A civic crisis rooted in racial inequity. A chance visit to an Atlanta retail attraction. A commercial developer persuaded to step outside his own comfort zone. Three events converged in 2015 that put in motion a $230 million redevelopment in St. Louis’s urban core—an effort that launched like a cannonball from Steve Smith’s imagination but came within a hair’s breadth of dying.
In this episode of On Principle, we look at the moment when inspiration launches a transformative project. What prompted the inspiration? What were the considerations? In what ways did reality temper the inspiration? How far did the reality stray from the inspiration itself? And what are the takeaways for listeners?
The story of how The City Foundry in St. Louis came to be includes a wake-up call to developers, several strokes of spectacularly timed luck and a clandestine, cellphone-lit tour of an abandoned factory. The 15-acre retail, residential and dining project—built in and around a transformed automotive brake-parts factory—began when Smith visited a similar venue in Atlanta as his son graduated from Georgia Tech in May 2015.
“My son took us to a foundry there, a food hall,” said Smith, CEO of real estate development firm the Lawrence Group. “It was exuding energy. Dynamism. I'm sitting there thinking, ‘This is what St. Louis needs.’ I can tell you exactly what I was thinking and where I was sitting at the time.”
And that was the pivotal moment.
Seven days after graduation, Smith and his son visited an abandoned industrial site they knew was for sale in St. Louis’ midtown. Rebuffed by a guard when they asked to take a look, the pair snuck around the back of the building, jumped a fence and toured the site by the light of their cellphone flashlights. Within a few months, the project had its first seed funding and Smith was on his way to buying the property. The $6.4 million purchase closed in December 2015.
Along the way, Smith contended with:
Internal company debates over assuming the environmental liability for a brownfield factory that had been idle since 2007.
- Civic debates over applications for tax incentives to redevelop the property.
- A high burn rate on capital and slow-to-close leasing commitments threatened to scuttle the entire project. This was so serious in February 2019 that Smith and his firm were seriously looking at the cost of closing down the project.
Then luck kicked in.
First, the federal Investing in Opportunity Act had passed in December 2017, creating a new tax incentive mechanism to pump development dollars into underserved and impoverished communities. That helped Smith raise $50 million in June 2019, later prompting Forbes to name his project among the nation’s top 20 most transformative Opportunity Zone projects.
Then, an angel investor facilitated a $15 million “patient capital investment”—a “gift from heaven,” Smith said—that allowed project construction to commence. “It was a civic leader stepping up to do something very nontraditional, who made a lot of other civic leaders feel this was an important project to make happen,” he said.
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Credits
This podcast is a production of Washington University in St. Louis’s Olin Business School. Contributors include:
- Katie Wools, Cathy Myrick and Judy Milanovits, creative assistance
- Jill Young Miller, fact checking and creative assistance
- Hayden Molinarolo, original music and sound design
- Mike Martin Media, editing
- Sophia Passantino, social media
- Lexie O'Brien and Erik Buschardt, website support
- Mark P. Taylor, strategic support
- Paula Crews, creative vision and strategic support
Special thanks to Ray Irving and his team at WashU Olin’s Center for Digital Education, including our audio engineer, Austin Alred.
