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St Louis Centre; Different Owners, Different Standards

In 2005 the failed downtown mall, St. Louis Centre, was at the center of Mayor Slay’s priorities. At the time the Mayor and others were busy pushing Centre owner Barry Cohen to tear down the sky bridge that crosses over Washington Ave and move forward with redevelopment.

From the Mayor’s blog on Sept 25, 2005:

Stories in the business pages last week confirm the obvious. Barry Cohen, the owner of St. Louis Centre, is stalled. After a summer of fumbling, Mr. Cohen lost the funding proferred by Downtown Now’s Tom Reeves to demolish the skybridge.

Since purchasing the downtown mall more than a year ago, Mr. Cohen has promised, announced, floated, and projected some plans – none of which has come to anything. It is not clear to me whether he is hapless or canny, hoping for a profit on the $5.4 million the Biz Journal says he paid for the property.


As Tom Reeves told us, there’s plenty else to do Downtown. Meanwhile, we’ll keep sending Mr. Cohen those tax bills.

Wow, he had the mall for a whole year and the mayor calls him out. Slay supporter, now former developer John Steffen, was treated differently from day one:

Friday, February 17, 2006

This is a note to every developer hoping to be able to make a deal in the City and to every citizen hoping for redevelopment: John Steffen has announced ambitious plans to turn St. Louis Centre and the One City Centre office building into a mixed-use development.

These plans are possible because a public/private team, including Barb Geisman, Rodney Crim, Rollin Stanley, and Tom Reeves, kept their eyes on the goal line — not the headlines.

Not every real estate transaction can be negotiated in a blog.

I congratulate Barb, Rodney, Rollin, and Tom for their discipline — and I wish John good luck in getting this done.

This was well over two years ago and today the mall is totally vacant and the bridge still hovers over the street. Pyramid is out as developer with their equity partner Spinnaker taking over the now very stalled project. In fact, as reported here a week ago, Steffen and his company are out of the development business completely. Does this mean that Geisman and company dropped the ball? Were they all too cozy with Steffen?

Oh wait they did manage to give Steffen a sweetheart deal — a TIF backed by the city’s general revenues. That was also in 2006.

In the year and a half since then we’ve seen only slick marketing — drawing a line around a few blocks and calling it a district, The Mercantile Exchange or MX for short. That is almost as clever as the cards calling Ballpark Village a six block area (Broadway/5th to 8th and Clark to Walnut is 3 blocks no matter how many times they say otherwise).

So my question is this —does the city-backed TIF deal run with the property regardless of who takes over? If so, how long does Spinnaker have to complete the project? A year? Five years? A decade?

I think Steffen wanted this project so the city put up roadblocks for Cohen so he’d be forced to sell to Steffen.

Finally on Wednesday KMOX reported Pyramid’s story with greater detail and certainty than I had last Friday:

The developer of major St. Louis projects…St. Louis Centre and the former Dillard’s building, in the Mercantile exchange project…is getting out of the development business. Pyramid Construction’s John Steffen made the announcement through Steffen’s attorney Attorney Steven Goldstein… Problems in the real estate lending market are the main reason. Goldstein says Pyramid is currently working with other developers, investors, lenders and the city to make a transition for its development projects…but will continue to operate it’s property management division…which oversees a thousand apartment units in the city and surrounding area.

For someone with $609 million in development on his plate, Steffen has gone on a crash diet. Two years ago Steffen had this to say;

“We literally have more people offering to finance us than we have projects to finance,” Steffen said. “I need more projects because I have banks wanting to do business with me.”

Our city’s leaders bought Steffen’s hype. Or did Steffen buy off their better judgment with generous campaign contributions and illusions of success? Regardless our leadership has once again failed us. They claim Steffen was a victim of the current crisis but the roots of this go way back (see my post from June 2006) .
Perhaps we would have been better off giving Cohen a chance to prove himself? Of course then many of us wouldn’t have been able to enjoy the fancy parties thrown by Steffen for each project he announced. We sold out for some sushi.

I do hope all their projects are assumed by others and that they perform well. I also hope the next time we’ve got a developer bragging about his ability to get financing that we recognize the red flags.


Currently there are "9 comments" on this Article:

  1. Cohen’s management of St. Louis Centre and the Jefferson Arms was embarrassing. No matter what you think of Pyramid, don’t assume Cohen would have been any better. Cohen played these buildings like Mark Finney played the Syndicate Trust and Century Buildings, and got a similar sweetheart deal of his own. The real problem is that the city didn’t knock Cohen’s high prices down further before brokering the TIF.

    [slp — True enough, yet another example of failed local leadership.  Why was Cohen’s bid the only one at the foreclosure sale?]

  2. John says:

    Your post is predominantly speculation. And you really don’t give credence to the impacts of the current credit crisis on lending practices and the demands for residential property, which have obviously played a large part in this.

    [slp — the post is mostly looking at past and current events.  I do wonder what would have been if Cohen had retained the property.  I don’t however offer any speculation about what would have been.  I think the city felt they’d take their chances with Steffen over Cohen and perhaps this was still the best outcome.  Steffen was too busy financing big deals but not busy actually selling finished units — we can’t blame that on the credit crisis.  ]

  3. Paul says:

    Seriously, this is pretty poor reporting. Last I heard the city is not on the hook; the partner in the project is continuing the deal.

    You obviously are having a rough day so I assume thatis why you are raging against Steffen and our city leadership.

    I am pretty confident with the BILLIONS of dollars already invested in downtown that we will see other developers fill the void.

    You may not like our city leaders but even I have to admit they are doing a better job than anyone else has in the past 40 years.

    Keep up the good work and I hope your recovery keeps coming along.

    [slp — I take exception to the ‘”poor reporting” comment — actually my day is going just fine thank you very much.  I nrver stated the city was on the hook for anything — obviously there are probably no bonds to pay off yet — or was there some just to purchase the properties in which case there might be an issue.] 

  4. Adam says:

    “You may not like our city leaders but even I have to admit they are doing a better job than anyone else has in the past 40 years.”
    that’s not saying much.

  5. Tim E says:

    Steve, I would go with a great deal of speculation or a poor attempt of spinning this to be the mayors’ fault when you were writing this. First, Everybody and their uncle tries to gain political support/favor/etc. Expecting otherwise is niave. Two, Real Estate is about making money on way or another. I’m sure their was plenty of real estate agents who were glad to sell a house twice within a year for house flippers during the housing boom. But more importantly, you try to go to the prom with one who you might have the best chance to score with. It certainly beats not going to the prom.

    The benefit of this whole mess is that viable opportunities exist with the groundwork in place for something to happen. Even if it only starts with the Laural and requires an outside firm to take over a local firms best properties. But the outside firm committed even more of its own money and a major hotel chain sees an opportunity. A good sign. The Mayor supported someone whose organization not only believed in downtown and did their work locally but probably did a lot of number crunching, preliminary design and promotion. I certainly don’t see Cordish wanting to have a large staff, does little or no promotion, and certainly doesn’t want to pursue anything else in St. Louis.

    MX in my mind is an approach, even if it is mostly marketing, which is much more plausible and sustainable in the long term for downtown. Look at the tailgating lot called Bottle District. The reality is that MX properties are still intact under one ownership if I’m not mistaken. That is good thing because success on one property might encourage success next door or at least make it easier for a developer to gain further financing next time. Look at the Cupples warehouses. But, that must either be a fluke in your mind or devoid of any city attention since it is happening during Mayor Slay’s term.

    [slp — I blame the Mayor for Steffen’s current situation as he and the staff were enablers.  They likely encouraged him to take on more than he could handle as it made them look better with each new announcement.  Steffen would still be developing today if those around him had encouraged him to go at a slower pace.]  

  6. Tim E says:

    I meant to put spaces between my rambles. My short answer. His business and the markets are too complex to put it down as simple political favoritism. My positive attitude, we will some projects go forward. Not all, but certainly within reason of the current market condition.

  7. Michael Allen says:

    Good point, Steve. The city had the chance to lure Steffen or others to the foreclosure sale, which would have saved millions. Where was the leadership? This is the same sort of vaccum that has led to the quagmire on the near north side — responding to the market rather than naming priorities and setting standards.

  8. But since when is issuing 100,000,000 for Paul McKee’s blockbusting responding to market forces? Or putting the full faith and credit for John Steffen? The former is compensating criminal activity, while the latter is beyond simple subsidy for the purpose of simulating the market, but indicates the market is so against a given project that the city must guarantee payment if the project fails. How is either the representation of capitalism? I’m not familiar with Cohen and whether the daemonization of him was legitimate, but clearly issuing the good faith and credit for a project isn’t an acceptable solution. Even if we didn’t enter a recession, I don’t think we can completely assume that this project would be profitable. Although I’d like to assume that the return to the city is imminent, I also don’t think we should issue the good faith and credit on this gamble. There are many ways to promote city living which don’t require direct withdrawals from the city coffers.

  9. southsider says:

    every generation of developers needs a steffen to remind them that very likely the sky is not the limit. in fact it is usually quite a bit lower. no body put a gun to his head to get in over his head.


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