Partnership aims to cement cooperation - not competition - in economic development
This article first appeared in the St. Louis Beacon, July 26, 2013: St. Louis County Executive Charlie Dooley made a point earlier this summer to note that his friendship with St. Louis Mayor Francis Slay went beyond politics.
“[People will say] Charlie, Mayor Slay is your political friend. No he’s not,” Dooley said during a speech in June. “He is just my friend. He’s my friend. And that’s what I want you to understand. This is in our best interest. He wants St. Louis City to be successful. I want St. Louis County to be successful.
"Together, we want to the St. Louis region to be all that it can be,” he added.
Indeed, the leaders of St. Louis and St. Louis County are doing more than fostering a personal bond.
They’re embracing high-profile joint initiatives, including a soon-to-be launched economic development partnership meant to take a more regional approach to attracting businesses. It's in addition to other recent city-county efforts to nurture start-up companies and attract immigrants to the region.
Boosters contend that the arrangement -- known as the St. Louis Economic Development Partnership -- will clamp down on "backyard" competition and provide a more national and international focus on getting companies to come to the region. They also see it a step toward being more cohesive in a traditionally fragmented region.
"It's about working together with a common vision," said Slay earlier this year.
But while the agreement managed to pass the county and city legislative bodies by decisive margins, the plan still has skeptics. Some say competition between the two jurisdictions is inevitable as long the city and county remain separate. And companies coming to region may have distinct requirements that lure them to an urban or more suburban environment.
At least one prominent business leader says the focus should be on building Downtown St. Louis instead of spreading resources across a large geographic area.
"A lot of it is coordination of efforts and the belief – which I truly hold – that if the region is going to grow, you’ve got to get it right in Downtown first," said Zack Boyers, chairman and CEO of US Bank Community Development Corp. "If we keep spreading our resources too thin and competing with opportunity for ourselves ... I think that will hold us back."
Lay of the land
In many respects, collaboration between St. Louis and St. Louis County is not a new development.
St. Louis County residents pay into the Zoo-Museum District, helped fund downtown sports stadiums and contribute to Metrolink. More recently, voters in both jurisdictions approved a sales tax increase to pay for improvements around the Gateway Arch and to bolster regional parks and trails.
But while the city and county have sought closer ties, they remain separate governmental jurisdictions. And the two entities are geographically different: the city is more compact and developed, while the county is larger with generally more opportunities for newer construction.
As a result, some St. Louis County municipalities – such as Clayton, Maryland Heights, Town and Country and Chesterfield – have become major business centers. And some of the region's biggest companies -- including Monsanto, Express Scripts and Reinsurance Group of America -- are headquartered and expanding in the county.
Kevin Farrell, senior director of housing and economic development for the Partnership for Downtown St. Louis, said St. Louis’ situation isn’t unusual. Other major cities have multiple commercial hubs scattered across a region, as opposed to confined within a singular setting.
“I’m from Baltimore,” Farrell said. “And you have Towson, which is the county seat in Baltimore County, Md. It’s very similar. It’s only seven or eight miles from downtown. It’s much more wealthy and affluent generally. And they can definitely compete with what goes on downtown. So it’s not particularly unique.”
Officials say it's not uncommon for businesses to pit the city and county against each other to get the best incentive package. Alderman Fred Wessels, D-13th Ward, provided an example earlier this year of a city company with an expiring lease that tried to “shop” for the best deal.
“They say ‘our lease is up in 2014, we’re thinking about moving.’ What can you do for us?” said Wessels during a Board of Aldermen debate. “They’ll come to the city. And we’ll offer a package. Then they go to the county, and then they’ll offer a package. And then they’ll come to the city.”
St. Louis County Economic Council President Denny Coleman said his agency adopted an “anti-pirating” policy long ago, which included not trying to lure city businesses to come to the county.
“First of all, we did not call on city companies,” Coleman said. “And if we did receive a call from a city company looking to move to the county, we would actually call the city and let them have an opportunity to hang onto that company.”
After recounting a similar scenario to Wessels', departing St. Louis Development Corporation executive director Rodney Crim said “the region doesn’t win with that kind of internal competition.
"We’re saying ‘OK, let’s figure out how we can work together to address a business’ needs without putting forward competing proposals.’ And so, that’s what we’ve been trying to work for over the last couple of years."
Reducing any perception of "backyard" competition was one rationale behind the St. Louis Economic Development Partnership, which was unveiled earlier this year and ratified by city and county legislative bodies earlier this summer.
St. Louis Mayor Francis Slay talks in February about the goals of St. Louis Economic Development Partnership.
In essence, the partnership combines city and county programs aimed at fostering business development, job creation and entrepreneurship.
Coleman will be chief executive officer of the new agency. Crim will be president. The organization – which includes a shift of about 10 SLDC employees – will be located in Clayton.
Coleman said the partnership “sends a very positive message to the business community that the two major governments in the region are operating and collaborating to the benefit of not just the city and the county, but for the entire region.”
One of the first orders of business, Coleman said, is a strategic planning process for both jurisdictions. That, he said, will look at the “strengths, weaknesses, opportunities and threats” for the city and the county.
“It’s a classic strategic planning initiative -- plus some input from some consultants that could give us both a national – as well as an international – perspective on business trends and economic trends,” Coleman said.
Wessels -- who handled legislation authorizing the partnership in the city -- said the arrangement is going to create “a much stronger, more energetic capacity when you talk about business development.” He also said the fact that the two jurisdictions will have a seat at the table will naturally cut down on city and county subsidies.
"Will there be competition between the city and the county? Yeah there will," he said. "But again, it’s going to be minimized."
But not everybody is a fan of the collaboration. Some St. Louis County Republicans -- and some members of the Board of Aldermen -- contended the partnership amounted to an incremental step to a city-county merger, which supporters of the move forcefully denied.
And among other things, St. Louis County Councilman Greg Quinn, R-Chesterfield, earlier this summer questioned how to gauge the Partnership’s success.
“There are no metrics to measure how well this is working,” Quinn said. “There’s no information on goals and objectives, other than just platitudes – cooperation and that kind of thing.”
Alderwoman Sharon Tyus, D-1st Ward, said she doubted city-county competition for businesses would cease, adding that "even wards are competing."
She said the Partnership might be hampered by the fact that other counties – such as St. Charles County – aren’t involved. Wessels countered that other jurisdictions may eventually join in, adding the partnership “is going to be the biggest fish in this relatively small pond.”
After Crim takes on his new post, Otis Williams will become the new executive director of SLDC. The agency will still be able to authorize such incentives as tax increment financing and tax abatement.
Williams added in an interview that the SLDC will, among other things, also be in charge of the St. Louis Port Authority and pursue neighborhood and commerical district development opportunities.
"We will continue to be the central hub in the city for economic development," Williams said. "The glue that will be holding us all together from a regional perspective will be the economic development partnership."
Picking and choosing
One of the key functions of the new entity will likely include assisting business in site selection. Coleman said the arrangement "will send a good message also to the site selection community that deal with national relocations" that the entities "are not competing with one another and that we are looking for what’s best for the entire region."
"A company will typically say ‘I have the following requirements for a location – be it office, industrial, raw land or what have you,'" said Coleman, adding that businesses make the ultimate decision on where to locate. "And we take that criteria, do a search throughout the now city and county and present sites that meet the company’s criteria."
Both Coleman and Crim say the city and the county have different things to offer potential businesses.
Some companies with a younger workforce might be more attracted to Downtown St. Louis, especially since it provides more entertainment attractions.
Others may prefer a “campus” environment or a newer, more customized building. That may cause a business to look to St. Louis County.
“If you’re a tech-related company today and you have a bunch of tech employees who like to live in lofts downtown, you might very well be attracted to that type of a location – a more high-rise, urban type location,” Coleman said. “If you are the kind of company that needs vast expanses of parking, you’re probably not going to be downtown – whether you’re in St. Louis or Chicago or anywhere else.“
Coleman said factors could include where current employees live – which may have been why companies such as Monsanto and RGA decided to expand in St. Louis County.
"If you draw a concentric circle around their location and the vast majority of their employees are there, then that’s where they’re going to be," Coleman said.
The Partnership is coming online as Downtown St. Louis experienced a burst of residential population and redevelopment in the past decade. But one lingering challenge is increasing that business center's office population.
Farrell said some real estate companies have placed downtown’s vacancy rate at close to 25 percent, which he said is “obviously high and higher than we want it to be.”
He emphasized that figure has plenty of caveats, including the fact that some “single-owner occupied that have never been released" are part of the tally. And he contended that some buildings with high-occupancy rates aren’t placed into some real estate companies' percentage.
“We’re actually getting ready to hire an additional research person and get them to delve into these things,” Farrell said. “Because we know for example there’s no context to that number.” He went onto say that economic conditions – and the condition of buildings – play a role in the ebb and flow of occupancy throughout Downtown.
“We have these outdated Class B and C buildings that just can’t compete with Class A,” said Farrell, referring to the way buildings are classified. “And when the economy gets tough and people in Class B can move into Class A space, you’re left with space that’s not as current that gets tougher and tougher to lease.”
Boyers contended that policymakers should be trying to "get it right" in Downtown St. Louis, as opposed to spreading economic development opportunities across a large area.
“I think it’s indicative of a lack of clarity and commitment to the one idea – which is you’ve got to get it right first here,” said Boyers, referring to Downtown St. Louis. “This is where visitors come. This is where the conventions come. This is where your sports teams are. This is where a company is going to come first when they think about relocating.”
But he also said both Joe Reagan's ascenion to head the St. Louis Regional Chamber and the good relationship between Dooley and Slay are positive developments.
"I think we’re getting there. I don’t want this to sound negative, but you ask what’s going to hold us back," Boyers said. "I’m saying if we don’t have that will, that could be a limit on how far we go. I think we’re getting there."
Some say intangible factors may prompt a big company to choose Downtown St. Louis. Pulaski Bank President Tom Reeves said Downtown offers “a very unique environment" that "will appeal to those individuals seeking a much more urban lifestyle.”
“You’re talking about creative companies," Reeves aid. "You’re talking about a whole variety of businesses and residents that really want a more urban lifestyle. They like riding their bikes to work and living downtown where there’s a lot of activity all the time. I think that’s a completely different neighborhood and environment.”
And Farrell’s group is banking on having 20,000 people living within downtown’s borders by 2020, which he added was an “ambitious” goal that he said could have implications on attracting businesses.
“What ultimately needs to happen is the residential population grows and the vacancy goes down,” Farrell said. “And we’re attracting more young, educated people to Downtown. I think we’ll start to attract more and more of the jobs that rely on those folks to provide talent for the growth of the company.”
To be sure, full city-county unity hasn't arrived. Recently, some of the city’s top political leaders expressed major concerns about the South County Connector. Dooley and Slay also have diverged to some extent when it comes to expanding transit services.
But in addition to the Partnership, Dooley and Slay have joined in efforts to bring more immigrants to the region – which they contend could help the economic fortunes of the region.
And Dooley’s praise of Slay came at the Regional Entrepreneurial Initiative, which seeks to raise $100 million over five years to grow and retain start-up companies in St. Louis.
"You can tell that things are going pretty well in terms of collaboration in terms of getting to this point," Crim said. "We’ve been doing more and more together and recognizing that we compete as a region against the world – not against each other."
The collaboration, Coleman added “allows areas of common interest to rise to the surface.”
“We can really get down to the basics of what’s important for the whole region,” Coleman said. “Because the economy, workforce issues don’t respect political boundaries. They look at St. Louis as an economic region.”