Innovation District law is signed in Missouri; now comes the hard part for downtowns statewide

ST. LOUIS, Mo. (First Alert 4) - Supporters say Gov. Mike Kehoe signing off on the creation of Innovation Districts across Missouri is a major step in reinvesting new revenue into public safety and infrastructure.

But the signing isn’t the finish line: the state still must finalize key rules, and St. Louis still has to set up the local process before developers can fully tap the incentives.

Developer Charles Goldman, who is proposing to redevelop the former AT&T tower at 909 Chestnut Street, called the new law a “pivotal moment” and a potential game-changer for St. Louis.

“This is a pivotal moment for Missouri and for St. Louis,” Goldman told First Alert 4.

Gov. Mike Kehoe signed House Bill 3231 on July 13, creating a framework for cities to establish Missouri Innovation Districts — downtown zones designed to speed up approvals and unlock incentives tied to new investment, office-to-housing conversions, and district reinvestment.

What’s new now that it’s signed

HB 3231 creates an Innovation District Program, allowing cities to apply to the Missouri Department of Economic Development (DED) to designate one downtown area as an innovation district.

Under the law, DED must act on a city’s innovation district master plan within 45 days, or it is automatically approved.

Once a district is designated, projects inside it can access a package of incentives, including an office-to-residential tax credit and new employer reinvestment tools.

Goldman said the law’s promise is predictability: a standardized scorecard for incentives and a local “one-stop shop” to reduce red tape.

The catch: the city and state still have to build the system

Goldman told First Alert 4 that the office-to-residential tax credit — one of the most anticipated incentives — cannot be used until St. Louis establishes an innovation district and DED finishes its rulemaking.

“In order for us to apply for the office-to-residential tax credit, the city needs to create the Missouri Innovation Zone,” Goldman said. “And it can’t do so until the Department of Economic Development has finished with their rules and regulations.”

Goldman said he expects DED’s rules and regulations process to be completed in 2027, while the city can work in the meantime on what’s required locally.

City: scorecard may not be ready until Q1 2027

When First Alert 4 requested an interview about the timeline for establishing an innovation zone downtown, the mayor’s office provided a written statement:

“We are working to understand the process of establishing an innovation zone for downtown. We will be scheduling a meeting with DED and it is our understanding that the state scorecard for projects in innovation zones may not be ready until Q1 2027.”

What St. Louis has to do next

To keep an innovation district designation, HB 3231 requires participating cities to create a fast-track permitting structure often described as a “One-Stop Shop.”

Goldman said the goal is a single, empowered point of contact that coordinates reviews across departments like building, fire and zoning.

“The bill defines [it] as a singular point of contact within City Hall, or an extension of City Hall — so, for example, SLDC,” Goldman said, referring to the St. Louis Development Corporation.

The law gives a city six months after district designation to adopt and maintain the required policies and processes.

The office-to-residential credit: capped money, big projects watching

HB 3231’s office-to-residential tax credit is designed to make costly downtown conversions financially feasible — especially for large, long-vacant office towers.

The credit can cover up to 25% of qualified conversion expenditures, but the state’s authorization is capped at $50 million per fiscal year.

Half of that annual cap, 50%, is reserved for projects in buildings larger than 750,000 gross square feet, a threshold Goldman said applies to only a handful of structures statewide.

“To my understanding, there are four buildings in the entire state that are more than 750,000 square feet,” Goldman said, listing the AT&T building, Railway Exchange, and Bank of America Plaza in St. Louis, plus potentially one building in Kansas City.

Employer reinvestment: the “3%” tool

The law also creates an employer retention and reinvestment incentive tied to workplace activity inside an innovation district.

Goldman highlighted what’s commonly described as a “3%” tool, an incentive linked to employee wages that must be reinvested in eligible improvements.

“Three percent of gross wages are returned to the business,” Goldman said. “That’s a very significant sum of funds and across all of downtown could accumulate to hundreds of millions of dollars.”

Under the law, eligible employers must commit to staying in the district for at least five years, maintain at least 95% of baseline payroll, and use the benefit only for qualifying reinvestment expenditures.

What this means for the AT&T tower

Goldman said he is continuing to advance architectural and engineering plans, but he stopped short of naming a firm construction date.

“We are eager — very eager — to move forward and would like to move forward in 2027,” Goldman said, “with the idea of completing the project in several phases over the next several years.”

Goldman argues the long-term goal is restoring certainty and confidence in downtown.

“We need public safety improvements. We need to make development easier,” he said. “Fundamentally [we] need to restore certainty and confidence in the market.”

What to watch

In the coming months, the focus shifts to how quickly DED finalizes the rules and the statewide scorecard, whether St. Louis formalizes its innovation district plan and builds the required “one-stop shop,” and which large projects apply first for a share of the state’s capped tax credits