By Brian R. Hook
Local banks are getting involved in the revitalization of downtown St. Louis.
Enterprise Bank & Trust now is financing downtown redevelopment projects, once considered so risky that only big national banks with deep pockets were willing to invest.
The Clayton-based bank is the financier behind the redevelopment of the Spool Thread building. Steve Marsh, president and senior officer at Enterprise Bank, a subsidiary of Enterprise Financial Services Corp., said that the Spool Thread project currently is the bank’s largest rehabilitation, for-sale project in downtown St. Louis.
The Spool Thread building, located at 1113 Locust St., once housed the Spool Thread Manufacturing Co., a producer of silk and cotton thread for the Washington Avenue garment district. The five-story building is being turned into a mix of residential, retail and commercial space by developer New City Neighborhood Redevelopment LLC. New City is also redeveloping the Alexander Lofts at 1123 Locust into a mix of residential, retail and office space.
Marsh said that Enterprise Bank selected this project because of New City’s Dennis Flatness. “The experience of the developer, both in real estate and city real estate, was very important to us,” Marsh said. Enterprise Bank has worked with Flatness on a number of business projects over the years, according to both Flatness and Marsh. Flatness is also a principal at Welsch, Flatness & Lutz Inc., a St. Louis insurance firm.
Flatness said he approached Enterprise Bank about financing the $5 million project because of this prior relationship.
“They hadn’t done much downtown,” Flatness said. “But we went through a process, and they got comfortable and they did the deal.”
In addition to the personal relationship, Marsh said that the bank liked the mix of residential, retail and commercial space proposed for the project.
Enterprise has committed $10 million in loans in the downtown area. And more renovation projects may be in the works at Enterprise Bank. Marsh said that a couple of businesses in downtown St. Louis are working with the bank. But instead of buying real estate to develop and place back on the market for sale, the businesses are looking for property downtown to develop or redevelop for their own use. “We are working with them to locate property and then to finance them,” Marsh said.
But given the small size of Enterprise Bank relative to the size of the big national banks — Enterprise has $1 billion in assets — there are limits to how much the bank is able to put into any one project, Marsh said. Therefore, he said that the big banks would continue to have an important role to play in downtown redevelopment. “There is plenty of work to go around,” Marsh said.
One of those big banks is U.S. Bancorp, which has nearly $196 billion in assets. Zack Boyers, senior vice president and director of historic and New Markets Tax Credit investing at U.S. Bancorp Community Development Corp. in St. Louis, said that he has started to notice smaller banks getting involved in downtown.
“It means that the market is maturing,” Boyers said.
U.S. Bancorp has been committed to downtown redevelopment efforts “since really the beginning of this kind of renaissance effort,” he said. Redevelopment started to really catch on about five years ago, according to Boyers. Since then, U.S. Bancorp has invested nearly $500 million into downtown redevelopment.
Boyers said it has been the responsibility of his division to learn the intricacies of the subsidy programs, such as historic tax credits and New Markets Tax Credits. He said it is his job to make the unfeasible bankable. Over the next five years, he said that he expects the bank’s other divisions, like the commercial real estate arm, to start playing a bigger role downtown.
“We’re excited that businesses are taking a second look at downtown St. Louis, and we’re excited that financiers of all sorts want to get on that,” Boyers said. “We want other banks to get involved and fill the gaps that we are not able to fill each time.”
It is a similar story at Bank of America, whose holding company has more than $1 trillion in assets. David Puricelli, the bank’s senior vice president of community development banking, said that Enterprise Bank’s decision to enter the market “demonstrates that downtown redevelopment has gathered sufficient momentum to attract new corporate players to the effort.” Bank of America has invested nearly $100 million in downtown St. Louis over the past few years, according to Puricelli.
Puricelli said, “returning downtown to its past glory is going to take a long-term commitment from a broad base in both the public and the private sectors.”
Brian R. Hook is a St. Louis freelance writer.