ST. LOUIS — Webster University is facing allegations that it has not paid rent at its downtown ºüÀêÊÓƵ campus, adding to the private institution’s growing financial troubles.
The owners of the Arcade Building at Eighth and Olive streets allege in a lawsuit filed in federal court in ºüÀêÊÓƵ on Friday that Webster owes more than $75,000 in interest, past rent and late fees after failing to pay the full amount owed from January through August of this year.
The downtown location is in addition to the school’s main campus in Webster Groves in ºüÀêÊÓƵ County.
Steph Kukuljan and other business reporters bring you insights into ºüÀêÊÓƵ-area real estate and development.
Webster signed a 20-year lease in 2016 for 54,000 square feet at the Arcade Building, nearly double the space it had leased across the street at the Old Post Office Building in a deal that city leaders at the time hailed as a boon for downtown and the redevelopment.
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A spokesman for Webster, Patrick Giblin, said the university does not comment on pending litigation. Lathrop GPM attorney Emily Cantwell, who represents the ownership group — entities affiliated with Minneapolis-based Dominium Holdings — declined to comment.
The lawsuit is another sign of trouble for the university, which for years has lost students and tens of millions of dollars amid a competitive higher education environment. Investments in its science and business programs have yet to lead to the enrollment windfall officials had counted on. Its credit rating has declined as analysts question a rebound. And Webster, known for its plethora of campuses around the world, has shuttered many of its satellite locations.
The university has had a downtown presence since 1975 when it operated a campus in the former Boatmen’s Bank Building on Broadway, according to its website. It later moved to the Lammert Building on Washington Avenue, home to the tech incubator T-REX, before heading a few blocks east to the Old Post Office Building in 2006.
Webster’s deal for the Arcade Building, at 810 Olive Street, was key for the redevelopment moving forward. The building was constructed in two stages in 1906 and 1909 in the Gothic Revival architectural style and features a two-story vaulted arcade. It was used as one of the country’s first indoor shopping malls before it was abandoned in the 1970s.
One attempt at redeveloping the property failed during the Great Recession, prompting several lawsuits and the city to take over ownership.
Dominium in its lawsuit said the city “enticed†it to redevelop the Arcade Building and that it needed a “credit tenant,†or a financially stable tenant, to move forward.
“The credit tenant located was Webster, the same tenant that has now breached its lease obligations ... and has put plaintiff in significant financial jeopardy, despite all of plaintiff’s efforts to revitalize downtown at the city’s urging,†according to the lawsuit.
In addition to Webster, the Arcade Building also houses nearly 300 apartments.