This report is the third in a series of Nowak Metro Finance Lab City Cases, a set of case studies that will dig deeply into institutional and financing models that have driven large-scale urban transformation. City Cases seek to provide sufficient detail to enable large-scale adaptation and adoption and, over time, contribute to a new paradigm for financing inclusive cities by demonstrating how reorganizing public, private and civic resources in novel and creative ways can reshape local economies and remake local places.

The Cortex Innovation Community, located in the Central West End of St. Louis, is ranked as one of the top five innovation districts in the world. Founded in 2002 and built within a blighted 200-acre former industrial area, the district generated $2.1 billion in economic output for the St. Louis region in 2018. In February 2020, almost 6,000 employees worked in Cortex. This City Case details how Cortex originated, how it has evolved, and what its impact has been on the St. Louis economy. This City Case reflects on Cortex at a time of extraordinary transition. The COVID-19 crisis has threatened the viability and growth of small business and startups across the country and St. Louis is no exception. Dennis Lower who led the growth of Cortex over the past decade retired in March 2020 and a new Executive Director, Sam Fiorello, was hired just after most programming and operations within Cortex went virtual. Finally, Cortex’s astonishing growth and appeal has left little developable land within the district for additional projects—an impressive challenge to have, but one that Cortex leaders must contend with and is currently addressing in a strategic planning process.

VIEW: Washington University hosted a webinar on 1/13/21 focused on the Cortex City Case with a panel of local, national and global experts.

What is Cortex?

Cortex is both a geographic district and a non-profit. The Cortex Innovation Community was developed as a 200 acre innovation district located four miles from downtown St. Louis in the city’s Central West End. The master developer for the district is a 501(C)(3) non-profit called Cortex that oversees the development of the Cortex Innovation Community. The nonprofit is led by a board comprised of the five St. Louis anchor institutions who founded Cortex—Washington University in St. Louis, BJC HealthCare, Saint Louis University, Missouri Botanical Garden and the University of Missouri-St. Louis. In 2002, four of the anchor institutions pledged $29 million in equity to acquire land for the new district. This patient capital, along with powers granted by city government that include eminent domain and land use control, allowed Cortex to strategically buy limited properties within the district while defining the future use of every parcel. The nonprofit’s primary focus is on district-wide curation, placemaking and supporting innovators with the programming they need. Lab space, greenspace, event space, and co-working space creates innovation through what long-term director Dennis Lower calls “serendipitous collisions” of smart people and new ideas.

What impact has Cortex had?

The development of Cortex is now a global success story of a booming tech hub created from scratch in a former industrial area of a weak market city. The operational purchases of Cortex and its 369 company tenants generated over $1 billion dollars in direct impact for the St. Louis region in 2018. When you look at the indirect and induced economic ripple effects of spending by employees working within the District, that number doubles. In 2018 Cortex generated $69.6 million in state and local tax revenues for the year. This is particularly noteworthy given that Cortex is a Tax Increment Financing District authorized to use future tax revenue resulting from new development in the district to finance redevelopment projects or infrastructure investments. Cortex has used $110 million of the maximum authorized $167.7 million in city tax dollars to support infrastructure and real estate projects to date. As the 23-year TIF expires and property values continue to increase, Cortex is projected to generate over $476 million in new tax revenue over the next thirty years. Since 1998, Cortex has constructed over 2 million square feet of development with investment exceeding $700 million. At the time of this analysis the Cortex district included 369 companies with over 5780 employees.

Why was Cortex formed?

Cortex was formed in 2002 to create new economic growth for St. Louis after the city had lost 65% of its population and the majority of its Fortune 500 companies since 1950, when it was then the eight largest city in the United States. The goal was to stop farming business ideas out to other cities because St. Louis lacked the facilities and capital to support entrepreneurs and start-up companies. Life sciences was the region’s strongest industry cluster and a 2000 study forecasted that the St. Louis region could become a top ten global innovation life sciences hub if it facilitated research and collaboration opportunities among industry and academic institutions in the plant and biotechnology sectors. By creating state of the art facilities that co-locate research assets, supporting commercialization of university research and offering abundant startup capital and support, St. Louis sought to keep its talent pool and incubate new companies locally to drive economic growth.

Has the Cortex model created long-term inclusive growth?

Cortex has proved that St. Louis can build a strong new district to inject needed jobs and revenues into a struggling city. Cortex has had three goals since its formation, one of which is to create inclusive growth or as the goal was articulated in 2017, to become “the most racially, ethnically and gender inclusive district in the country.” Cortex is bordered by anchor institutions and stable, relatively affluent neighborhoods. As a result, Cortex focused its goal for equity and inclusion on steps it could take to create opportunities within its borders to address the historic lack of women and people of color within technology enterprises. In 2002, its goal was focused on requiring participation by minority and women-owned construction businesses on real estate projects. Over time, those goals have expanded to include programming and training for entrepreneurs of color, education of young people of color in technology and increasing diversity on the board. The current and former CEOs both believe there is a great deal more work to support innovators from disadvantaged communities in St. Louis who experience limited opportunities due to severe economic, educational and racial disparities. Cortex Chairman Hank Webber states that Cortex is going to continue to actively pursue new partnerships, policies and programs to create a district where the benefits of new company formation, capital investment, job creation, and wealth generation extend to all.

Why is the Cortex model important to explore?

The Drexel University Nowak Finance Lab seeks to help practitioners to better understand the types of innovation in leadership, financing and collaboration that can regenerate our disinvested cities and neighborhoods. St. Louis created an advanced technology hub and job center on former industrial land by combining private local capital and government powers and importing effective partners with the expertise to create and manage spaces appealing to innovators. The Cortex model offers important lessons on how anchor institutions can create economic growth through the building of a dynamic mixed-use innovation district centered on advanced technologies.

Read the City Case [PDF]

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