly ventilated; and untested sprinkler and alarm systems.

St. Louis’ acting building commissioner Frank Oswald calls the violations at the King Bee “major,” but says none of them are severe enough to warrant condemnation. What’s unusual to Oswald is the way they arose in the first place.

“Usually when somebody else is [violating code],” says Oswald, “they’re doing it on their property, and they haven’t sold it as a condominium.”

The fundamental issue, adds Oswald, is that the developer failed to alert the St. Louis Building Division before converting the warehouse to residences. He explains that most developers begin by filing a plan, which kicks off a series of reviews and inspections, before anyone moves in. “It clearly was not done appropriately,” Oswald says.

Deputy Fire Marshal Baron Ross agrees. “The life-safety requirements for a warehouse or factory are quite different from where people are going to be sleeping,” he explains.

Interesting.  As the article also notes, the developers asked for and received tax abatement.   So while the building division didn’t have a master plan in front of them the developers would have had to show something to St Louis Dev Corp and the Board of Aldermen.  This is probably one of the most glaring examples of a breakdown in communications between the many city departments and agencies.


St Louis Centre; Different Owners, Different Standards

In 2005 the failed downtown mall, St. Louis Centre, was at the center of Mayor Slay’s priorities. At the time the Mayor and others were busy pushing Centre owner Barry Cohen to tear down the sky bridge that crosses over Washington Ave and move forward with redevelopment.

From the Mayor’s blog on Sept 25, 2005:

Stories in the business pages last week confirm the obvious. Barry Cohen, the owner of St. Louis Centre, is stalled. After a summer of fumbling, Mr. Cohen lost the funding proferred by Downtown Now’s Tom Reeves to demolish the skybridge.

Since purchasing the downtown mall more than a year ago, Mr. Cohen has promised, announced, floated, and projected some plans – none of which has come to anything. It is not clear to me whether he is hapless or canny, hoping for a profit on the $5.4 million the Biz Journal says he paid for the property.


As Tom Reeves told us, there’s plenty else to do Downtown. Meanwhile, we’ll keep sending Mr. Cohen those tax bills.

Wow, he had the mall for a whole year and the mayor calls him out. Slay supporter, now former developer John Steffen, was treated differently from day one:

Friday, February 17, 2006

This is a note to every developer hoping to be able to make a deal in the City and to every citizen hoping for redevelopment: John Steffen has announced ambitious plans to turn St. Louis Centre and the One City Centre office building into a mixed-use development.

These plans are possible because a public/private team, including Barb Geisman, Rodney Crim, Rollin Stanley, and Tom Reeves, kept their eyes on the goal line — not the headlines.

Not every real estate transaction can be negotiated in a blog.

I congratulate Barb, Rodney, Rollin, and Tom for their discipline — and I wish John good luck in getting this done.

This was well over two years ago and today the mall is totally vacant and the bridge still hovers over the street. Pyramid is out as developer with their equity partner Spinnaker taking over the now very stalled project. In fact, as reported here a week ago, Steffen and his company are out of the development business completely. Does this mean that Geisman and company dropped the ball? Were they all too cozy with Steffen?

Oh wait they did manage to give Steffen a sweetheart deal — a TIF backed by the city’s general revenues. That was also in 2006.

In the year and a half since then we’ve seen only slick marketing — drawing a line around a few blocks and calling it a district, The Mercantile Exchange or MX for short. That is almost as clever as the cards calling Ballpark Village a six block area (Broadway/5th to 8th and Clark to Walnut is 3 blocks no matter how many times they say otherwise).

So my question is this —does the city-backed TIF deal run with the property regardless of who takes over? If so, how long does Spinnaker have to complete the project? A year? Five years? A decade?

I think Steffen wanted this project so the city put up roadblocks for Cohen so he’d be forced to sell to Steffen.

Finally on Wednesday KMOX reported Pyramid’s story with greater detail and certainty than I had last Friday:

The developer of major St. Louis projects…St. Louis Centre and the former Dillard’s building, in the Mercantile exchange project…is getting out of the development business. Pyramid Construction’s John Steffen made the announcement through Steffen’s attorney Attorney Steven Goldstein… Problems in the real estate lending market are the main reason. Goldstein says Pyramid is currently working with other developers, investors, lenders and the city to make a transition for its development projects…but will continue to operate it’s property management division…which oversees a thousand apartment units in the city and surrounding area.

For someone with $609 million in development on his plate, Steffen has gone on a crash diet. Two years ago Steffen had this to say;

“We literally have more people offering to finance us than we have projects to finance,” Steffen said. “I need more projects because I have banks wanting to do business with me.”

Our city’s leaders bought Steffen’s hype. Or did Steffen buy off their better judgment with generous campaign contributions and illusions of success? Regardless our leadership has once again failed us. They claim Steffen was a victim of the current crisis but the roots of this go way back (see my post from June 2006) .
Perhaps we would have been better off giving Cohen a chance to prove himself? Of course then many of us wouldn’t have been able to enjoy the fancy parties thrown by Steffen for each project he announced. We sold out for some sushi.

I do hope all their projects are assumed by others and that they perform well. I also hope the next time we’ve got a developer bragging about his ability to get financing that we recognize the red flags.


Downtown Just Gained One More Resident

November 7, 2007 Downtown, Real Estate 24 Comments

Last week I teased you that I was moving. And while guesses often focused on the 15th and 7th (Ald. Florida and Ald Young, respectively) I actually moved to the 6th, where Ald. Kacie Triplett was elected earlier this year in a heated 3-way race. I did not move for political reasons, I moved because I got a cool place for a great price in a part of town I wanted to experience.
My first six months in St. Louis were in the fashionable Central West End. I enjoyed walks up and down Euclid and shopping at Straub’s. The year was 1990 and the rent on my 8th floor studio apartment was $330. From there I jumped over to Old North St. Louis, then still officially known as Murphy-Blair. After a few years there, I moved down south to Dutchtown in 1994 and then a few blocks over to Mt. Pleasant in 2004. I’ve actually moved very little and then only because it was want I wanted to do.

So where did I move?

I am in the Printer’s Lofts on Locust between 16th and 17th. Pretty basic loft, no upgrades. A nice spot in the parking garage for my scooter.  Seems like a waste to have an entire parking space for a single scooter. Although I spent the night in the loft last night I have not fully moved in — that will come soon enough.  But, I have enough items to get me through.  As lofts go it is pretty big but it is still a downsize from my 2,642 square foot corner storefront — nearly a 40% reduction in space.

I will have room for my bicycles, which I plan to use often.  I also will get one of those old lady carts to allow me to walk down to the store and do my grocery shopping when wheel everything back.   I might, for grins, bike to MetroLink and head out to Eager to go to the Trader Joe’s at some point.

This will be a good place for me as I finish my masters degree (in Urban Planning & Real Estate Development).  Who knows, in a couple of years I might move on — both Old North and the Cherokee area are calling my name.  Until then, see you downtown.


City of St. Louis Says Even Small Landlords Need a Business License

Say you buy that problem house next door to yours so you can do a better job of screening renters. You buy the house in your personal name, just like your own house, and proceed. But wait, even though you’ve got a day job the city license collector’s office says you are operating a business and therefore must obtain a graduated business license — at $200 per year.

At issue is what constitutes a business. Over the last few months this topic is repeatedly raised on the Rehabber’s Club discussion list.

Some argue, presumably in agreement with the city, if you receive money you are operating a business. Others cite the fact they own the property in their personal names, do not have an FIN (Federal Identification Number) and that the IRS considers such income as “passive” as opposed to their “active” income from work in which you typically receive a W-2 or 1099 as reasons why they are not a business.

Here is what I gather from the discussion:

  • The license collector makes no distinction between owning the property in your personal name, an LLC (Limited Liability Corporation), a partnership, or a corporation.
  • The license collectors office does not distinguish between owning one rental unit or hundreds.
  • The city cites ordinances requiring all businesses to have a license unless specifically exempt — a few professionals such as a doctors, engineers, real estate agents, etc. are exempt by state law.
  • The license collector doesn’t consider it a business if you live in the building, say in the case of a two-family.

I do concur that if you establish some sort of legal structure (LLC, corporation, etc..) in which to own property that may well constitute a business even if the income is passive. That said, I once had a stake in an LLC that owned a piece of rental property and we didn’t have a business license — it never occurred to us as we didn’t think this was a “business.” The business license is that thing you post in your place of business for customers to see, right? And for the record, I no longer have an interest in that property and it is no longer held in an LLC.

Ironically, one person posting on the discussion list indicates he was told that the license collector is basically ignoring those hard to find landlords that have LLC’s but are tracking down individual owners of property where the property tax bill is mailed to an address other than the property address.

For ten years I owned a two-family building — living in the first floor unit and renting the 2nd floor unit. From what I gather, such an arrangement would be exempt — that does not constitute a business they say. However, after 10 years I bought another building and moved from that first 2-family so then it apparently would qualify as a business and require a license. I sold that first 2-family in January 2006.

If we look at the issues and policies being tossed around it would appear that owning a single family house that you rent and thus receive passive rental income (possibly at an annual loss on a cash accounting basis) you are operating a business. However, you can own a 20-unit building in which you live in one unit and rent the remaining but that is not a business.   WTF?
The license collector’s office says you need a business license for each location in the city. If you operate a chain of McDonald’s drive-thrus you must have a business license for each location even if all are operated under the name of one entity. Seems pretty logical.  So if you bought several properties on your block to help stabilize it I wonder if they’d require a license for each address? And if so, is it based on address or the assessor’s parcel number? For example, many corner storefront properties have two tax ID numbers — one for the commercial space and one for the residential space. Does each constitute a separate business from a landlord perspective? If so, each address may require more than one $200 business license.

The ordinances on this are not helpful.  Stating any business, except those that are exempt, requires a business license leaves far too much gray area.  Short of an ordinance clarifying how and when property owners must have a business license, I want to see a written policy.  I plan to talk with our License Collector, Mike McMillan, about this issue as I have many questions.  I’m sure you have plenty as well.  And finally, remember that it may be wise to talk to your attorney if you don’t think you should be required to have a business license.


City Values Vacant Land Higher than Land With Buildings

As a REALTOR® I tend to have some basic assumptions about the real estate market. One of those is that a building and land is worth more than the land without a building. Even if the building is in poor condition, it still holds some value in my view. But apparently the people at the St. Louis Development Corporation — the entity that is responsible for property the city owns — thinks differently. Here is how they describe themselves:

The Real Estate Department of the St. Louis Development Corporation (SLDC) documents, manages, maintains, markets and sells agency-owned vacant and abandoned buildings and property.

In some St. Louis area neighborhoods, it will cost you more to buy a vacant lot than it will to buy a lot with a building. Let’s compare a two-family building in poor condition on a 25ft x 125ft lot with a similar 25ft x 125ft lot that happens to be vacant (with the intent for new construction). Oddly enough, the vacant lot is more costly than the building and lot in some cases. For example, based on SLDCs price list, the example building and lot in Benton Park would be $3,000 while the vacant lot (of the same size) would be $4,687.50 — 56% more than the same size plot of land with a building! Their for sale list turns up one vacant building but 19 vacant lots (of various sizes) in Benton Park. In Benton Park West the prices are quiet a bit less at $2,000 for a two-family and only $1,562.50 for a 25ft frontage lot.
If we head up to the north side of the city where many lots are vacant we see a similar situation.  In the Hyde Park neighborhood the two-family would be $1,000 while the same size lot sans a building is $1,250.   Over in The Ville the two-family will cost you the same as Hyde Park but the lot is only $937.50.  In the St. Louis Place neighborhood, where Mr. Paul McKee has purchased quite a bit of private property, the two-family would be $2,000 while the vacant lot $2,343.75.  The building prices are per unit so a single family house on the same 25ft wide lot would be half as much as I indicated above.  So in St. Louis Place a single family home owned by SLDC would only be $1,000 but the land of the same size would still be $2,343.75.

Their price list was last updated in March 2006.  Maybe SLDC has a formula based on the availability of land vs buildings?  Perhaps the idea, and a good one, is to price buildings attractively to encourage their reuse more rapidly than of vacant land?  I just wasn’t expecting to see vacant land with higher selling prices than land and a building.  Given this practice, I can see why some people might favor demolition —- they get the impression from the city it increases the value of their land.