THE BIG FIX

A desperate St. Louis pays top dollar to gamble on a risky convention-center hotel

The unobtrusive five-story cast-iron storefront blends with the streetscape so well that it is easily overlooked. An architectural inventory prepared by the city in the early 1990s cited the significance of the building's bay windows but misspelled the name of the business. As if in protest, the letter "T" has fallen on its side on the overhang above the entrance. The sign now reads "Herker Meisel." Through the dusty window, the place looks almost vacant, except for Wallace McNeill's pet macaw, who is perched outside his cage, in the middle of the display room.

McNeill owns the Herkert & Meisel Trunk Co., 910 Washington Ave., in the heart of downtown. He bought the firm in 1985 from a descendant of one of its founders. The luggage company has been located in the same building for 111 years. Herkert & Meisel still makes the steamer trunks that made it famous, but nowadays it more regularly produces sample cases for the shoe industry.

The manufacturing is done upstairs, using many production methods that originated in the 19th century. On the fifth floor, for example, a crew of four skilled workers glues the linings into sample cases while, two floors below, the frames are cut and riveted together. One sewer has worked for the company for 30 years. The entire operation employs 15 union workers.

"It's very difficult to go into a union contract negotiation not even knowing where you're going to be located," McNeill says. For more than a year, the businessman has been living in limbo, unsure of whether he will be forced to sell his place of business. As the months slip by, he sometimes wonders whether his troubles are real. But then the phone rings or a letter arrives in the mail, and he feels besieged again.

McNeill would like to stay put, he says, but his building is in the way of the parking garage and ballroom planned for the proposed downtown convention-center hotel. This has forced him into sales talks because the city could invoke eminent domain and seize the property. But so far, negotiations with the hotel developer, Historic Restoration Inc. (HRI) of New Orleans, have been sporadic, unsuccessful and less than cordial, McNeill says. The city, he adds, has only recently contacted him, making an unreasonably low offer. This lack of consideration has left him frustrated and doubtful as to whether the hotel project will ever get off the ground.

"It's very frustrating because it's not like I can just pick up and move in 30 or 60 days," McNeill says. "I can't put any improvement into the building because I don't know if I'm going to own it. I don't know anything. I've never talked to anybody from the city who represented themselves as being any part of this deal, ever. I wish somebody would clarify it for me. I can't get a straight answer out of anyone.

"I've never heard so much double-talk in all my life. It borders on harassment because I have this thing hanging over my head."

This "thing," as McNeill refers to it, has also been described by one city official as the most complicated financial package ever assembled in the history of St. Louis.

The deal, which is expected to close next June, involves the redevelopment of a two-block area of Washington Avenue near America's Center, the publicly owned convention facility. The project entails renovating the existing Gateway Hotel and linking it to a new tower to be built immediately to the east. The two structures, which would serve as the 916-room convention-headquarters hotel, will be operated by the Marriott chain under the Renaissance Hotel brand. On the block immediately west of the Gateway, where the Herkert & Meisel building is located, the plan calls for the construction of a parking garage topped by a ballroom and other facilities. Across Washington Avenue from the Gateway, next to America's Center, the old Lennox Hotel would be converted into a 165-room Marriott Renaissance Suites hotel. The hotel complex -- 1,081 rooms -- is expected to open in 2002.

At a press conference held at America's Center in June, Mayor Clarence Harmon triumphantly announced that the long-delayed hotel deal had been cinched, but he failed to detail any of the unresolved issues, including the cost of acquiring privately owned property or how the city planned to meet its financial commitment to the project.

For instance, the estimated cost of the project has risen from $172.4 million to more than $242 million, in part as a result of design changes. The hotel's price tag doesn't include millions of dollars in other expenses that the city incurred to set up the deal. In addition, project financing is still in flux, having already been repeatedly restructured. The latest changes have pushed the level of public subsidy to more than 30 percent -- significantly higher than similar projects around the country -- and the bulk of the other financing depends on bonds issued by public agencies and substantial tax credits. It's a risky project -- if the projected revenues from the operation of the completed hotel don't meet the optimistic expectations of the developer, the city could be held responsible for the shortfall.

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