How to spend the Rams money: Develop St. Louis’ hidden “gold mine”

This article first appeared in the Solutions newsletter. Click here to learn more about the newsletter and sign up.

The special thing about the cash that St. Louis city and county won from the NFL in their lawsuit over the Rams’ departure is that it’s unrestricted. We can do whatever we want with it. Which means we could fritter it away—or, I hope, make a savvy move that builds momentum, or even tips us toward a boom.

The county has backburnered any decision on the $169 million it has received; the focus in Clayton right now is on the budget and the federal pandemic-stimulus dollars (which do indeed come with deadlines and strings attached). The city’s Board of Aldermen, by contrast, has launched an online “public engagement hub” to build consensus on how to spend its $250 million in Rams money. The next meeting is Saturday afternoon.

Some observers have made a case for long-term investment. But other possibilities abound. One is for St. Louis to emulate cities such as Atlanta and develop public property for the public good.

The Atlanta Example

When Andre Dickens was campaigning in 2021 for mayor of Atlanta, he made a big promise: His administration would build or preserve 20,000 units of affordable housing by 2030. Today, Mayor Dickens and his allies are trying to follow through by aggressively developing real estate that’s publicly owned.

Their approach is not privatization. Nor is it selling off public assets for one-time gain. Rather, the government keeps owning its properties but uses private-sector techniques to maximize a commercial return that’s spent on a public benefit. Such properties form what’s called an “urban wealth fund.” These funds have succeeded in cities such as Copenhagen, Hamburg, Hong Kong, and Singapore. Now they’re making inroads stateside.

So in Atlanta, for example, where space is at a premium, there’s an old firehouse that needs an overhaul. The plan there is to lease the land to developers who would build a new fire station at street level and a 30- or 40-story residential tower on top. The majority of the units would be market-rate so that in the long run, they’d subsidize affordable ones. And again: The land would stay publicly owned.

A Gateway Urban Wealth Fund?

One reason that Atlanta is pursuing this project and conceptually similar ones is that it landed a spot in the first cohort of the Putting Assets to Work incubator. That monthslong workshop, offered by the Government Finance Officers Association and other entities, starts with the premise that many local governments have no idea that they’re sitting on “a gold mine”: their own real estate. They have neither the resources nor the incentive to calculate its fair market value because nobody is paying taxes on it. They don’t even have a clear picture of what they own because the properties are sprinkled across various public authorities, departments, and districts.

So an initial step in the incubator’s process is for the government to build a central repository of all publicly owned land within its borders and calculate the fair market value.

Here in St. Louis, that exercise hasn’t happened spontaneously: Assessor Michael Dauphin told me via email that he’s unaware of an effort to create such a tool, that any values on public real estate in the city are “certainly out of date and not representative of the market,” and that his office does “not have any extra resources to devote to this purpose.”

(Who knows what an inventory would reveal here. Before Pittsburgh did one, the mayor there reportedly believed his city had 400 public properties valued at $57 million; the inventory revealed 11,000 properties, most of them unnecessary for the provision of public services, worth $3.9 billion.)

A local government eyeing an urban wealth fund also must choose a desired benefit. Atlanta wanted affordable housing, but a different city (such as St. Louis) could spend the yield from a newly flourishing asset on something wholly unrelated—say, public safety, water infrastructure, or schools.

From there, the government sets up a separate holding entity that is shielded from short-term political influence. It recruits leadership and staff from the private sector. Expertise matters because the staff must be “on equal footing” with private developers, says Shayne Kavanagh, the Government Finance Officers Association’s senior manager of research. That way, you avoid any asymmetry of information during negotiations.

Fund Feasability

I truly don’t know whether the St. Louis Development Corporation—the city’s nonprofit development arm—could be expected to run an urban wealth fund, what with the bewildering array of boards and initiatives already in its purview. Its insulation from political whims, furthermore, is not a structural guarantee: SLDC’s executive director is appointed by the mayor and can be removed by its board, the majority of whose members may or may not be, at any given moment, a mayor’s appointees and allies. In any case, Sara Freetly, SLDC’s spokesperson, told me in an email that “the concept of an urban wealth fund is one SLDC is interested in exploring.”

But the SLDC focuses only on the city. Underutilized public land may well dot the entire metro area, says Kavanagh. “The market doesn’t care,” he tells me, “what’s owned by the city and what’s owned by the county.”

St. Louis is especially well-positioned to launch a fund, thanks to all those Rams dollars. The incubator’s Ben McAdams, formerly a U.S. congressman and mayor of Salt Lake County, Utah, wrote in an email that seed capital isn’t necessary to launch. He added, however, that “cities who are seeing the most success have made a larger commitment of staff resources” and that public funding “will certainly accelerate the process.” It would render the asset more attractive to private capital. Then, at least in theory, private dollars would become public dollars.