Yesterday’s earthquake may have actually been the tremors felt after the collapse of one of the city’s biggest developers.

Steve Patterson of the Urban Review St. Louis blog was the first to report that employees of Pyramid Companies, owned by developer John Steffen, were given their final paychecks yesterday.

Employees were, I’m told, given final paychecks and told to cash them quickly.

Pyramid owns several high-profile properties downtown, including the Arcade Building on Olive Street, Dorsa Lofts on Washington Avenue, and the Jefferson Arms on Tucker Boulevard. But the Post-Dispatch reports today that Pyramid’s largest project (which through a controversial decision by city leaders also weighs on the City of St. Louis’ credit rating), the $400 million Mercantile Exchange, which includes the former St. Louis Centre mall, will move forward without Pyramid.

“We have taken over management of the partnership,” said Amos Harris, president of Brady Capital, local partners of Connecticut-based Spinnaker Real Estate Partners LLC.

Spinnaker was Steffen’s equity partner on St. Louis Centre and the former Dillard’s building, both key components of the larger six-block Mercantile Exchange project. Steffen was in charge of the daily decision-making.

Spinnaker recently increased its investment by 50 percent to roughly $16 million. As costs continued to increase, Harris said, “we took over.”

Steffen’s financial troubles have long been rumored in the city’s political circles. Steffen has been a regular contributor to key city officials, including Mayor Francis Slay, and is rumored to have financially backed two local newspapers, the St. Louis Argus and the now defunct Arch City Chronicle. But it was the Board of Estimate and Apportionment’s 2006 decision to have the city essentially co-sign Steffen’s $14.5 million loan application to finance his St. Louis Centre project that most invited the ire of bloggers and public policy watchers.

Comptroller Darlene Green, one of the three members of the Board of E&A, warned against the Steffen deal, but was outvoted by then-Aldermanic President Jim Shrewbury and Mayor Slay.

With less than a year before the 2009 Mayoral Primary, who do you think is the best candidate to run against Francis Slay as he seeks his third term in office?

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