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Take three: Centene unveils vision for new HQ in Clayton
(by Tim Woodcock - May 21, 2008)
Centene has released detailed renderings of its plans for new headquarters in downtown Clayton.
After a deal to move into the Ballpark Village downtown collapsed earlier this year, Centene revived a plan from 2005 that uses land in the city block that surrounds its current headquarters. However, under the new plan, the work would be carried out in two phases — a major difference from the original plan — and if all goes smoothly the final development will be larger than what was envisioned originally, with the first-phase, 24-story office tower sitting next to a 14-story tower to be built in the second phase. In total, the two buildings would provide 950,000 square feet of new office space in Clayton, some of which could be rented out to other firms.
At a May 13 public forum, Centene’s representatives did not put a dollar amount on the project, and Robert Wislow of U.S. Equity Realty, a developer working with Centene on the project, said the project is “completely contingent” on the company getting a complex package of tax breaks and other incentives. The value of incentives is more than $30 million.
But in the minds of many, the biggest key difference between the original and the current versions of the plan is that eminent domain is no longer required to assemble the necessary land. Previously the plan had become mired in lawsuits regarding an effort to seize the land from unwilling sellers through eminent domain. Both the current plan and the 2005 plan rely on the same parcels of land, which combined make up about half the city block bounded by Hanley Road, Forsyth Boulevard and Bemiston and Carondelet avenues, although now Centene will obtain control of this land through a traditional buyout rather than the controversial practice of eminent domain.
In the past few months, a third party, Barry Pessin, has acquired four properties, with a fifth property, owned by Debbie Pyzyk of Kohner Properties, “under firm contract” and due to close in August, Wislow said. Pessin is selling these properties on to Centene. The total to be paid for the properties is $18.8 million, making it the highest-value-per-square-foot sale in local history, according to a St. Louis Business Journal report.
The company would like the project to be fast tracked, and Wislow mentioned a potential groundbreaking date of October 2008 — even though the company doesn’t yet control all the land it needs, nor have the plans undergone any form of architectural review by the city of Clayton. The company has no specific date in mind for beginning the second phase of its plan.
Centene, a fast-growing health care management company, needs to expand, and delaying the project will only inflate the costs, Wislow said. The company has about 600 employees now and projects that it will have 910 employees by 2010 and 1,230 employees by 2015.
The increased difficulty of securing loans and the rising price of steel forced Centene to ask its architectural firm HOK to find a cheaper way to build the same kind of office space, and part of HOK’s suggested solution has been to replace the steel framing of the building with concrete. “It will look no different from the outside,” Wislow said.
Dividing the project into two phases also saves money by minimizing the displacement within the company. Currently the company has two buildings in use in this city block: its main building that faces Bemiston and the former Library Limited building at the corner of Forsyth and Hanley. In the original plan, the Library Limited building would have been torn down to make room for the new office tower, creating a need for the company to find temporary office space elsewhere. The current development plan allows for the former bookstore to remain standing while the first new tower is built to the south, where a parking garage now sits. The old bookstore would be torn down only when the second phase is in development.
The new plan changes the orientation of the project, with energy initially going into the corner of Hanley and Bemiston, Wislow said. The 24-story tower constructed there would have an “eroded corner,” a diagonal setback from the street creating a public plaza with water features, Wislow said. Along Hanley, the building would have a colonnade, or walkway, under the building, in addition to the regular sidewalk, which would make the area pedestrian friendly as well attractive to tenants who would lease space in the retail section on the ground floor of the building. The companion 14-story building would have a similar look and would extend the colonnade.
Parking arrangements are identical to those in the 2005 version, with a new 10-story, 1,380-car garage facing Forsyth in the spot where the properties that were tied up in the eminent-domain lawsuits stand. Centene’s existing 460-car garage next to its HQ on Bemiston will remain in place. The parking garage would be open to public in the evening, Wislow said.
At the public meeting, comments were overwhelmingly supportive of Centene’s vision, although one questioner wondered what the chances are of the second-phase building actually materializing.
“Nothing is a sure bet,” Wislow said. But he also said he is very optimistic that it will work out, and even if the development were to stall after the first phase, the city block in question would have been vastly improved by the consolidation of the miscellaneous parcels of land. Neighboring property prices would also have been enhanced by the presence of the new high-rise. Because the intersection of Hanley and Forsyth is one of the most valuable sites in the metro area, there would be plenty of other developers interested in building something with greater density than the aging Library Limited building, Wislow said.
Denny Coleman, president and CEO of the St. Louis County Economic Council, said he was impressed with the way the city of Clayton “graciously” and “unintrusively” sat on the sidelines while Centene attempted to broker a development deal in downtown St. Louis, yet it was ready to re-engage when that deal collapsed.
It was a good project anyway, but it is a coup for Clayton to have landed it “in the teeth of a national recession,” Coleman said.
The incentives that Centene is asking for include:• $19.178 million through the Missouri Quality Jobs program;• $8 million in tax credits through the Missouri BUILD program;• inclusion in St. Louis County’s planning process regarding upgrades for Hanley Road;• creation of a Community Improvement District, which would allow a 1 percent sales tax to be added to goods in the area;• 50 percent tax abatement on real and personal property tax payable to the city of Clayton;• a sales tax exemption on construction and personal property.
The discussions are with three different governmental bodies, and the decisions will be made separately. But, Centene spokesman Ken Fields said, “We believe the governmental entities are working closely together to ensure that Centene and this region continue to grow together.”
The Regional Chamber and Growth Association has been charged with the task of analyzing Centene’s figures regarding tax revenues and its potential for wealth creation. If these numbers are overstated, then the incentives that are under discussion now will have to be rethought.
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