St. Louis Mayor Cara Spencer believes so much in her city’s downtown that she made it the centerpiece of her administration after she took office last year.
Like other Midwestern legacy cities, St. Louis is suffering from population loss and post-Covid office vacancies in its downtown. Landmark buildings like the 44-story AT&T Tower and the historic 21-story Railway Exchange have been vacant for years. Squatters and thieves have replaced business tenants, spurring the Wall Street Journal to call the Missouri city a “real estate nightmare” in 2024.
Spencer is unfazed. “Downtown St. Louis is a sleeping giant,” she told Smart Cities Dive.
Local businesspeople agree. Robert O’Loughlin, chairman and CEO of St. Louis-based Lodging Hospitality Management, believes that despite its current issues, his city offers more than other Midwestern cities he views as St. Louis’s competition.
“We have a world-class zoo, and our Forest Park rivals Central Park,” he told Smart Cities Dive. “The [Gateway] Arch draws 1.5 million people per year. We have a lot of concerts and sporting events. I boast that if you take all of those assets, they far exceed Indianapolis and Kansas City combined.”
But while Kansas City has poured more than $3.5 billion into district development and Indianapolis officials boast a $9 billion downtown construction pipeline, St. Louis has lagged behind — until now.
A trio of revitalization initiatives
“It’s a vibrant time in St Louis. The next three years are going to be maybe the greatest investment in the urban core since the [1904] World’s Fair,” Ron Kitchens, managing partner of the economic development nonprofit Greater St. Louis, told Smart Cities Dive.
In July, Missouri Gov. Mike Kehoe signed HB 3231, the Missouri Downtown and Rural Economic Stimulus Act. The bill, which the Missouri House approved by a bipartisan 119-24 vote, creates millions of dollars in tax incentives for downtown innovation zones, along with tax credits to convert vacant office buildings into residential spaces.
“This law recognizes the critical importance of downtown St. Louis to the state’s economy, catalyzing hundreds of millions of dollars in new investment in the economic engine of the state,” Kitchens said.
While St. Louis is a blue city in a red state, Spencer believes the Missouri legislature understands its economic importance for the entire state, and so does the private sector.
“I can’t overstate the alignment we currently have in St. Louis to revitalize our downtown,” she said.
Along with HB 3231, this revitalization push also includes a new public-private downtown redevelopment partnership to spend $55 million that St. Louis received as part of a lawsuit settlement over the St. Louis Rams National Football League team leaving for Los Angeles.
And in anticipation of St. Louis hosting 2028 Olympic soccer group stage and knockout matches, the St. Louis Board of Alderman in February approved a new Downtown St. Louis Sports And Entertainment Community Improvement District designed to remediate blight and encourage redevelopment downtown. The state will provide $4.5 million per year to the district for public safety, pedestrian access improvements, street lighting initiatives, upfront funding for sports and entertainment events and more, O’Loughlin said.
“The impetus is to [improve] a large metropolitan area so businesses functioning there can see it’s a safe area to go to, it’s well lit, it’s walkable,” he said.
Downtown innovation
Kitchens said HB 3231 allows cities and regions throughout the state to designate one area, like a downtown, as an innovation zone. The bill also expands existing tax incentives for converting office buildings to residential, creates the Missouri Angel Investment Tax Credit to support capital expenditures for startup businesses and expands the state’s Missouri Works program to support large-scale capital investment projects, particularly within innovation zones.
“Collectively, these tools will give St. Louis an unprecedented ability to revitalize downtown by leveraging private investment to generate new public revenue for infrastructure, public safety and housing,” Kitchens said.
In innovation zones, the bill allows cities to retain 50% of all new state sales and income taxes, as long as the money is used for public safety or infrastructure improvements.
“HB 3231 also establishes some of the most robust office-to-residential conversion incentives in the nation,” Kitchens said. To be eligible, buildings must be at least 25 years old, and more than 50% of the total space needs to be converted to residential. Spencer singled out a provision authorizing state tax rebates for investing in buildings over 750,000 square feet as particularly important for downtown St. Louis.
The Missouri business community “worked very diligently with the state legislature on this set of tools that work for everyone,” Kitchens said. “We had to build a coalition of 28 communities around the state” to help get the bill passed.
Kitchens expects that four large downtown buildings, including the AT&T building, will use these incentives to redevelop in the next five years. “Overall, we have $1.5 to $2 billion in new and redevelopment construction going on in the next 18 months,” he said.
Rams tough
After the St. Louis Rams moved to Los Angeles in 2016, the city, county and the St. Louis Regional Convention and Sports Authority sued the NFL for breach of contract by allowing the relocation to happen.
“When we lost the Rams, our city leaders and some private sector attorneys took a big risk in suing the NFL,” Spencer said. That risk paid off. In 2021, the NFL settled the lawsuit for $519 million. The city of St. Louis received $280 million of that total, but it took until this year for the Board of Aldermen to decide how to distribute the money.
The lawmakers voted in June on a plan that would earmark $55 million of the settlement for downtown revitalization efforts. “And the business community will match that total,” Kitchens said.
“Our business community is aligned with us in doing this work. It’s an exciting time when you have the private sector willing to come to the table and match us dollar for dollar,” Spencer said.
About 50% of that private investment will go to infrastructure projects and 50% to incentivize small businesses, Kitchens said.
“I hope to get every dollar out the door prior to the Olympics,” he said. “The world stage is going to be here. It’s like a dinner party — you need to get your house ready in advance.”
