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Local bankers
are pumping big bucks into downtown development.
By William Poe
When it comes to downtown St. Louis, area bankers are sold on St.
Louis, and those spearheading downtown development are glad they
are. “This is a banking community that steps up to the plate,” says
W. Thomas Reeves, executive director of Downtown Now!, a unique
public/private partnership formed to rejuvenate downtown St. Louis.
Even as the City of St. Louis as a whole continues to lose residents
to other jurisdictions, local bankers are decidedly upbeat about
the future prospects for downtown and for the entire city, too,
for that matter.
“This bank has been committed to financing in the city,” says Paul
Glarner, chief credit officer for Allegiant Bank, which has more
than $50 million in financing invested in the city and which maintains
a branch in north St. Louis. “It’s something we know; we’re comfortable
lending in the city, and we’re committed to it.”
Bank of America, formerly NationsBank, has been a leader in downtown
St. Louis lending and in April, 1998 committed $100 million in new
loans and direct development investment in the core city. NationsBank
made the huge commitment at a time many local developers worried
that the acquisition of St. Louis-based Boatmen’s Bank by Carolina-based
NationsBank would mean less local bank investment in the city.
In 1998, Bank of America purchased Cupples Station complex,
a part of which is being redeveloped by McCormack Baron
& Associates into a Westin Hotel scheduled to open next
month. |
“We took our leadership role seriously, “ says Mary Campbell, senior
vice president of Bank of America Community Development Banking.
“We wanted to send a message that investment in the city is good
business and that it is profitable.”
Reeves says it is vital that local banks step to the plate for downtown
St. Louis. “Our bigger goal at Downtown Now! is to create an environment
where people want to invest money, and most of that has to come
from private sources. National sources always want to see local
bank participation. If the local banks aren’t going to play, there’s
a perception that development potential probably isn’t real.”
Reeves knows of what he speaks. As the former chief lending officer
for Mark Twain Bank and Mercantile Bank, Reeves knows the key role
local banks are playing in downtown revitalization. Similarly, developers
say it is telling that the executive heading Downtown Now! has a
background on the money side, rather than on the bricks and mortar
side, of development.
Developers know that the success of Downtown Now’s $1.3 billion
downtown action plan, especially in the area of private residential
development, is largely in the hands of financing sources. It’s
not enough, Reeves notes, for a bank to loan a developer the money
needed to transform an obsolete Washington Avenue garment factory
into gleaming residential lofts. Mortgage money has to be made available
to buyers, and that can be problematic in an atmosphere of uncertain
market demand and unknown re-sale or residual real estate values,
he says.
“The major banks were true civic leaders in pioneering and working
with developers to establish a market for both rental and for-sale
residential units downtown,” Reeves says. “This key first step set
the stage for other developers, banks, mortgage lenders and investors
to follow.”
In early 1998, NationsBank/Bank of America played a major role in
the development of the first largely market rate residential development
on Washington Avenue, Campbell recalls. Before the $5.6 million,
26-unit University Lofts at 1627 Washington Ave., Campbell says
there “wasn’t one major market rate project on Washington Avenue.”
Now the building is fully occupied. “It’s been a very successful
project and was a catalyst to getting market rate in the district,”
Campbell adds.
Washington Avenue has the potential to add dramatically to the number
of downtown residential units. Only 6,000 housing units are located
downtown, with about 96 percent of them occupied. More residential
activity cannot come fast enough for Downtown Now’s Reeves.
“Downtown is our region’s calling card,” Reeves says. “If we are
to affect long-term revitalization, it’s crucial that we build a
strong residential base. These residents will frequent shops, restaurants
and venues to help create and maintain a 24-hour downtown.”
As important as residential development is to downtown vitality,
linchpin projects are considered to be the convention center hotel
complex along Washington Avenue on downtown’s northern edge and
the Cupples Station warehouse project on the south. And if it were
not for the early commitment of local banks, both projects might
now be among the many development plans collecting dust in the bowels
of City Hall.
NationsBank, for example, stepped up with $2.1 million to purchase
the old Gateway Hotel in late 1997 to hold the property for the
city until it could select a developer and finalize plans for the
long-awaited convention center hotel project. “When we bought the
Gateway Hotel, it was really a leap of faith,” Campbell says. “The
city didn’t have a developer; it didn’t have a development team;
it didn’t have anything.”
Mercantile Bank, now Firstar, also acted as a local backstop when
a national financing source withdrew its convention center hotel
commitment after a developer had been selected.
“The convention hotel was dead,” Reeves recalls. “Mercantile stepped
up and said ‘we’ve got to have it’ and agreed to provide financing
to bridge the loan and to purchase the Mayfair Hotel parking lot”
that is a centerpiece parcel to the project.
“Those commitments by Mercantile and Bank of America kept that project
alive,” Reeves says.
At the other end of downtown, Bank of America, under the direction
of David Darnell who directs the bank’s Midwest Banking Group, in
1998 purchased the multi-building, six-city-block Cupples warehouse
complex before spinning off two blocks to Sun America and McCormack
Baron & Associates for a 224-room Westin Hotel. Mercantile/Firstar,
in turn, is financing the $60 million Westin project.
“The involvement of the local banking community is critical to our
downtown revitalization efforts,” Reeves says. “It’s more than just
dollars. They bring construction expertise as well as a vital credibility
factor, which, in turn, helps attract additional investment money
both from within and from outside the region.”
William V. Poe is principal of Poe Communications, a St. Louis
advertising and marketing communications firm.
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