The Bank of Washington has filed a lawsuit alleging fraud by two entities associated with the city of St. Louis stating the city ignored a development agreement.
The bank filed the suit July 6 in Franklin County Circuit Court against the Land Clearance for Redevelopment Authority (LCRA) and LCRA Holdings Corporation (LCRAH), accusing the entities of ignoring a 2016 agreement between the bank, a developer and the city.
The bank is a lender to Northside Regeneration, LLC (NSR), a firm led by Paul McKee Jr., which is developing 1,500 acres in north St. Louis known as the Northside Redevelopment Area.
The Bank of Washington lent money to NSR several years ago when the group began purchasing ground to develop that area in St. Louis. As a result, NSR attracted the National Geospatial-Intelligence (NGA) to relocate to the redevelopment area.
That move projects a $1.7 billion investment in North St. Louis. It will retain 3,100 high-skilled and high-wage jobs in the city, with predictions for as many as 7,200 employees by 2025, as well as many more thousands of construction and permanent jobs, according to information released by the bank.
According to a St. Louis Post-Dispatch report, Bank of Washington Chief Executive Officer L.B. Eckelkamp Jr. was key to bringing the NGA project to fruition.
The project will provide a catalyst and economic stimulus to revitalize the depressed and blighted area.
Agreement in 2016
In 2016, to influence NGA’s decision to relocate with the redevelopment zone, the Bank of Washington and NSR executed a series of agreements with the LCRA and LCRAH to secure the transfer of the NSR land for the NGA facility.
The bank released the deed of trust on the land and relinquished other valuable collateral for substantially less that it would have otherwise, bank officials said.
In return, the LCRA and LCRAH agreed to modify the development time lines and requirements under the NSR’s 2014 redevelopment agreement. Under the agreement, the city would not declare NSR in default as long as it met those new terms.
Officials said the bank and NSR honored the agreements. In particular the NSR met its redevelopment requirements and began projects unrelated to the NGA facility.
After NGA selected North St. Louis, the city declared NSR in default under the 2014 development deadlines, and ignored the 2016 agreements and new development requirements.
The bank alleges that LCRA and LCRAH fraudulently induced the bank to release its liens and is seeking damages and rescission of the 2016 agreement.
According to court records, the bank and NSR state they have honored all promises in the agreements with the LCRA and LCRAH, but those entities have not honored the agreements and have made “public statements suggesting that they never had any intention of doing so.” It is alleged that the city wishes to sell the land acquired by NSR to other developers now that it is more marketable due to the relocation of NGA.
Filed in County
According to court documents, the bank is suing in Franklin County because it was financially injured by the alleged fraudulent and negligent misrepresentations of its “principal place” in Washington.
The bank is represented by Paul J. Puricelli, with Stone, Leyton & Gershman, P.C., St. Louis. The case is being heard in front of Presiding Circuit Judge Ike Lamke.
Bank officials did not comment on the suit, stating it is the bank policy not to comment on litigation.