Wednesday, January 31, 2007

Charlotte: An Example to Follow

If you’d ever like to see firsthand the role that the corporate community can play in the redevelopment of a city’s central business district, look no further than Charlotte. The Queen City is booming, thanks to two of its largest corporate citizens, Bank of America and Wachovia. Both companies have made substantial commitments to the city, with each company trying to build more impressive office buildings than the other. The winner, of course, is Uptown Charlotte.

Here’s a quick look at each company’s holdings in Uptown Charlotte:

Bank of America

The stunning, 60-story Bank of America Corporate Center stands proudly as the Charlotte skyline’s signature structure. Bank of America also anchors the 47-story Hearst Tower (the second-tallest building in Charlotte) as well as the 40-story Bank of America Plaza. Also included in the Bank of America Complex is the 19-story Omni Charlotte Hotel and two buildings currently under construction: A 32-story, 750,000 square foot office tower and a 150-room Ritz Carlton hotel. Last, but not least, Bank of America was responsible for developing Gateway Center, a mixed-use development consisting of housing and office space.


Wachovia Bank

Charlotte’s other banking giant also calls Uptown Charlotte its home, with four buildings in the city’s central business district: One Wachovia Center (42 stories), Two Wachovia Center (32 stories), Three Wachovia Center (32 stories) and Wachovia Main (12 stories). It has also begun construction on a mixed-use project that will include a 46-story, 1.3 million square foot office tower as well as Wake Forest University’s MBA Progam and $97 million worth of arts and cultural venues. The Ratcliffe on the Green – 10 floors, mixed use w/condos and retail.

Imagine if downtown St. Louis had more corporate citizens like Charlotte does. The departures of SBC/AT&T, Boatmen’s Bank and Mercantile Bank have left downtown with less of a headquarters presence than it once enjoyed, but there are a few corporations that remain committed to downtown – A.G. Edwards, Stifel Nicolaus and Hardee’s/CKE Restaurants, to name a few.

But what if Centene could have been persuaded to build its new headquarters downtown, instead of Clayton? What about Express Scripts or Rawlings? The impact would be amazing.

Wednesday, January 24, 2007

Addressing the earnings tax

David Nicklaus’ column in today’s Post-Dispatch got me thinking about the city’s 1% earnings tax. The earnings tax is widely viewed as one of the largest impediments to downtown’s ability to attract and retain businesses. Unfortunately, revenue from the earnings tax also accounts for a substantial portion (one-third) of the city’s overall budget, making it too important to be phased out, in the absence of any viable alternative.

Here’s my idea…

What if the city were to incorporate a sliding scale approach, promising to reduce the earnings tax if enough businesses move to or expand within the city to offset it?

Make it clear to the business community how much new business activity would be required to provide a reduction in the earnings tax:

$X million in new business will result in a 0.5% reduction.
$Y million will result in a 0.75% reduction.
$Z million will result in a total elimination of the tax.

This approach would help make it clear to businesses the role that they can play in the revitalization of downtown St. Louis, that by relocating or expanding their operations within the city, they will be working towards reducing their own taxes as well as the taxes of other city businesses.

In such a campaign, communication with the business community would be critical; businesses should be constantly updated as to how close the city is to achieving its tax-reduction milestones. Imagine the goodwill generated by the company that decides to move to the city, resulting in the total elimination of the earnings tax!

Take the case of Anheuser-Busch, for instance. In addition to its city-based headquarters and brewing operations, it also leased approximately 100,000 square feet in the One City Centre building downtown. A-B recently vacated its space in One City Centre, consolidating its downtown offices with space it already leases in Sunset Hills. This move results in a loss of earnings tax for the city, incremental tax revenue generated by A-B employees who spent money at downtown businesses on their lunch breaks and after work, and has left One City Centre with a substantial vacancy.

However, A-B might have kept its downtown offices and perhaps would have even relocated its Sunset Hills operations downtown if it knew that doing so would help reduce its overall tax burden.

I realize that this proposal is incredibly simplistic, but it’s clear that something needs to be done about the city earning tax. In order to thrive, downtown needs to remove its roadblocks and become the region’s most attractive site for business.

Friday, January 19, 2007

Welcome!

The ongoing renaissance of downtown St. Louis has been widely documented in the local media and has even garnered coverage in the New York Times, USA Today, NPR, and other national outlets. The efforts of bold loft developers and entrepreneurs has brought about a recent influx of new residents and retailers to downtown, along with a new sense of vitality and a much-needed shot in the arm.

However, often overlooked in the media’s coverage is the role of the business community in the downtown revival. How can downtown build on its assets to attract new businesses and help its existing companies grow? What role does the central business district play in the future of our region’s economy?

In this blog, we'll take a look at the people and businesses that make downtown tick.