St. Louis Post-Dispatch business coverage

J O I N U S O N L I N E S T L T O D A Y. C O M / B U S I N E S S

SUNDAY • 04.01.2018 • D

U. CITY FOCUSES ON OLIVE Developer is sought to help build on its potential; current residents, merchants fear being pushed out

BY JESSE BOGAN AND JACOB BARKER St. Louis Post-Dispatch

UNIVERSITY CITY • Pull off Interstate 170 at Olive Boulevard and it’s the only place in the region that offers whole red snapper, bongs, a Korean brand of Catholicism, a Jewish school and Ukrainian mechanics.

There are no fast-food chains.

Instead, hungry customers wait patiently for anything from a Jamaican jerk chicken sandwich with a side of fruit for $7.95 to Taiwanese braised pork belly

snacks, two for $5.99.

Behind a strip of small businesses such as these, residents, most of them African-American, might typically get $75,000 for 910-square-foot brick homes built in the early 1950s.

But prices are going up here at University City’s backdoor. A developer, hat in hand, is angling to buy out both sides of Olive Boulevard between I-170 and Woodson and McKnight roads. Momentum seems to be building.

The city hasn’t officially picked a

ABOVE: “The clientele will follow, but I don’t know if I’ll start again. They put you through so much,” said Easton Romer, owner of De Palm Tree, as he grilled Jamaican jerk chicken behind his restaurant in Jeffrey Plaza on Thursday in University City. Romer has owned the restaurant for 13 years.

LEFT: Owner and sushi chef Noboru Kidera prepares an order at Nobu’s Japanese Restaurant on Thursday.

Nobu’s has been in Jeffrey Plaza in University City since 1991.

PHOTOS BY CHRIS LEE clee@post-dispatch.com

See OLIVE • Page D4

LOCAL TOY STORES SCRAMBLE TO SCOOP UP TOYS R US BUSINESS

Ascension outlines new strategic direction

BY SAMANTHA LISS St. Louis Post-Dispatch

Will users ‘unfriend’ Facebook over abuse?

It’s possible

Total of more than $7 billion in sales may be up for grabs

Ascension, the nation’s largest nonprofit health system, is pivoting away from its hospital-centric thinking as it forges a new strategic direction that focuses on improving overall health, CEO Tony Tersigni told the Post-Dispatch Thursday.

The new “advanced strategic direction” comes at a time when the Catholic health system is experiencing a decline in inpatient admissions as patients seek more care in outpatient settings.

Ascension operates 153 hospitals across the U.S. and is based outside of St. Louis in Edmundson. It operates two local senior facilities.

“We’re going to focus on health as opposed to health care,” Tersigni said.

“The mindset has to change from inpatient care to: How do we move away from our campuses and move into the community and move into settings that are easier to access, cheaper, quicker and have the same quality and safety and outcome standards?”

So far the new direction has meant eliminating $400 million in cost from the administrative office. Another $65 million will be trimmed by July 1.

The shift in strategy comes as others threaten to disrupt the traditional health care market.

Late last year, drugstore chain CVS Health Corp. said it would purchase health insurance company Aetna Inc. in a $69 billion deal. The two have said they want to expand CVS’ MinuteClinics that give customers easy access to health care services for minor ailments.

At the same time, rumors have swirled about online retail giant Amazon jumping into the health care sector.

izes in toy train sets, tracks and accessories.

Local retailers, however, will have to wait out Toys R Us’ liquidation sale, which could last through June and provide shoppers with more than three months of enticing sales. Toys R Us also operates Babies R Us, which is shuttering after liquidation sales.

“Liquidations don’t help, so we might be in for a bit of a crunch in the short term,” Ray said. “But long-term, it should push a flood of people looking where to go for a toy store.”

Idanna Smith, president of The Good Toy Group, a cooperative of independent toy stores nationwide of which Happy Up is a member, said more stores were likely to go on

Perhaps Facebook should be required to remind subscribers every day that they are its product, not its customers.

The company’s financial reports make clear that the real customers are the advertisers who spent almost $40 billion last year to reach Facebook users. They’re happy to pay because Facebook’s data lets them target consumers with very specific interests and demographic characteristics.

Do you have a close female friend with a birthday next week? Facebook knows, and advertisers will pay to reach you. If you’re an avid baseball fan who travels frequently, that’s valuable information too.

Facebook exists only because we trust it with such data. The implicit contract is that we sacrifice our privacy in exchange for the ability to share photos and political musings with friends. But what happens if that trust breaks down?

That’s the question being asked in the wake of revelations that Cambridge Analytica improperly acquired millions of Facebook users’ data and used it to help campaigns target political ads.

There’s clearly a backlash against the social media platform, although it’s too early to know how many people are doing as the #DeleteFacebook hashtag suggests. Importantly, a few advertisers have expressed displeasure, which is sure to get CEO Mark Zuckerberg’s attention.

Aaron Perlut suspects, though, that Facebook will

See TOYS • Page D4

See NICKLAUS • Page D3

NIKOS FRAZIER • nfrazier@post-dispatch.com

Isaiah Reynolds (left), 8, and his brother, Joshua, 10, play with a pair of foam swords at Happy Up Inc. on Thursday in Edwardsville.

BY BRIAN FELDT St. Louis Post-Dispatch

More than $7 billion in toy sales will be reallocated throughout the industry after Toys R Us finalizes its liquidation sale and closes 700-plus stores, including several in the St. Louis area.

Local toy retailers and specialty shops are hoping some of that money trickles into their cash registers.

“There is definitely an opportunity for us,” said Shawnta’ Ray, owner of Happy Up Inc., which has two toy stores in the region in Clayton and Edwardsville.

“Something we need people to understand is there isn’t just one real toy store in the area.

There are thousands of independent toy stores across the country, and there are four or

See ASCENSION • Page D2

five of us in St. Louis.”

According to a survey from Coresight Research, a New York-based research firm that focuses on the retail industry, nearly 14 percent of Toys R Us shoppers have also browsed for products at independent toy stores in the last 12 months, suggesting those consumers could end up shopping there moving forward.

Just more than 11 percent of the broader toy-buying public said they browsed for toys or games at independent toy shops, with 10.4 percent actually buying products from those stores over the last 12 months.

“The hope is that it’s advantageous for us,” said Tom Berry, who along with his wife, Kristin, own the Frisco Train Store in Valley Park, which special-

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D2 • ST. LOUIS POST-DISPATCH

M 1 • Sunday • 04.01.2018

Need Social Security help?

Be prepared to wait awhile

Industry faces challenge to rethink, adjust

Agency receives essential funding boost, but it’s likely not enough

BY MARK MILLER Reuters

Need help from the Social Security Administration with your benefits? Be prepared for a long wait.

Years of budget cuts by Congress have left the Social Security Administration (SSA) short of staff on its toll-free customer service line. Long lines form daily outside many local field offices. And the backlog of people waiting for a hearing on disability insurance claims is more than 600 days.

But last month, Congress made a down payment on a badly needed fix for the customer-service crisis plaguing the agency.

Lawmakers ignored a request from President Donald Trump’s administration to hold the SSA budget flat, instead boosting the agency’s administrative budget by $480 million as part of the $1.3 trillion omnibus spending legislation signed into law by the president.

Few government agencies touch as many lives as the Social Security Administration. In fiscal 2017, the agency paid $990 billion in benefits to 67 million retired or disabled workers, survivors and recipients of Supplemental Security Income. The agency interacts with the public through its network of more than 1,200 field offices, its website and its toll-free teleservice.

Demand for SSA services is rising as the nation ages, with about 1 million new claimants coming on board each year. But budget cuts have forced sharp reductions in staffing and other resources that have damaged the agency’s ability to provide effective, timely public service.

The most serious problem is a historic backlog in appeals by people trying to claim disability benefits. According to agency data, the average wait for a response on an initial SSDI application or “reconsideration” (a form of quick appeal available in 40 states) was 212 days in fiscal 2017, and the average wait for an appeal decision was 605 days. More than 1.1 million people are waiting for a hearing decision.

But the service crisis affects people attempting to transact all manner of business with the SSA. The average waiting time to see a claims agent in the field offices has been rising; waiting times to get help on the SSA’s toll-free number have also ballooned — the average wait is 30 minutes, and callers are on hold for as long as two hours at peak times. Slow processing of paperwork can keep beneficiaries in limbo for months and even years waiting for mistakes to be corrected.

An SSA spokesman declined to comment for this column, saying only that the agency is reviewing the new legislation.

BUDGET SHRINKS AS ENROLLMENT RISES The agency’s operating budget has been cut 11 percent from 2010 to 2017 in inflation-adjusted terms; at the same time, the number of beneficiaries rose 13 percent.

The cuts have forced a reduction of 3,200 field office staffers since 2010, according to data from the National Council of Social Security Management Associations (NCSSMA), a membership organization composed of SSA field office and teleservice center managers. The staff losses often have come through attrition as older, more experienced staff depart.

More than 60 field offices have closed, and office hours have been reduced.

Against that backdrop, the budget allocation for fiscal 2018 is just a small start in the right direction. The omnibus legislation increases the SSA budget by $480 million over fiscal year 2017’s appropriation; $280 million of that is earmarked for badly needed information technology upgrades. Another $100 million is tagged for reducing the disability backlog. Another $100 million is general funding that can be used to improve field office and toll-free teleservice operations.

Advocacy groups welcomed the funding news. But they noted that the hole that the SSA needs to climb out of is deep. If the agency’s budget had only kept pace with the Consumer Price Index since fiscal 2010, it would be more than $1 billion higher next year than the $12.1 billion that has just been allocated, said Kathleen Romig, senior policy analyst at the Center on Budget and Policy Priorities, who tracks the operations of the SSA. That is a conservative figure, she notes, because the SSA’s costs for big items such as office rent and health care tend to rise more quickly than the CPI. “And all of that is figured in before you consider that the number of beneficiaries served is growing by 1 million a year,” she said.

Even the increased funding for disability hearings will not turn things around overnight. Much will depend on how the money is spent, said Lisa Ekman, director of government affairs for the National Organization of Social Security Claimants’ Representatives, a group of attorneys that handles disability cases. “While $100 million sounds like a lot of money, it’s a drop in the bucket in the context of the chronic underfunding of the system that has been going on for years.”

The key question, said Romig, is whether the SSA receives higher funding on a consistent basis in the years ahead.

“We didn’t expect Congress to reverse all the damage in a single year, but we will need them to continue to increase SSA’s funding if we want them to meaningfully address the agency’s problems.”

HANDOUT

Ascension CEO Tony Tersigni is shown in 2016 at the company’s Clayton office.

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Earlier this year, Amazon said it was partnering with Berkshire Hathaway and JP Morgan to create a health care company for their own employees in an effort to reduce costs.

It’s these moves that bolster Tersigni’s new direction, he said.

“I’m not fearful,” Tersigni said. “I like those moves. Those moves are really challenging us to change and change quickly. Our industry has been so slow to change for years and years. It really is a catalyst. They’re the catalyst, which is wonderful. I think it helps us rethink what we’re doing on a day-today basis and what we ought to be doing.”

But a big part of of the new strategic vision will be to partner with these types of organizations as they also seek to change the industry.

And the system will aim to better leverage its other sites of care that include urgent cares and senior centers.

A new branding strategy is helping to tie the Ascension name to all its 2,600 sites.

Tersigni said that to execute the new strategic direction, the system must meet certain goals such as turning a profit on Medicare and better serving the poor.

As more patients rely on government-based health coverage, such as Medicaid or Medicare, Tersigni said, it will be necessary to become profitable off Medicare rates.

About 64 percent of Ascension’s patients have government-sponsored health plans.

Some hospitals have long complained that Medicare underpays.

Medicare provides health care coverage to seniors.

“That 64 percent is only going to go up and we need to live within the realities of the new world and that’s the new world,” Tersigni said.

In order to do that, Tersigni said his team of clinicians are figuring out ways to eliminate clinical variance or differences in care from hospital to hospital. The doctors are creating a playbook dubbed “Ascension Way” to eliminate variance and improve care and eliminate harm, another goal.

One of the most ambitious goals is Ascension’s mission to eliminate preventable disparities in health outcomes — in other words, trying to address the differing rates for certain diseases or health outcomes based on socioeconomic backgrounds or a geographic location.

In Detroit, the system has targeted the poorest ZIP codes and is trying to figure out the factors that perpetuate the cycle of poverty. Once those are identified, Tersigni said, they’ll focus on partnerships to see how they can break the cycle of poverty.

More broadly speaking, when some of the poorest show up in the emergency room, 25 percent of their condition is related to health care and the rest is due to social determinants, Tersigni said.

Tersigni said Ascension needed to back up and figure out why those are coming to the emergency room and how they can address those issues.

“I’m sure people will say that’s just not doable ,but we have to do it.”

Samantha Liss • 314-340-8017 @samanthann on Twitter sliss@post-dispatch.com

To e-mail a staff member, use the first initial and last name, followed by @post-dispatch.com

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Watch Jim Gallagher and David Nicklaus discuss the current issues shaping our economy. stltoday.com/watch

MARKETS • WEEK IN REVIEW Dow Jones

+569.91 24,103.11

SOURCE: Reuters

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MARKET WATCH: Page D5

BUSINESS

04.01.2018 • Sunday • M 1

Facebook knows it must rebuild trust NICKLAUS • FROM D1

remain both a big part of our lives and a key medium for advertisers.

“Brand marketers and publishers have become increasingly reliant on channels like Facebook to spread their messages and spread their content,” said Perlut, a partner in St. Louis digital marketing firm Elasticity. “Some consumers will leave, but people’s lives have become so sym-

ST. LOUIS POST-DISPATCH • D3

biotic within the Facebook ecosystem. I can’t see this having a huge impact.”

Seethu Seetharaman, a marketing professor at Washington University’s Olin Business School, says it’s hard to know whether consumers will view Facebook’s transgressions as worse than, say, Target’s 2013 credit card data breach.

On one hand, Facebook’s lax oversight of data hasn’t exposed users to direct financial losses. On the other, the data that Facebook mishandled is the core of its business model. If consumers become less willing to share such data without thinking about it, the model may not work as well.

“Their credibility has been severely affected,” Seetharaman said. “Facebook was

claiming they took all the right safeguards, and this reveals that they have goofed up big time.”

Advertisers, Seetharaman says, will be both watching out for consumer backlash and rethinking the value of micro-targeted ads. He thinks Facebook’s ad revenue, which has been growing by more than 50 percent a year, could slow.

Then there’s the regulatory front. The Federal Trade Commission is investigating Facebook, and Congress will hold hearings.

Reaching consensus on online privacy legislation will probably take years, if it ever happens. President Donald Trump’s administration, so proud of rolling back red tape in other areas, is unlikely to make

showing a net employment decrease of 6,200 since February 2017. That figure, like others for specific sectors, is not seasonally adjusted. Construction and mining was another weak spot, with a loss of 2,500 jobs.

Health-care and social-assistance employers added 5,700 workers in the latest 12 months, and professional and businessservices firms added 4,100. Financial services firms created 1,800 jobs and manufacturers added 1,200.

The BLS also reported that Missouri’s unemployment rate held steady at 3.7 percent in February, while Illinois’ jobless rate dipped to 4.7 percent from 4.8 percent in January. The metro St. Louis unemployment rate, which was 3.6 percent in January, will be updated April 4. (03.23)

frequent staff parties. Ninety-eight percent of survey respondents praised the company’s “great atmosphere” and “great pride.”

Build-A-Bear’s profile mentions the “messenger bear” who delivers offer letters to new employees. Collectible gifts for birthdays and work anniversaries are another treasured perk. (03.27)

a big push to regulate social media.

So, for now, it’s up to Facebook to clean up its own act. Zuckerberg has taken a few steps, including closing a program that shared information with third-party data providers. Shares of Acxiom, one firm that participated in the program, fell 19 percent the next day.

That should show, in case you didn’t know, how valuable you and your data are to the social media marketing ecosystem.

Facebook may view you as little more than a product to be bundled and sold, but it knows that product is worth a lot of money.

David Nicklaus • 314-340-8213 @dnickbiz on Twitter dnicklaus@post-dispatch.com

MOUND CITY MONEY‌ From David Nicklaus’ blog about St. Louis business. STLtoday.com/moundcitymoney Farm slump hurts income growth in Missouri and Illinois • The continued downturn in agriculture held down personal income growth last year in both Missouri and Illinois. Personal income — the sum of wages, dividends, government payments and other forms of income — rose 2.1 percent in Missouri and 1.9 percent in Illinois. Both states showed an improvement from their 2016 growth rates, but were well below the national average of 3.1 percent.

Missouri has now trailed the national income growth rate for eight straight years, and Illinois has lagged for nine of the past 10 years. A long farm slump bears part of the blame: Agricultural income fell 72 percent last year in Missouri and 96 percent in Illinois. The business and professional services sector was the biggest contributor to earnings growth in Missouri. In Illinois, the biggest contribution came from health-care and social-assistance firms.

Missourians’ personal income came to $43,661 per person, which was 87 percent of the national average. Illinoisans earned $52,808 per person, or 105 percent of the national average. North Dakota was the only state to show a decline in personal income last year. Washington state posted the fastest growth at 4.8 percent. (03.23) St. Louis area adds 2,000 jobs in February • The St. Louis area added 2,000 jobs in February, continuing a strong start to the year after a slow 2017. January’s job gain, based on seasonally adjusted figures from the Bureau of Labor Statistics, was revised downward to 2,200 from a preliminary estimate of 3,600. Still, in just two months the metro area has added more than half as many jobs as the 7,800 it gained in all of 2017. February was also one of last year’s stronger months, though, and the latest figures show a 12-month gain of just 6,300 jobs, or 0.5 percent. That’s well under the national growth rate of 1.6 percent.

Local governments continue to shed jobs,

Three St. Louis companies make Fortune’s list • Small brokerage offices, cuddly bear-making stores and big technology warehouses are all among the nation’s best places to work, Fortune magazine says.

The St. Louis-area companies that operate those workplaces — Edward Jones, Build-ABear Workshop and World Wide Technology — have become fixtures on the friendlyemployer list. Fortune recognized Edward Jones, No. 5 this year, for the 19th time, No. 45 World Wide Technology for the seventh time and No. 55 Build-A-Bear for the 10th time.

Veterans United Home Loans, based in Columbia, Mo., made Fortune’s top 100 for the third time. It was No. 32 this year and ranked second, behind Edward Jones, on a separate list of financial services employers.

Fortune’s profile of Edward Jones mentions the brokerage firm’s regular bonuses, overnight family retreats and long list of community outreach events. Survey respondents also mentioned mentoring as “one of the most treasured traditions at Edward Jones.” (Edward Jones also was No. 1 in last year’s Post-Dispatch ranking of the top large employers in St. Louis.)

Fortune praised World Wide Technology for providing free medical care at the Maryland Heights headquarters, along with

the

SIXTH ANNUAL

The

With no bonus, Huttig CEO’s pay falls 41 percent • Huttig Building Products missed its goals for economic value added last year, resulting in no bonuses for top executives.

As a result, Huttig says in a proxy statement filed March 16, Chief Executive Jon Vrabely’s total compensation fell 41 percent to $926,805. His bonus target had been equal to his $600,000 salary. Vrabely’s pay included $300,000 worth of stock. He also has a cash long-term incentive plan, but its goals were not met and, the proxy statement says, “as a result, Mr. Vrabely did not receive any 2017 milestone payments.”

Vrabely earned 20 times as much as the median Huttig employee. The company says its 1,300 full- and part-time workers earn a median of $47,091.

Huttig, a building-materials distributor based in Town and Country, lost $7.1 million in 2017. Its share price rose 0.6 percent during the year. (03.28)

Enterprise Financial pays old and new CEOs nearly $1 million each • James Lally succeeded Peter Benoist last May as chief executive of Enterprise Financial Services, and each man earned just under $1 million for the year.

A proxy statement filed March 14 lists Lally’s total compensation as $969,702 and Benoist’s at $966,746.

Lally earned a full-year salary of $443,544, a bonus of $308,526 and a stock award of $188,858. Benoist earned Lally a partial-year salary of $219,419, a bonus of $381,903 and a post-retirement consulting fee of $353,531.

Both men’s bonuses were paid at 142 percent of the target amount. The final value of Lally’s stock Benoist will depend on Enterprise’s earnings and shareholder return between 2017 and 2019. Enterprise calculates that Lally made 16 times as much as its median employee, who earned $60,000. The Clayton-based bank’s per-share profit grew 8 percent last year, excluding unusual items, and its share price rose 1 percent. (03.27)

Post-bankruptcy stock award boosts Peabody CEO’s pay to $20.6 million • Peabody Energy Chief Executive Glenn Kellow forfeited $8 million worth of stock in the company’s bankruptcy, but Peabody more than made up for it with a $15 million stock award when it emerged from Chapter 11 last April.

The stock award brought Kellow’s total pay for 2017 to $20.6 million, Peabody disclosed in a proxy statement for its annual shareholder meeting.

Even better for Kellow, the shares he got in April were worth $26.8 million by year’s end. Peabody’s share price rose 79 percent above the value used in its Kellow reorganization plan, the company notes. It also rose 27 percent above where it began trading in April.

The stock is a time-based award; Kellow can claim all of it if he remains at Peabody for three years.

Kellow also received a salary of $1.02 million and two bonuses: $1.9 million tied to Peabody’s financial performance after bankruptcy and $2.6 million covering its time in bankruptcy. The latter was part of an plan that incentivized executives to expedite Peabody’s emergence from Chapter 11.

The performance bonus was paid at 167 percent of Kellow’s target amount and the bankruptcy-period bonus at 150 percent of target. Kellow earned 173 times as much as the median Peabody employee, the company reveals in a new disclosure that is mandatory for all public companies. Peabody’s 7,148 employees in the United States and Australia earned a median $118,812 last year.

Aegion skips bonuses in money-losing year • Aegion missed its profit goals for 2017, so its executives missed out on their bonuses.

That meant Chief Executive Charles Gordon’s total pay dropped 7 percent to $2.6 million, according to a proxy statement filed March 16. Gordon made 36 times as much as the median employee’s compensation of $73,848. The Chesterfield-based pipe-repair company employs 6,242 people worldwide.

Gordon’s salary was $664,625 after a 2.5 percent raise. He also got $1.9 million of stock, half of which depends on Aegion’s performance between 2017 and 2019.

A 2015 stock award paid out at 150 percent of its original value because Aegion’s total shareholder return exceeded the target.

Considering that, and the company’s rising share price, Gordon’s “realizable” pay totaled $3.9 million last year, or 47 percent above the reported amount. Aegion reported a net loss of $69 million last year, but its share price rose 7 percent. (03.27)

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3 mo CD Min

6 mo CD Min

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0.81

12 mo CD Min

18 mo CD Min

1.06

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0.00 10,000 1,000 1,000 1,000 1,000

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Savings Update

What is a rate lock?

By Sabrina Karl

PRESENTED BY

LOCALLY DISTILLED

IT’S TIME TO PLAY FAVORITES, ST. LOUIS! Nominate your favorite hangouts, family destinations, arts institutions, artists, restaurants, bars and more in our sixth annual Go! List poll. We’ll publish the results of our reader poll (along with our critics’ selections) in The Go! List, a special issue of Go! Magazine, published in the Apr. 29 edition of the Sunday Post-Dispatch.

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STLtoday.com/contests

Whether you’re shopping for a new mortgage or simply refinancing, a rate lock is a useful feature to consider, allowing you to remove some risk and uncertainty from the home loan process.

for holding your rate and completing the closing isn’t unlimited. This means you won’t want to activate a lock too early in your house hunting process. A good time is when you have an accepted offer on a house.

Because mortgage rates fluctuate daily, the APR you’re quoted this week might not be available in three or four weeks when you close your mortgage. If it’s lower, lucky you.

But what if it’s higher, and now your monthly payment has increased?

Even worse is when that higher monthly payment means you no longer qualify for the same loan amount.

Why not just ask for the longest rate lock possible? Because rate locks aren’t free. True, some lenders provide locks without charging a separate fee, but their cost of absorbing the risk is baked into their offered interest rate. Meanwhile, other lenders do charge an explicit fee. In either case, longer locks will cost you more.

So what if rates drop after you lock in? Though some lenders offer the option of a “float down” provision to take advantage of new lower rates, these also aren’t free, and can be expensive. It’s better to simply lock your rate at a comfortable level, rest easy that you’re protected, and not Mortgage lenders typically offer locks sweat the minor savings you’d have for 30, 45 or 60 days, so the window realized with a slightly lower rate.

This is why rate locks exist, to protect homebuyers from market changes by locking in a rate that works for them, and knowing throughout the processing period that there won’t be any rate surprises.

Rate Criteria: Rates effective as of 3/29/18 and may change without notice. RateSeeker, LLC. does not guarantee the accuracy of the information appearing above or the availability of rates in this table. Banks, Thrifts and credit unions pay to advertise in this guide. NA means rates are not available or not offered at the time rates were surveyed. All institutions are FDIC or NCUA insured. Yields represent annual percentage yield (APY) paid by participating institutions.

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BUSINESS

D4 • ST. LOUIS POST-DISPATCH

M 1 • Sunday • 04.01.2018

Developer is sought to revive area

HELP FOR THE THIRD WARD

OLIVE • FROM D1

developer yet, but one company seems furthest along in negotiations with property owners.

“I’m kind of energized by the willingness of people to grab this opportunity,” said Novus Development President Jonathan Browne, who has been knocking on doors in the 50 acres near the interchange where he hopes to build a nearly $200 million retail-anchored mixed-use center. “You’ll find someone who doesn’t like it ... but by and large, I’m where I am because people seemed willing to take it as an opportunity.”

University City officials say they’re not just aiming to refresh a tired-looking road and lure more sales tax revenue. They say they want to structure development to funnel money into the neighborhoods on the northern edge of the city, which officials say has long suffered from disinvestment.

The plan sounds a lot like Kirkwood’s redevelopment next to Meacham Park, that affluent suburb’s historically AfricanAmerican neighborhood. There, a shopping center was built after a large part of the neighborhood was acquired, but a portion of new sales taxes was earmarked for loans and other programs in Meacham. University City actually just hired the planning director who oversaw the Kirkwood effort, Rosalind Williams, as its new community development director.

Yet ambitions to revamp the broader Olive corridor have dogged builders for decades.

Plans hatched in the mid-2000s for a big retail center at the interchange fell apart.

The Great Recession of course was an obstacle. The cloth pattern of the neighborhood is also complex. Unlike the Delmar Loop, which thrives on foot traffic, Olive is Missouri Highway 340. Yet officials believe the wide roadway has lots of potential, with about 300 businesses and 20,000 vehicles passing by on any given day.

The area is the closest the St. Louis region has come to Chinatown since a swath of downtown was cleared to build Busch Stadium.

“Olive is not a real pretty road, but we really do have a strong and thriving international district there,” University City Mayor Shelley Welsch said. “It is not just Asian. We have influences from all over the world.”

That’s part of what’s at stake, said Rick Raaf, 58, who lives on one of four residential cul-desacs near I-170 that have drawn interest.

“I don’t want to move. I love it here,” he said. “What they have offered isn’t enough for me to get what I have.”

Raaf is proud of the character of the neighborhood.

“The only way that we move into a post-racial world is for all of us to live together and figure out how to do that,” he said.

“This is a place where it’s happening all by itself. That’s an atmosphere worth protecting so it can prosper.”

Two other residents declined to comment. One said the offer to buy was well above market values in recent years.

For the development to be successful, Welsch said there first

PHOTOS BY CHRIS LEE • clee@post-dispatch.com

“I wish they can still bring diversity here but I understand the move,” says Klippers Barber Salon owner Carl Walker. “I’m not mad at it. It is what it is.” Walker has owned his University City business for four years.

A diverse set of businesses occupy Jeffrey Plaza on Olive Boulevard in University City, including a tattoo parlor, barber salon, Asian grocery store and Japanese, Jamaican and Vietnamese restaurants.

needed to be a large anchor, as well as space for new and some current businesses so it doesn’t look like any other intersection.

“I hate to lose committed University City residents,” she said.

“And we may lose some businesses that have made their home in University City for a long time and helped stabilize that area for many years. If this development did proceed, I hope that they try to make sure a lot of the diversity comes back into the new development.”

That seems unlikely for the wide array of more than a dozen tenants at Jeffrey Plaza at 8600 block of Olive Boulevard. A firm tied to Novus purchased the plaza in January.

After 15 years there, employees at All Star Tattoo said they had since been told that 2019 would probably be the last at the plaza.

“It’s not like you are going to come back in two years to the same area,” said Trevor Cosby, 30, a tattoo artist. “You can’t put your life and work on pause — that’s if they would have you.”

Now they are weighing a move to Maplewood, maybe Olivette.

They’d rather stay put.

Nobu’s Japanese Restaurant has rented a former IHOP building at the other end of the plaza since 1991. It grew out of its original location in the 1980s.

“I want to work,” Noboru Kidera, 70, said from behind the counter. He runs the business with his wife, Taeko. “I don’t have enough money to open a new restaurant. If you give me the money, I will do it. I have a lot of nice customers here. I don’t know any other job.”

Right across Olive from Nobu’s, a representative of Bob’s Seafood, which supplies many restaurants with fresh fish, said nobody was going to talk about it. Salesmen at nearby Beyers Lumber and Hardware, a fam-

ily business that dates to 1946, said they’d heard redevelopment plans for years.

Behind them, a tenant indicated change was coming soon.

“We just know we were told to be out by June 1 and that’s what we plan on doing,” said Mike Pickerd, of Central Turf and Irrigation Supply.

REDEVELOPMENT TARGET In the last three years, University City officials have stepped up their efforts to lure development to the corridor, issuing requests for proposals at the corner of Olive and North and South Road and at Midland Boulevard.

City officials are still mulling a recent proposal from the one responding developer to build mixed-use housing and commercial at Midland Boulevard. A plan to build a brewery at North and South fell apart last year.

University City has already put out one request for proposals at the I-170 interchange, and Novus was the only respondent. The Webster Groves-based developer was closely involved in the project from the beginning and was invited to a city council work session last year before the city issued its first request for proposals at the interchange.

Novus, which developed Market at McKnight in Rock Hill, Big Bend Crossing in Crestwood and the Shoppes at Old Webster, had bid unsuccessfully for a similar opportunity just on the other side of I-170 in Olivette. Keat Properties plans a shopping center there.

Still, Browne said that allowed his team to get familiar with the interchange and the opportunity at the corridor and thus bid for a project on the University City side. He said he already had an anchor retail tenant that had expressed interest. If chosen, Novus hopes to build about

Independent stores woo customers TOYS • FROM D1

the marketing offensive to attract more customers.

“There is an opportunity, and for any small business, when opportunity presents itself, you have to figure out how to get your share,” she said. “We’re all trying to figure out what the best ways to speak to consumers are.”

Smith said that instead of marketing to people within a certain radius relative to their store, perhaps toy store owners should “look at where the nearest Toys R Us is to them and a little bit further” than they typically do.

Ray said she planned to be more aggressive with marketing campaigns, might start introducing new products and would increase the number of events aimed at bringing children and their parents through the door.

Once shoppers walk in, Ray said, they usually enjoy their experi-

NIKOS FRAZIER • nfrazier@post-dispatch.com

Shawnta’ Ray, owner of Happy Up Inc. in Edwardsville, stands Thursday in her store. “There are thousands of independent toy stores across the country, and there are four or five of us in St. Louis,” she said.

ence and return.

“Because we’re relatively small, we have the ability to quickly adapt to what our customers need, and every year our store can be different based on those needs,” she said. “We also offer free gift wrapping and we generally know our customers, so we can better help find toys right for their children.”

While some consumers may

spend more money in local shops, a more likely scenario entails many shoppers’ shifting to other retail behemoths such as Walmart, Amazon and Target, which all figure to make major moves to capture Toys R Us’ business.

“Somebody is going to fill that void,” Smith said. “They had a big business. It’s not like they didn’t have the business, they just

400,000 square feet of retail and 300,000 square feet of other uses, including apartments, offices and a hotel.

University City, though, decided to issue a new request for proposals in February, expanding the overall footprint. The deadline is Monday. Browne said he was surprised, but understood if the city felt it needed to go through the process again because of the change in scope.

“We’ve been working closely with them, but once the new RFP was submitted, all the discussions and work with Novus was terminated,” said Gregory Rose, University City’s city manager.

“It’s an open opportunity for any developer that wishes to submit a proposal.”

But Novus and its affiliates have already been in negotiations with property owners and working on the project for over a year.

Max Tsai described negotiations with Novus as “a little weird.” His family has invested in the area since the 1990s and is among the largest landowners in the development footprint, including a strip mall, former synagogue and three out of four street corners at the intersection of Olive, Woodson and McKnight roads.

“We weren’t able to come to an agreement because the offer they made to us didn’t make sense to us,” Tsai said. “We won’t take them seriously until they come up with something we find viable.”

If the city decides to tap Novus, Browne said he hoped some of the small restaurants and businesses that had loyal followings would find space in the new development. But he acknowledged that waiting a couple of years for new space was difficult for small businesses.

Some of the street’s well-regarded restaurants, such as Private Kitchen and Cate Zone Chinese Cafe, are further east on Olive. But other acclaimed eateries, such as Taiwanese restaurant Tai Ke, are in the potential development footprint.

“In a perfect world,” Browne said, some of the businesses in the development area can move east and fill in some of the vacancies that exist in the commercial space there.

“It absolutely has that international flavor,” Browne said.

“I don’t think that’s going to change.”

And he said he’d make sure the popular Bob’s Seafood had space at any new development, which probably wouldn’t even get started until 2020.

“I probably wouldn’t be allowed home if I didn’t find a place for Bob’s Seafood,” he said.

didn’t execute the business plan very well. So Target will be right there.

Walmart will be, too. And I expect Amazon will do Labit everything in their power to fill that void, as well.”

The Coresight research also said dollar stores, department stores, eBay and Costco could also capture some of those toybuying dollars.

“There are a lot of balls up in the air right now in terms of how the economics of this will shake out,” said Jennifer Labit, founder and CEO of Cotton Babies, a supplier of cloth diapers that also operates a retail store that sells children’s toys and baby gear such as car seats and strollers.

Cotton Babies recently closed its Town and Country retail store and moved it to its headquarters facility in Fenton, where operations could be more streamlined and the company could use an expanded space to offer more classes, group meetings and playdates.

Labit said that Babies R Us, which has two locations in the region, was one of Cotton Babies’ biggest clients and that the clo-

Whatever development goes at the interchange is likely to be offered tax increment financing, or TIF, support, which lets developers use increases in sales and property taxes to finance their development.

But University City officials said they had a slightly different approach for the TIF they were planning. At least a portion of the TIF sales tax captured from any new development would be reinvested in neighborhood stabilization in the adjacent subdivisions, Rose said, rather than simply becoming another piece of the developer’s financing package. The University City TIF Commission will discuss the project at 6:30 p.m. Wednesday at City Hall.

“The TIF that’s being proposed is certainly not traditional in the sense that it will allow for funding to improve the third ward, which has historically been a challenged area,” Rose said. “It also would allow for funding to improve the Olive Boulevard corridor.”

It’s an approach Williams, the new planning director, used when she was planning director of Kirkwood and the Kirkwood Commons developed — buying out a large swath of historically black Meacham Park in the process. Instead of giving all the TIF money generated to the developer, several million in TIF money was earmarked for neighborhood improvement in Meacham.

Browne said he got to know Williams from work his firm had done in Kirkwood. Novus was not the Kirkwood Commons developer, but it acquired a portion of the other side of Meacham to build Big Bend Crossing.

Williams, a longtime University City resident and former planning commission appointee, called him about a year ago to ask about interest in investing in the residential neighborhoods, too.

But Browne said his firm had little experience with residential development.

“What you need is what you had in Kirkwood,” he recalls suggesting. “Some commercial development to have some horsepower to fund what you’re interested in.”

Third Ward City Councilman Rod Jennings said he supported the development because he had seen land values drop over the years and he thought they should be going up. He sees the area becoming a hub, with hotels, theaters, restaurants and parking.

“If I had $100 million I would be buying that area up and trying to put something there,” Jennings said. “I am perplexed why there is only one developer.”

He said he wanted to ensure that any taxpayer assistance was administered professionally.

“I want to make sure this is not a cash cow for any one individual, contractor or any one company,” he said.

Browne, at Novus, said he had been surprised that University City’s leaders had been so supportive. In a council known for division, he said his proposal had already gotten three unanimous votes.

“That told me both sides of the political spectrum were in favor of this redevelopment,” he said.

But how that corridor develops will be up to a new city council.

Welsch isn’t running for re-election as mayor. Jennings is done, too. University City will see two new members on the sevenmember council after Tuesday’s election.

“We’re in a city that’s in transition, and we’re in transition at the political level,” Rose said. “It could be a change in approach in economic development here.”

sures would result in lost revenue that would have to be made up elsewhere.

Cotton Babies is also a supplier for Target and Walmart, among other big box retailers.

The company is also expanding its product offerings to include more hygiene items and adult care products.

“We’ll shift our strategy, and I expect to see more shifts in the future as to where and how people shop,” she said. “When the liquidation sale ends, we’ll move more aggressively to capture that business.”

Cotton Babies’ biggest opportunity is within the registry segment, Labit said.

According to Toys R Us’ last annual report, its Babies R Us Registry business had more than 23 million registrants since being launched a couple decades ago. And a CNBC report said approximately 100,000 active Babies R Us registries could be up for grabs.

“That’s the play to be had for us as registries are growing, and it’s our goal to capture those registries for Cotton Babies,” she said.

Brian Feldt • 314-340-8528 @bfeldt on Twitter bfeldt@post-dispatch.com​

J O I N U S O N L I N E S T L T O D A Y. C O M / B U S I N E S S

SUNDAY • 05.06.2018 • D

PROFITS PROPEL CEO PAY The unsurprising reveal: The big boss makes far more than typical worker MICHAEL NEIDORFF Centene

$25,259,468

GLENN L. KELLOW

HUGH GRANT

Peabody Energy

TIMOTHY WENTWORTH

MARK C. TRUDEAU

Express Scripts

Mallinckrodt PLC

Monsanto

$20,577,025

$19,459,959

$15,895,415

$15,026,710

DAVID NICKLAUS St. Louis Post-Dispatch

It was never a secret that the big boss made a lot more money than the worker at the assembly line or the call center or the checkout counter.

Now, thanks to new disclosure requirements that were part of the DoddFrank Act of 2010, we know exactly how much more.

Last year, Centene Chief Executive Michael Neidorff earned 379 times as much as the median worker at his health care company. Enterprise Financial Services CEO James Lally earned just 16 times as much as his median bank employee.

The variation has as much to do with the composition of a firm’s workforce as it does with the generosity of the CEO’s pay package. Caleres’ Diane Sullivan and Reinsurance Group of America’s Anna Manning each earned a little over $7 million last year, but Caleres’ pay ratio was 331 and RGA’s was just 66.

The difference? Caleres’ largely retail employees earned a median $21,528, while RGA’s insurance professionals See NICKLAUS • Page D4

Centene chief leads pack for 4th year; median pay up 33%

BY DAVID NICKLAUS St. Louis Post-Dispatch

MORE AT STLTODAY.COM/ BUSINESS

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CEO pay ratio • See the ratio of the CEO’s pay to earnings of the median employee.

“The Bottom Line” • Watch Jim Gallagher and David Nicklaus discuss multimillion-dollar pay packages and a new CEO pay ratio rule.

EPA turmoil raises concern over progress at West Lake Landfill

BY BRYCE GRAY St. Louis Post-Dispatch

As Environmental Protection Agency Administrator Scott Pruitt faces a mounting list of ethics and spending complaints, many locally wonder how the controversy will affect the West Lake Landfill Superfund site.

Some of the widely reported ethics and spending complaints against Pruitt include: frequent first-class air travel paid for by taxpayers; a six-figure trip to Morocco at least partly arranged by a lobbyist; controversial raises for two close aides; and living for months in a Washington condominium owned by a lobbyist’s wife for $50 per night.

As allegations snowball, so too do calls

for Pruitt’s resignation — a specter with vocal support from many environmentalist groups that have staunchly opposed his regulation-trimming agenda.

Pruitt But things are a bit different in St. Louis. Just months after the EPA announced a long-awaited proposal to excavate the bulk of World War II-era radioactive waste from the West Lake Landfill Superfund site in Bridgeton, some local activists worry that top-level turmoil at the agency threatens to plunge the site back into the state of uncertainty and inaction that has dragged out there See PRUITT • Page D4

The men and women who run corporate St. Louis had a very good year in 2017.

Median CEO compensation rose 33 percent last year at the 26 public companies that had the same chief executive throughout 2016 and 2017.

Profits were generally strong, and boards rewarded the bosses with bonuses that were up 40 percent from the previous year. More than half of St. Louis CEOs’ pay came in the form of stock, so they also benefited from a rising market.

Michael Neidorff of Centene was the area’s highest-paid CEO for the fourth year in a row. His total compensation rose 15 percent to $25.3 million, but Centene can make a strong case that pay is in line with performance. Its per-share profit grew 38 percent last year and its share price climbed 79 percent.

The second-biggest pay package for 2017 went to Glenn Kellow at Peabody See CEO • Page D4

Square plans to double its space, add 300 jobs in Cortex district

BY BRIAN FELDT St. Louis Post-Dispatch

Mobile payments company Square plans to expand its footprint in St. Louis and add 300 jobs over the next five years in the Cortex innovation district.

To make room for the new employees, the Silicon Valley-based tech company told the Post-Dispatch it will lease an additional 56,000 square feet of office space in the Cortex 1 building at 4320 Forest Park Boulevard and renew its lease in the @4240 building at 4240 Duncan Avenue.

After the expansion, Square will have approximately 100,000 square feet of office space and more than 600 employees in Cortex, making it the largest

tech-related tenant in the district. BJC HealthCare is Cortex’s largest tenant.

The St. Louis office will be Square’s second largest hub of operations outside of its headquarters in San Francisco. And with the new space, the company, which was founded by native St. Louisans Jack Dorsey and Jim McKelvey in 2009, will have the capacity for an 800-employee workforce here. Dorsey also is CEO of Twitter.

McKelvey said in a statement that Square was proud of its local roots and “thrilled to expand our presence here, where we’ve exceeded our growth expectations thanks to the wealth of local talent.”

See SQUARE • Page D3

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Secure children’s data now to protect credit in the future Commission.

Report to the credit bureaus • Ask the three bureaus to remove all information created fraudulently, from inquiries on accounts to collection notices. Request that they put a credit freeze — or at least a fraud alert — on your child’s account.

File a police report • This step generates paperwork you may need to persuade businesses at which the criminals opened accounts to do the right thing (below).

Inform businesses that these accounts are illegitimate • Ask them to close the accounts and mark them as having been generated by child identity theft.

File a complaint with the Federal Trade Commission • The FTC is the nation’s repository of identity theft complaints. Its ID theft website will generate an action plan with further recommendations for you.

Some grow up to find thieves have set up many accounts in their names

BY ELISABETH LEAMY Special to The Washington Post

A college-bound teen applying for financial aid found out she had a long and appalling credit history created by crooks who had stolen her Social Security number when she was a baby. According to the nonprofit Identity Theft Resource Center, it took so long for the teen to clear her name that she never caught up to her peers in college.

She is far from alone. Last year, nearly 14,000 identity theft cases reported to the Federal Trade Commission involved people age 19 and younger. Credit reporting agency Experian estimates a quarter of kids will be victims of identity fraud or theft before they turn 18.

“Child identity theft is something all parents need to be alert for,” says Eva Velasquez, president of the Identity Theft Resource Center. “Thieves target children because they have clean credit reports where they can take advantage of the credentials without it going noticed for a long period of time.”

So where do the bad guys obtain your child’s personal information? Data breaches are the primary method; 2017 was a record year for stolen financial information, according to Gemalto, a digital security firm that tracks breaches. Anywhere you provide your child’s Social Security number — doctor’s offices, hospitals, schools, camps, sports leagues and so on — creates a potential point of vulnerability.

On a smaller scale, some identity thieves harvest this data by committing burglaries of homes or cars, or even snatching purses. And some child identity theft is committed by family members or close associates with access to a child’s information. Foster children are at particular risk, because so many adults are involved in their lives.

Once identity thieves have a child’s Social Security number, the internet makes it easy to piece together the rest of the information required to open bank or credit accounts.

A child’s date of birth, city of birth, mother’s maiden name, etc., can often be found simply by scanning Facebook.

Identities complete with all of these details, called “Fullz” on the dark web, a shadowy network where criminals sell guns, child porn and identities — go for far more than adult identities. With fake identity in hand, thieves can apply for credit cards, car loans and mortgages, rent apartments, set up utilities, have surgery or obtain government benefits. By the time the child or parents catch on, the thieves may have generated so much havoc that the victim is unable to obtain credit for years.

Here are several steps you can take to try to keep your child’s financial identity from being stolen in the first place.

Provide less information • Refuse to provide your child’s Social Security number and consider holding back information such as middle name and date of birth, unless essential. If a school, doctor or government entity insists, ask them what they do to secure that information. See if you can give your identifying information instead of theirs, since it is easier to monitor your own credit file for problems.

Protect physical information • Don’t carry documents containing your child’s Social Security number or other information in your wallet. Instead, keep them locked up at home or in a safe-deposit box. Shred sensitive documents before throwing them away. Use a locked mailbox for incoming and outgoing mail.

Use caution on social media • Don’t post personal information online, such as birth dates or cities of birth, that would be of value to identity thieves. And once your son or daughter is old enough to have an account of his or her own, discuss online security with them and monitor their social media use.

Consider creating/freezing your child’s credit file • The three credit bureaus, Equifax, Experian and TransUnion, may establish a credit file for your child at your request. At least 23 states then allow you to freeze that file, so outsiders can’t open bogus accounts in your child’s name. According to the Identity Theft Resource Center, this step requires great responsibility: You must protect the PIN needed to unfreeze your child’s account and make it available when the child is ready to start using credit.

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to strike back against child identity theft swiftly and completely. Here are the steps to take, according to the Federal Trade

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Some retirees live so miserly that they barely spend down nest egg

BY GAIL MARKSJARVIS Reuters

When Doug Anderson retired as an electrician at the end of 2016, he worried he would run out of money. So he put himself on a miserly spending plan.

A financial planner disagreed, however, and assured Anderson that his pension and savings would be plenty for a lifetime. In fact, the planner told Anderson to give himself a break and have some fun.

In response, Anderson, 67, and his wife, Pam, 65, took three driving vacations last year from their suburban St. Paul, Minn., home. Anderson also treated himself to a used Chevrolet Silverado pickup.

“It’s beautiful,” said Anderson, who rarely indulged himself while working and raising six children. “I roll down the window, stick my arm out, play retro music and turn back the clock 40 years.”

Most retirement research points to an impending retirement crisis for about half of Americans who save too little. But a new study suggests that behavior such as Anderson’s makes the outlook far less dire. Because people worry about outlasting their savings, most adjust by living humbly — often overly so. Consequently, they make even modest savings last for years longer than expected by researchers.

While some people do run out of money, a person with less than $500,000 in savings, on average, spends just about a quarter of it during the first 20 years of retirement, according to a study by Sudipto Banerjee of the Employee Benefit Research Institute.

One-third actually end up with a nest egg larger than they had when they left their jobs, the study says. Even people who had only $32,000 shortly after leaving the workforce had about $24,000 left some two decades after retiring.

Rational behavior defies the assumption in many studies that people exhaust their savings and live in crisis, Banerjee said. He used government data from the U.S. Health and Retirement Study to track retirees born between 1931 and 1941 with assets ranging from stocks, bonds, mutual funds, real estate and CDs to savings and checking accounts. Individual homes were excluded, although people with homes and pensions stretched their savings the furthest.

“People don’t know how long they are going to live,” said Lori Lucas, the president and chief executive of the Employee Benefit Research Institute.

“They may also be afraid of facing catastrophic health care costs if they need to stay in a long-term care facility for a prolonged period.”

Those uncertainties are valid, yet many people overdo frugality, said Brett Anderson, the financial planner who urged Doug Anderson to treat himself a little. (The two men are not related.)

“I have a lot of clients who are very well off financially and live in trailers in Florida,” said the Hudson, Wisconsin financial planner. “They are quiet millionaires.”

The EBRI study found conservative spending among every income group.

“People don’t want to touch their nest eggs,” said financial planner Anderson. “They feel fine spending interest or income from their investments but are reluctant to touch anything else.”

FINANCIAL RESTRAINT POST-DISPATCH BUSINESS STAFF LISA BROWN

Business editor

314-340-8127

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Economic development

314-340-8291

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Retail and financial institutions

314-340-8528

BRYCE GRAY

Energy and environment

314-340-8307

SAMANTHA LISS

Business of health

314-340-8017

MARK SCHLINKMANN Transportation and real estate

314-340-8265

DAVID NICKLAUS

314-340-8213

Business columnist

To e-mail a staff member, use the first initial and last name, followed by @post-dispatch.com

SUBMIT AN ITEM Bulletin Board and People in Business submissions should be sent to: biznetworking@ post-dispatch.com.

Or you can mail a release to: Business News, 900 North Tucker Boulevard, St. Louis, Mo. 63101

RED FLAGS Even if you are vigilant, however, your child could be a victim of identity theft.

Here are red flags: A credit report exists • Children should not have credit reports unless you have added them to your accounts. Check with the three major credit bureaus when they are about 16 years old, which will give you time to troubleshoot before they become adults.

Your child is receiving credit cards or offers • Sometimes crooks mess up and credit cards they have opened are routed to your child instead of to them.

Your child is receiving bills or collection notices.

You are having problems obtaining government benefits for your child • Sometimes, the bad guys have already applied for those benefits.

If you discover a problem, it’s important

Don’t be too worried you’ll outlive your savings

THE BOTTOM LINE Go to stltoday.com/watch to see why Jim Gallagher thinks all the multimillion-dollar pay packages are outrageous, while David Nicklaus is focused on a new rule that compares the bosses’ compensation to that of their workers on this episode of ‘The Bottom Line.’

MARKETS • WEEK IN REVIEW Dow Jones

Nasdaq

-48.68

+89.82

24,262.51

SOURCE: Reuters

7,209.62

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MARKET WATCH: Page D5

In the EBRI study, those with the most savings — a median of $857,450 shortly after retiring — still had $756,300 two decades later. The decrease amounts to just 11.8 percent of the original sum.

The largest drop in retirement nest eggs, 24.4 percent, was among those with the least savings, or a median of $29,975.

Frugal behavior is consistent with research led by Anna Rappaport for the Society of Actuaries. She and her team found that most people do not plan for retirement or know what they should spend, but they adapt — even when shocked by high dental bills or a roof repair.

What can devastate financially are divorce, caring for a mentally or physically ill adult child who cannot work, and long-term care expenses, according to the actuarial society’s research.

Still, debilitating health care costs are far more rare than people fear, according to the EBRI research. Half of retirees face no nursing home expenses because Medicare covers short recoveries after hospital stays and Medicaid can help when resources run out.

The medical annual out-of-pocket spending for 90 percent of retirees is just $2,000, and the big nursing home costs over $87,000 hit only 10 percent of people living longer than 95, according to the EBRI study.

BUSINESS

05.06.2018 • Sunday • M 1

ST. LOUIS POST-DISPATCH • D3

State providing tax incentives SQUARE • FROM D1

To help facilitate the move, the state of Missouri is providing the company with approximately $1.8 million in tax incentives.

Square considered moving its local operations to downtown St. Louis, other areas of midtown or remaining in Cortex, a destination for innovation-oriented companies.

It’s unclear what space Square will expand into in the Cortex 1 building, where it already subleases office space formerly occupied by biotech firm Stereotaxis.

It could take more space in that office, or could potentially move into the area currently occupied by the Biogenerator, which will anchor a remodeled Crescent building being developed by Washington University nearby.

Cortex President and CEO Dennis Lower declined to provide specifics on where Square would expand in the building. He said the expansion was a big win for the district and sends a message that St. Louis has value for expanding tech companies.

“Their continued expansion is something we can leverage nationally,” Lower said.

At least 36,000 square feet of new tech space will be available in Cortex as soon as this summer, when developer Wexford Science and Technology finishes work on its $53 million office building at 4220 Duncan Avenue, which will be anchored

by Microsoft.

Looking ahead, Wexford plans another

POST-DISPATCH FILE PHOTO

The interior of Square’s office in the Cortex district of the Central West End is shown in this photo from March 2016. Conference rooms at Square’s offices are named after St. Louis roads, including Lindell, Manchester, Vandeventer and Skinker.

tech building that would be similar to the 180,000-square-foot 4220 Duncan structure, providing even more space for tech companies.

Square initially opened its Cortex office in 2015, roughly six years after McKelvey and Dorsey moved the company from St. Louis to San Francisco because they couldn’t find a critical mass of tech talent to hire here.

As St. Louis’ entrepreneurial ecosys-

tem evolved, McKelvey said the company realized it could tap into the deepening talent pool of graduates from institutions such as Washington University and St. Louis University.

Square initially committed to creating 200 jobs, for which the state provided the company roughly $2.5 million in incentives.

Today, Square has just over 300 workers in the St. Louis area and is

Dallas.

Beginning this fall, Stadia says, the five or so startups it selects for a 14-week accelerator program will split their time between St. Louis and Frisco. The Demo Day for Stadia’s current cohort, an event that has been held in St. Louis throughout

the program’s history, will be in Frisco this August.

Stadia is partnering with LaunchPad City, a business incubator, for its Frisco programming.

Stadia also announced that it will begin a separate track this fall for companies involved in esports, or competitive online gaming. It has invested in a handful of esports companies already, including Chicago-based GamerzArena, which stages daily video game contests offering cash prizes.

Twenty-five companies have gone through Stadia’s sports-business accelerator program since 2015. Stadia invests up to $100,000 in each firm. (04.27)

even operating in temporary workspace in the former TechShop space, at 426 Forest Park Avenue, as it continues to grow.

McKelvey developed the first prototype of Square’s credit card reader in a TechShop in California.

The chain of maker spaces, which opened its Cortex location in 2016, announced it would cease operations late last year. McKelvey is in the process of reviving the St. Louis workshop under a new name, Made.

The maker space that’s under development at 5127 Delmar Boulevard is near McKelvey’s Third Degree Glass Factory, a gallery and studio that has glass-blowing studios and kilns for artists.

Despite posting a net loss of $24 million in its most recent quarter, Square beat Wall Street’s revenue projections by reporting $669 million in sales for the quarter that ended March 31. The company went public in 2015 with a $2.9 billion valuation. Today, it’s worth around $19.4 billion.

Square has additional offices in New York City, Seattle, London and Dublin, Ireland, among other cities.

“We’ve had a great relationship with Square the past few years, so it makes sense that they chose us as a location to continue their growth,” Sheila Sweeney, CEO of the St. Louis Economic Development Partnership, said in a statement.

Most of Square’s employees in St. Louis are in compliance and customer support, though some IT and recruiting jobs are in Cortex, too.

Square, on its website, lists six open local positions, mostly in sales and support roles.

Brian Feldt • 314-340-8528 @bfeldt on Twitter bfeldt@post-dispatch.com​

MOUND CITY MONEY

St. Louis will share Stadia accelerator • Stadia Ventures, which has run its sports accelerator program in St. Louis since 2015, is branching out to Frisco, Texas, a suburb of

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the index with which it is linked, and that index will fluctuate with market conditions.

The margin, on the other hand, is fixed and serves as an add-on to the index. So if an ARM’s margin is 3%, and the 12-month LIBOR index is 2.25% at adjustment time, the new rate would be 5.25% (2.25% index + Each ARM has an initial period and 3% margin). an adjustment period. The initial period is typically 3, 5, 7 or 10 Two more ARM terms can also come years during which the rate is fixed. into play. One is the rate adjustment But after that, the rate will change cap, which limits how much the rate according to its adjustment period. can move with any one adjustment.

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American Railcar’s Ex-CEO forfeits stock options • Jeffrey Hollister forfeited more than $1 million in stock appreciation rights when he was terminated as American Railcar Industries’ chief executive.

Hollister, who left the company Dec. 31, received the stock appreciation rights as long-term incentive compensation. The company’s proxy statement says he forfeited all of last year’s $562,500 worth of the rights along with unvested portions of previous year’s grants.

The stock appreciation rights, which are similar to stock options, vest over three years. Assuming Hollister lost two-thirds of his 2016 grant and one-third of the 2015 grant, his total amount forfeited was more than $1 million.

The proxy statement lists Hollister’s 2017 compensation as $1.25 million, but he received less than $700,000 of that. He was paid a $375,000 salary and a $309,360 bonus.

Hollister also was paid $31,250 for remaining as a consultant for 30 days after he terminated.

John O’Bryan succeeded Hollister in February as American Railcar’s CEO. The railcar manufacturer, based in St. Charles, reported a 51 percent drop last year in earnings per share before a tax adjustment. Its share price fell 8 percent.

(04.30) Stifel leads London investment bank ranking • Stifel Financial is mainly known as a U.S. investment bank, but it climbed to the top of London’s league table for the first quarter.

Analytics firm Dealogic says the St. Louis firm led 19 percent of all British equity deals during the quarter, more than any other firm.

Stifel says its European subsidiary raised 1.3 billion pounds ($1.8 billion) for 11 clients between January and March.

It did so with a relatively small staff: Stifel reports 264 employees in England, compared with 8,254 in the United States.

Stifel built its London presence by buying Oriel Securities, a British investment bank, in 2014.

The firm doesn’t say where it ranks in the comparable U.S. league table, but it’s not in the top 10. Morgan Stanley leads that list with $12 billion of equity deals so far this year, according to Dealogic and the Wall Street Journal. (05.02) Payments software firm offers free services • SwipeSum, a payment software company that moved to St. Louis from Los Angeles in January, is offering its services for free to businesses in its new hometown.

Michael Seaman, SwipeSum’s chief executive, says the offer is partly to thank St. Louis for the warm reception he has received here, and partly to build a source of referrals.

The offer is open-ended and available to any business in St. Louis or St. Louis County.

“We have a global reach but we are trying to be a local company St. Louis can be proud of,” Seaman said.

SwipeSum’s software lets merchants set up an auction in which credit card processors bid for their business. The firm says its average customer saves $973 a month on processing fees.

SwipeSum is in the process of raising $1.25 million in seed capital, Seaman said, and has already lined up some St. Louis investors.

(05.03) St. Louis labor force grows for first time in 17 months • St. Louis’ unemployment rate was flat in March at 3.4 percent, but the bigger news is that the metro area’s labor force is growing for the first time in 17 months.

The labor force is the number of people working or actively looking for a job, and a shrinking number makes the area unattractive to employers that are looking to expand. The metro area total rose by 4,600 people, or 0.3 percent, between March 2016 and March 2017.

St. Louis hadn’t showed a year-over-year gain since October 2016. As recently as January, the area’s labor force had shrunk by 20,000 persons in 12 months.

At 3.4 percent as seasonally adjusted by the St. Louis Federal Reserve Bank, the metro area’s unemployment rate now registers as an 18-year low. The St. Louis Fed originally estimated last October’s jobless rate at 3.3 percent, but it has now been revised to 3.5 percent.

The last time St. Louis unemployment was lower than 3.4 percent was in January 2000, when the rate hit 3.2 percent.

Metro area unemployment has been consistently below the national jobless rate since May 2015. U.S. unemployment was 4.1 percent in March.

The Bureau of Labor Statistics counted 54,608 metro area residents as unemployed in March, down 3,460 from a year earlier.

A separate survey of employers showed that metro St. Louis added 3,100 jobs in March and 11,600 in the latest 12 months.

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From David Nicklaus’ blog about St. Louis business. STLtoday.com/moundcitymoney

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BUSINESS

D4 • ST. LOUIS POST-DISPATCH

M 1 • Sunday • 05.06.2018

Long-term stock incentives are more popular along with shareholders. His pay fell 40 percent to $1.9 million as Avadel’s share price tumbled 21 percent.

Harder to explain is the case of Mallinckrodt, where CEO Mark Trudeau’s reported pay rose 19 percent to $15 million even as shareholders watched their investment lose 55 percent of its value.

Trudeau will realize less than a third of the $15 million, however, if the company fails to rebound.

CEO • FROM D1

Energy. He earned $20.6 million, including a one-time stock award of $15 million for leading Peabody out of bankruptcy.

Ten of the 26 local CEOs saw their pay fall last year. In some cases, that reflected the timing of incentive stock awards, but in others it reflected poor results.

Michael Anderson of Chesterfield-based Avadel Pharmaceuticals, for example, suffered

His $4.6 million in options are worthless unless the stock price bounces back, and a $5.5 million stock award will vanish if Mallinckrodt falls short of threeyear performance goals.

Mallinckrodt also says it’s reducing executives’ pay for 2018 to reflect last year’s poor performance.

Long-term stock incentives like Trudeau’s are an increasingly common component of CEO pay packages. Companies repeat-

edly point out that a large chunk of pay is “at risk” if results fall short.

Last year, St. Louis CEOs earned an average of $7.2 million but just 12 percent of that, or about $850,000, was in salary.

An annual bonus added about $1.5 million, but 53 percent of the total pay was in stock and 10 percent was in stock options.

The stock portion has grown over time; in 2011, just 29 percent of St. Louis CEOs’ pay came in

stock.

Consulting firm Mercer says that for 108 large U.S. companies that reported their information by mid-march, median CEO pay was up 7.9 percent last year. “It was a pretty solid year,” Mercer senior consultant Adam Bogucki said, “and most of the increase came in the form of long-term incentives.”

David Nicklaus • 314-340-8213 @dnickbiz on Twitter dnicklaus@post-dispatch.com

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CEO PAY CEO Business Year Salary Bonus Stock Options Pension All other 2017 2016 Percent

/incentive total pay total pay change Centene 2017 $1,500,000 $7,120,800 $16,137,600 $0 $0 $501,068 $25,259,468 $21,968,983 14.98% 1. Michael Neidorff Peabody Energy 2017 $1,018,809 $4,528,092 $15,000,007 $0 $0 30,117 $20,577,025 $3,535,876 481.95% 2. Glenn L. Kellow 3. Hugh Grant Monsanto 2017 $1,702,897 $5,995,512 $11,018,525 $0 $390,698 $352,327 $19,459,959 $11,840,984 64.34% 4. Timothy Wentworth a Express Scripts 2017 $1,436,539 $2,767,517 $7,666,667 $3,833,333 $0 $191,359 $15,895,415 $14,522,178 9.46% 5. Mark C. Trudeau b Mallinckrodt PLC 2017 $1,050,000 $866,250 $7,813,805 $4,600,016 $0 $696,639 $15,026,710 $12,647,466 18.81% Stifel 2017 $200,000 $3,457,937 $9,500,000 $0 $0 $70,141 $13,228,078 $9,313,235 42.04% 6. Ronald J. Kruszewski Emerson 2017 $1,300,000 $2,500,000 $7,736,250 $0 $526,000 $486,278 $12,548,528 $15,137,533 -17.10% 7. David Farr 8. John W. Eaves Arch Coal 2017 $1,025,000 $4,408,826 $4,175,802 $0 $138,136 $42,450 $9,790,214 $12,986,995 -24.62% 9. Robert V. Vitale Post Holdings Inc. 2017 $1,000,000 $1,200,000 $1,426,400 $4,761,935 $63,693 $195,470 $8,647,498 $18,010,488 -51.99% Ameren 2017 $1,075,000 $1,775,000 $4,474,803 $0 $629,030 $126,957 $8,080,790 $6,638,656 21.72% 10. Warner L. Baxter 11. John E. Fischer c Olin 2017 $960,000 $1,079,700 $2,712,855 $2,777,460 $52,113 $197,646 $7,779,774 $3,302,627 135.56% Caleres, Inc. 2017 $1,110,000 $1,125,940 $4,304,000 $0 $522,212 $64,402 $7,126,554 $7,119,077 0.11% 12. Diane M. Sullivan 13. Anna Manning d Reinsurance Group 2017 $950,000 $2,400,574 $2,433,807 $881,403 $273,375 $102,364 $7,041,523 $4,748,884 48.28% Belden 2017 $875,000 $455,000 $2,824,820 $2,353,193 $372,982 $131,409 $7,012,404 $6,254,208 12.12% 14. John Stroup 15. Alan R. Hoskins Energizer 2017 $961,833 $1,647,424 $3,860,069 $0 $41,918 $159,629 $6,670,873 $6,304,113 5.82% Commerce Bancshares 2017 $975,874 $1,606,339 $1,686,640 $445,070 $0 $158,048 $4,871,971 $4,102,521 18.76% 16. David Kemper 17. David P. Hatfield Edgewell Personal Care Co. 2017 $932,083 $285,429 $2,000,541 $1,000,016 $138,937 $144,971 $4,501,977 $2,475,427 81.87% Perficient 2017 $596,587 $750,000 $2,384,315 $0 $0 $30,203 $3,761,105 $2,866,066 31.23% 18. Jeffrey S. Davis Spire 2017 $846,635 $795,000 $1,566,544 $0 $205,208 $147,186 $3,560,573 $3,493,203 1.93% 19. Suzanne Sitherwood Esco Technologies Inc. 2017 $824,500 $678,488 $1,557,965 $0 $0 $82,828 $3,143,781 $3,346,660 -6.06% 20. V.L. Richey, Jr. Aegion Corporation 2017 $664,625 $0 $1,945,103 $0 $0 $23,371 $2,633,099 $2,839,506 -7.27% 21. Charles R. Gordon Cass Information Systems Inc. 2017 $609,157 $232,000 $737,484 $0 $723,321 $45,352 $2,347,314 $1,664,946 40.98% 22. Eric H. Brunngraber Build-A-Bear Workshop Inc. 2017 $700,000 $315,000 $750,011 $124,057 $0 $5,367 $1,894,435 $1,988,088 -4.71% 23. Sharon John Avadel Pharmaceuticals PLC 2017 $581,946 $279,334 $223,750 $757,500 $0 $18,891 $1,861,421 $3,085,972 -39.68% 24. Michael S. Anderson 25. Robert D. Moore e Foresight Energy 2017 $250,000 $500,000 $1,000,000 $0 $0 $0 $1,750,000 $1,050,000 66.67% 26. Jeffrey S. Hollister f American Railcar Industries Inc. 2017 $375,000 $309,360 $0 $562,500 $0 $7,026 $1,253,886 $1,042,275 20.30% FutureFuel Corp.

2016 $0 $0 $999,000 $0 $0 $0 $999,000 $1,028,000 -2.82% 27. Paul A. Novelly 28. James B. Lally g Enterprise Financial Services Corp. 2017 $443,544 $308,526 $188,858 $0 $0 $28,774 $969,702 $588,747 64.71% Huttig Building Products Inc. 2017 $600,000 $0 $300,000 $0 $0 $26,805 $926,805 $1,582,844 -41.45% 29. Jon P. Vrabely 30. Robert L. Montgomery Reliv International 2017 $610,494 $9,467 $0 $0 $0 $45,990 $665,951 $656,451 1.45% Allied Healthcare Products Inc. 2017 $429,000 $0 $0 $0 $0 $73,275 $502,275 $502,453 -0.04% 31. Earl R. Refsland 32. Timothy D. Boyd Peak Resorts Inc. 2017 $442,000 $0 $0 $0 $0 $8,391 $450,391 $451,443 -0.23% 33. David L. Fischel h Stereotaxis Inc. 2017 $0 $0 $43,200 $0 $0 $0 $43,200 $0 a. Wentworth became CEO in May 2016. b. Mallinckrodt changed its fiscal year. Fiscal 2017 ended in December but 2016 ended in September c. Fischer became CEO May 1, 2016 d. Manning became CEO Jan. 1, 2017

e. Moore’s base salary is not directly paid, but reflects the portion of his compensation determined pursuant to a services agreement with Murray Energy Corp. f. Hollister’s employment was terminated Dec. 31, 2017, and he forfeited some of his compensation

Pay-ratio rule changed reports NICKLAUS • FROM D1

earned a median $107,171.

Those median figures turn out to be the real news in the new disclosures. The big bosses’ compensation was always disclosed and widely discussed, but companies rarely revealed what they paid the rank and file.

After years of wrangling, and complaints by companies that calculating a median salary would be difficult and expensive, the Securities and Exchange adopted a pay-ratio rule in 2015,

Four top EPA aides have quit PRUITT • FROM D1

for decades.

“I do feel like we are about to get a good decision. I don’t know if that changes if Pruitt leaves,” said Dawn Chapman, cofounder of the volunteer group Just Moms STL, which advocates for cleanup at the landfill. “These people are exhausted. They thought they were getting a good decision, and now it’s kind of up in the air.”

Worries about progress at West Lake getting derailed are also fueled by resignations that have already roiled the upper ranks of EPA headquarters. Though Pruitt remains in place, four top aides resigned last week, including senior adviser Albert “Kell” Kelly, who chaired the agency’s Superfund Task Force established last year. The EPA did not respond to requests for comment.

Amid the emphasis on slashing

g. Lally became CEO in May 2017. h. Fischel was appointed CEO Feb. 3, 2017. He is not an employee of Stereotaxis and receives compensation only as a director.

effective for firms’ 2017 reports.

(Companies with fiscal years that ended before December, such as Emerson and Energizer, won’t make the disclosures until later this year.)

“The biggest change is you’re publishing that median employee pay, and by definition 50 percent of your population gets it and sees they are paid less than the median,” says Eric Marquardt, a Clayton-based principal with consulting firm Pay Governance.

Among 359 large companies,

Pay Governance says, the average CEO makes 263 times as much as a median worker. The ratio tends to be higher at large companies than small ones, and it varies widely by industry.

The highest ratio reported so far is at Mattel, whose CEO earned as much as 4,987 typical workers. Much of the firm’s toy-manufacturing workforce is overseas in low-wage countries. Similarly, McDonald’s CEO earned 3,101 times as much as its median employee, whom it identified as a part-time restaurant worker in Poland.

Among St. Louis area companies, the lowest median pay was $6,198 at Build-A-Bear Work-

shop, which employs a lot of part-time and seasonal workers. The highest median was $146,870 at Mallinckrodt.

With such wide differences, some observers think the pay ratio has little value. “It may not provide much information,” says Radhakrishnan Gopalan, professor of finance at Washington University’s Olin Business School.

Union leaders and politicians will use the ratios to argue that bosses are overpaid, but Gopalan says it’s hard to compare a CEO’s stock and options packages with an employee who’s on straight salary.

The disclosures may be more

informative, Marquardt suggests, when we have more than a one-year snapshot.

“It’s going to be more of a story a year from now,” he said. “The bigger question will be whether CEO pay is rising faster than median pay.”

If it is, and the disparity continues to grow, we’ll know one of two things is true: Either CEOs possess rare skills that are increasingly in demand, or they benefit from a pay process that’s insulated from market forces.

The pay ratio will inform that debate, but is unlikely to settle it.

environmental regulations that has characterized Pruitt’s EPA tenure, Superfund cleanup efforts have been touted as a hallmark — and even centerpiece — of the agency’s so-called “Backto-Basics” agenda.

Last year, the Superfund Task Force generated a list of 21 toppriority sites “targeted for immediate, intense action,” that included West Lake. Pruitt personally signed off on the site’s proposed cleanup strategy announced in February — a step he announced he would take at any Superfund site where expected remediation costs exceed $50 million.

Up until his departure, Kelly was one of the agency’s most active and visible liaisons in prominent Superfund communities like Bridgeton. He visited the area to attend public meetings about West Lake and to personally meet with concerned citizens and groups when the agency’s plan to partially excavate and cap the site was proposed. Local activists say his presence showed a level of attention and commitment to the site that had never

been seen from decades of past administrations spanning both parties.

“He was somebody that we had real hope was leading this effort for us in D.C.,” said Kay Drey, an environmentalist who has tracked St. Louis-area nuclear waste issues for decades. “He lent significant ears to our concerns.... This is a step back for St. Louis because we had somebody who was paying attention.”

“There isn’t a single person in this community that didn’t have the man’s personal cellphone number,” said Chapman, describing Kelly’s willingness to field calls and talk to area residents. “That’s something that’s very hard to come by.”

While some outside critics speculate that the EPA’s revamped focus on Superfund sites constitutes “photo-op environmentalism” to score political points, the program’s cleanup decisions under Pruitt can defy the “industry-friendly” narrative that many say has defined his work, overall.

At West Lake, for instance, a relatively tough stance toward

industrial players could be taking shape, with the proposed remedy’s price tag at $236 million — a total that would be borne by public and private entities liable for cleanup. Meanwhile, the least expensive alternative of capping the landfill would cost those groups about $75 million.

But those following West Lake say they don’t care what administration gets credit for the cleanup or what their motives are — they just want progress.

“We don’t have the luxury of playing games about what their political motives might be to help us,” Chapman said. “Political opinions don’t belong in this fight.”

The agency hopes to finalize a cleanup strategy — known as a record of decision — for West Lake by the end of September, according to Ben Washburn, an EPA Region 7 spokesman.

The public comment period regarding the proposed remedy closed late last month. EPA will respond to comments when it issues its record of decision.

Although submitted comments are not available for public

viewing, members of Just Moms echoed viewpoints expressed at recent public meetings, in which local residents called for maximal excavation of radioactive material at the site. A post on the group’s website reiterated its commitment to pursuing relocation for residents within one-mile of West Lake, off-site disposal of waste, and removing the “highest possible amount” of material.

Chapman said the group is willing to work toward the best possible solution regardless of the changes that take place at the EPA. She just hopes that attention to the Superfund program proves to be an enduring, “administration-wide” priority.

“I hope that Superfund’s emphasis is administration-wide and not just Pruitt and Kell Kelly,” Chapman said.

“It’s not a reassuring position,” she added. “We have no guarantees on a record of decision. We just have a proposal. That’s all we have.”

David Nicklaus • 314-340-8213 @dnickbiz on Twitter dnicklaus@post-dispatch.com

Bryce Gray • 314-340-8307 @_BryceGray on Twitter bgray@post-dispatch.com

J O I N U S O N L I N E S T L T O D A Y. C O M / B U S I N E S S

FRIDAY • 05.11.2018 • B

PHOTOS BY LAURIE SKRIVAN • lskrivan@post-dispatch.com

Co-founder Kyle Rood of Start Right weighs and bags a freshly made batch of original gluten-free waffles for an order Tuesday at Start Right’s production facility in Ballwin.

WAFFLING ON THEIR PRODUCT McKee deals involved only tax credits, not cash, city says in court him, city lawyers say. Those interest payments triggered the issuance of Missouri tax credits under a former state program that McKee was able to tap for over $40 million over the last 10 years An attorney for the city of St. Louis on Thurswhile assembling land in north St. Louis. day called a transaction between developer Those interest credits were on top of the tax Paul McKee and the former owner of the Buster credits issued based on 50 percent of the sale Brown shoe factory a “sham” where no money McKee price – an amount city lawyers alleged Wednesexchanged hands except Missouri tax credits that day was inflated to maximize the amount of tax credits the two sides split.

The allegation, and email evidence to support, were issued by the state. Attorneys for McKee say it was a revealed in the second day of a trial in St. Louis Circuit “key corner” and that they didn’t overpay.

The only principal payment to Osher was $591,000, Court over a building on the city’s north side that has since been razed to make way for the National Geospa- paid to Osher after McKee’s NorthSide Regeneration obtained and sold Distressed Area Land Assemblage tax tial-Intelligence Agency’s western headquarters.

Former Buster Brown owner Jim Osher in 2011 agreed credits from the deal in 2012. McKee was to keep the reto seller-finance the building at 1516 North Jefferson Av- maining tax credits or used them to pay professional fees enue to McKee and continue leasing it — with lease payments equaling the interest payments McKee then sent See MCKEE • Page B4

BY JACOB BARKER St. Louis Post-Dispatch

Mid Rivers Mall joins with developer of self-storage sites

Public weighs in on MSD’s proposal to address flooding

As retail sales sag, malls seek nontraditional revenue sources

Some oppose charging residents to pay for developers’ mistakes

BY BRIAN FELDT St. Louis Post-Dispatch

BY BRYCE GRAY St. Louis Post-Dispatch

CBL Properties, the Tennessee-based real estate investment trust that owns a majority of St. Louis area malls, has formed a joint venture with self-storage developer CubeSmart to help bring in additional revenue at its properties.

The first project under the new venture is being built in Cincinnati. The second, said CBL Chief Investment Officer Kathryn Reinsmidt during a recent call with investors, is being built near Mid Rivers Mall in St. Peters.

CubeSmart, a real estate investment trust based in Malvern, Pa., owns nearly 500 self-storage develop-

As the region deals with increasingly common and severe flood-related issues, the Metropolitan St. Louis Sewer District says that customers turn to the water and wastewater utility for help.

Though not typically in its domain, MSD has identified a list of 500 local projects where it can help alleviate flooding and erosion problems — if it can first get funding for the effort.

At a public meeting Tuesday in Sunset Hills, the utility outlined and fielded questions about its proposal to tackle those issues by adding a new charge to bills. The charge would be determined by a given

See STORAGE • Page B5

See WATER • Page B4

• Two former Mizzou athletes originally set out to found a medical device business • With help from an incubator, Start Right’s healthy breakfast products are in 300 stores DAVID NICKLAUS St. Louis Post-Dispatch

Many entrepreneurs talk about doing a pivot, but Clint Matthews and Kyle Rood did more of a hard reboot.

They won an Arch Grant for a medical-device startup in 2014 but shut it down months later after realizing they faced a long, expensive path to regulatory approval. They enjoyed the entrepreneurial journey, though, and looked for other problems to solve.

The product they came up with — a high-protein waffle — surprised some of the mentors who had advised Rood and Matthews on their original startup.

“I’m like, ‘What, waffles?’” recalls Dan Broderick, a vice president of Biogenerator. “But good for them for making a pivot.”

The former Mizzou athletes — Matthews played football and Rood ran track — both knew the importance of a good breakfast but, like many people, found it hard to fit a nutritious meal into a busy morning.

The business partners developed a high-protein, gluten-free frozen waffle and got it into two Columbia, Mo., grocery stores. The product sold well enough to become a business, Start Right Foods, with the See NICK • Page B5

Co-founders Kyle Rood (left) and Clint Matthews of Start Right transfer a batch of frozen waffles from the freezer to the counter to be bagged and packaged at Start Right’s production facility in Ballwin.

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BUSINESS

B2 • ST. LOUIS POST-DISPATCH

M 1 • Friday • 05.11.2018

Contegra completes medical building in Florida Contegra Construction Co. of Edwardsville has completed a $5.5 million medical facility in Coconut Creek, Fla. The two-story, 13,490-square-foot Broward Specialty Medical Center was built to house the medical practices of a urologist and an ear, nose and throat specialist. Two additional medical spaces are fully leased.

PEOPLE IN BUSINESS

Bi-State names Vago CFO and vice president

Mark G. Vago The two-story, 13,490-square-foot Broward Specialty Medical Center was built to house the medical practices of a urologist and an ear, nose and throat specialist.

U.S. ‘net neutrality’ rules will end on June 11

NEW 2017

INFINITI

Mark G. Vago was promoted to senior vice president and chief financial officer of Bi-State Development, the operator of the MetroLink light rail system and MetroBus fleet.

Vago, who has nearly three decades of experience in finance and accounting, will succeed Kathy S. Klevorn, who is retiring July 1.

Vago joined Bi-State in 2008 and has served as controller since 2012. He holds an MBA from Washington University and a bachelor’s degree in business administration from the University of Missouri-St. Louis.

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BY DAVID SHEPARDSON Reuters

The Federal Communications Commission said in a notice on Thursday that the landmark 2015 U.S. open-internet rules will cease on June 11, and new rules handing providers power over what content consumers can access will take effect.

The FCC in December repealed the Obama-era “net neutrality” rules, allowing internet providers to block or slow websites as long as they disclose the practice. The FCC said the new rules will take effect on June 11.

A group of states and others have sued to try to block the new rules from taking effect. The revised rules were a win for internet service providers such as AT&T Inc. and Comcast Corp. but are opposed by internet firms such as Facebook Inc. and Alphabet Inc. “The agency failed to listen to the American public and gave short shrift to their deeply held belief that internet openness should remain the law of the land,” FCC Commissioner Jessica Rosenworcel, a Democrat, said Thursday. “The FCC is on the wrong side of history, the wrong side of the law, and the wrong side of the American people.”

The U.S. Senate is set to vote as early as next week on whether to reject the FCC repeal of the net neutrality rules, but that effort faces an uphill battle.

Proponents currently have the backing of 47 Democrats and two independents who caucus with Democrats, as well as Republican Sen. Susan Collins of Maine. With the prolonged absence of Republican Sen. John McCain of Arizona due to illness, proponents believe they will win on a 50-49 vote.

Sen. Ed Markey said it was “likely” the vote will take place in the middle of next week. On Wednesday, senators officially filed a petition to force a net neutrality vote and 10 hours of floor debate under the Congressional Review Act. Following the FCC announcement, Markey wrote on Twitter, “the Senate must act NOW and pass my resolution to save the internet as we know it.”

The FCC voted 3-2 to reverse Obama-era rules barring service providers from blocking, slowing access to or charging more for certain online content.

Once they take effect, the new FCC rules would give internet service providers sweeping powers to change how consumers access the internet but include new transparency requirements that require them to disclose any changes to consumers.

If the Senate approves the measure, it would not likely pass the Republicancontrolled House of Representatives. If the legislation were to pass the House, President Donald Trump would be expected to veto it.

In February, a coalition of 22 state attorneys general refiled legal challenges intended to block the Trump administration’s repeal of net neutrality.

FCC Chairman Ajit Pai has often said he is confident the agency’s order will be upheld.

Democrats have said they believe the issue would be key in November’s midterm congressional elections, especially among younger internet-savvy voters.

Republicans have said the FCC repeal would eliminate heavy-handed government regulations, encourage investment and return the internet to pre-2015 rules.

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POST-DISPATCH BUSINESS STAFF Business editor

314-340-8127

JACOB BARKER

Economic development

314-340-8291

BRIAN FELDT

Retail and financial institutions

314-340-8528

BRYCE GRAY

Energy and environment

314-340-8307

SAMANTHA LISS

Business of health

314-340-8017

DAVID NICKLAUS

Business columnist

314-340-8213

AN ITEM Bulletin Board and People in Business submissions should be sent to: biznetworking@ post-dispatch.com.

Or you can mail a release to:

MARK SCHLINKMANN Transportation and real estate

314-340-8265

To e-mail a staff member, use the first initial and last name, followed by @post-dispatch.com

Timothy K. Walsh joined Midwest BankCentre as president of its Jefferson County region.

St. Anthony’s Cancer Care Center added Dr. Shaun Donegan and Dr. Michael Gu. John Stamm, director of global philanthropy at Junior Chamber International, was appointed to the Missouri Community Service Commission.

HLK hired Lucas Miller and Sean Connors as associate content directors.

Brian Kelley joined Avison Young as a principal.

IWR North America hired Sean Hamlin as senior estimator.

Tennille Wanner was named director of sales and marketing for the St. Charles Convention Center.

Jim Fox joined Colibri Group as chief financial officer.

Cindy Spriggs was promoted to vice president, finance at McGrath & Associates.

SUBMIT

LISA BROWN

Jeff Patterson was promoted to chief estimator for Murphy Co.

Business News, 900 NorthTucker Boulevard, St. Louis, Mo. 63101

Northstar Management Co. added the following new associates: Jake Goss as project manager, Scott R. Rushing as project manager, and Kristin Gounis as special projects coordinator.

CBRE hired Da’Vione Johnson as an associate broker.

Beltservice Corp. welcomed Nathan Blough as lead engineer.

First Bank hired David Frederick as senior vice president and director of wealth planning and Greg Noe as senior vice president for private banking.

The Missouri Gaming Association elected the following to its 2018 board of directors: Chris Plant of River City Casino as president; Ward Shaw of Ameristar Casino as vice president; and Brian Marsh of Lumière Place as secretary.

BUSINESS CALENDAR MONDAY

WEDNESDAY

BUSINESS PLANNING • SCORE presents this workshop on creating a business plan for a startup business.

•5:30 p.m. — 8:30 p.m., Fontbonne University, 6800 Wydown Boulevard, Anheuser-Busch Hall, Room 206, St. Louis •$35 preregistered, $40 at the door. Register: https://conta. cc/2jtZcDM

GATEWAY ARCH REVITALIZATION • Commercial Real Estate Women-St. Louis hosts this tour and program on Gateway Arch revitalization.

•4 p.m. -6:30 p.m., HOK, 10 South Broadway, St. Louis •$60 for members, $80 for nonmembers. Register: http://bit. ly/2jDeo1o

LINKEDIN • SCORE presents this class on creating consistent leads and clients.

•6 p.m. — 9 p.m., Fontbonne University, 6800 Wydown Boulevard, Anheuser-Busch Hall, Room 208, St. Louis •$35 preregistered, $40 at the door. Register: https://conta. cc/2JR2uw4

THURSDAY WOMEN BUSINESS OWNERS • The 2018 Midwest Women Business Owners’ Conference, hosted by Black Dress Partners.

•7 a.m. — 5:30 p.m., Ritz-Carlton, 100 Carondelet Plaza, Clayton •$345 before May 16. Register: http://bit.ly/2rs3hf7

MARKET WATCH 05.11.2018 • Friday • M 1

U.S. stocks made broad gains Thursday as technology and health care companies and banks climbed. The Labor Department said consumer prices rose just 0.2 percent in April, a sign that inflation pressure remain muted. Bond yields fell and the dollar weakened.

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ST. LOUIS1,500 POST-DISPATCH • B3 M

F

$27.61

$1,630.56

M A 52-week range

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$2,228.99

TRACK AND GET THE LATEST NEWS • STLTODAY.COM/BUSINESS .com TRACK YOUR YOUR STOCKSSTOCKS AND GET THE LATEST Vol.: 16.1m (3.5x avg.)NEWS PE: 9.2• STLTODAY.COM PE: 11.0 Vol.: 27.9m (2.4x avg.) /BUSINESS Vol.: 1.1m (2.4x avg.)

PE: 44.7 U.S. stocks made broad gains Thursday as technology and health care companies and banks climbed. The Labor Department said consumer prices rose just 0.2 percent in April, a sign that inflation pressure remain muted. Bond yields fell and the dollar weakened.

L Brands

LB

Close: $31.68 -2.44 or -7.2% Charts show stocks that made the news yesterday.

The owner of Victoria’s Secret expects to only reach the low end of its first-quarter profit forecast.

A

M

LB

Close: $31.68 -2.44 or -7.2% The owner of Victoria’s Secret expects to only reach the low end of its first-quarter profit forecast.

CenturyLink

CTL

Close: $19.40 1.36 or 7.5% The communications company posted a larger quarterly profit than analysts expected. $20

$50

Mkt. Cap: $20.9 b

F

$30.70

M A 52-week range

M $63.10

Vol.: 16.1m (3.5x avg.)

PE: 9.2 Mkt. Cap: $8.8 b Yield: 7.6%

$13.16

Mkt. Cap: $100.4 b

Yield: ...

BKNG

Cardinal Health

CAH

Booking Holdings

Close: $2,080.02 -103.57 or -4.7% The owner of Priceline and Booking.com’s second-quarter forecast disappointed Wall Street.

F

M A 52-week range

1,500

M $27.61

PE: 11.0 Vol.: 27.9m (2.4x avg.)

Mkt. Cap: $20.9 b Yield: 11.1%

Close: $54.74 1.98 or 3.8% The Wall Street Journal reported that experts think the Trump administration’s plan to reduce drug prices won’t have a big effect on costs. $80 70

2,000

16 14

Yield: 11.1%

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M A 52-week range

Vol.: 1.1m (2.4x avg.)

Mkt. Cap: $100.4 b

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M $2,228.99

PE: 44.7 Yield: ...

$50.80

F

M A 52-week range

M $80.37

Vol.: 4.9m (1.6x avg.)

PE: 10.2 Mkt. Cap: $17.2 b Yield: 3.4%

Booking Holdings

BKNG Cardinal Health CAH Qualcomm QCOM ExchangeRates Close: $2,080.02 -103.57 or -4.7% Futures Close: $54.74 1.98 or 3.8% Close: $54.97 1.80 or 3.4% 24,800 S&P 500 Dow Jones industrials The owner of Priceline and BookCHICAGO BOT CLOSEreported CHG The WallDATE Street Journal The telecommunications company FOREIGN CURRENCY IN DOLLARS $50 Close: 2,723.07 Close: ing.com’s second-quarter forecast24,160 that experts think the Trump24,739.53 adminsaid it will buyCLOSE back $10 billion inPREV 24,160 Corn May 18 394.75 disappointed Wall (0.9%) Street.

Change: 25.28 Change: istration’s plan to reduce drug 196.99 prices (0.8%)stock.

Argentina .0441 .0441 Soybeans May 18 1013.25 +6 won’t have a big effect on costs.

23,520 23,520 40 10 DAYS 10 DAYS $2,500 Australia .7537 .7464 $70 Wheat $80 May 18 507.75 -6.75 2,900 27,000 27,000 Brazil .2821 .2779 70 18 60 30 CHICAGO MERC DATE CLOSE CHG 2,000 F M A M Britain 1.3519 1.3555 60 16 50 52-week range 2,800 26,000Feeder cattle May 18 138.60 +1.45 26,000 Canada .7838 .7787 1,500 14 40 $30.70 $63.10 Live cattle 50 Jun 18 F M A M F M 107.52 +1.85 A M F M A M F M A M China .1575 .1571 52-week range 52-week range 52-week range 52-week range May 18 65.47 -.45 Vol.: 16.1m (3.5x avg.)

PE: 9.2 2,700 25,000Hogs 25,000 Euro 1.1927 1.1861 $2,228.99 $1,630.56 $50.80 $80.37 $13.16 $27.61 $48.56 $69.28 Mkt. Cap: $8.8 b Yield: 7.6% Milk May 18 15.24 -.03 India .0149 .0149 Vol.: 1.1m (2.4x avg.)

PE: 44.7 Vol.: 4.9m (1.6x avg.)

PE: 10.2 PE: 11.0 Vol.: 27.9m (2.4x avg.)

Vol.: 12.1m (1.0x avg.)

PE: ...

Copper May 18 309.25 +5.30 2,600 24,000 Israel .2799 .2787 24,000 Mkt. Cap: $100.4 b Yield: ...

Mkt. Cap: $17.2 b Yield: 3.4% Mkt. Cap: $20.9 b Yield: 11.1% Mkt. Cap: $81.5 b Yield: 4.5% CenturyLink CTL Japan .009143 .009115 ICE DATE CLOSE CHG Close: $19.40 1.36 or 7.5% Cardinal Health CAH Qualcomm QCOM Mexico Armo BioSciences Booking Holdings BKNG ARMO .052050 .051090 2,500 23,000 23,000 Cotton 84.56 -1.30 N D J F M A M N D Jul 18 J F M A M N D J F post- M A M The communications company Close: $54.74 1.98 or 3.8% Close: $54.97 1.80 or 3.4% Russia Close: $49.80 .0162 Close: $2,080.02 -103.57 or -4.7% 19.98 or 67.0%.0159 ed a larger quarterly profit than anaCoffee The telecommunications May 18 116.30 +.80 The Wall Street Journal reported company The owner of Priceline and BookThe cancer drug developer agreed So. Africa .0815 .0797 HIGH LOW CLOSE CHG. %CHG. WK MO QTR YTD lysts expected. that experts think the Trump admin- Sugar said it will buy back $10 billion in ing.com’s second-quarter forecast to be bought by Eli Lilly for $50 a Jul 18 24.60 +.05 So. Korea .000939 .000926 istration’s plan drug prices stock. disappointed Wall Street. share, or $1.52 billion.

DOW 24794.99 24575.91 24739.53 +196.99 +0.80% s s to reduce s +0.08% won’t have big effect on costs.

Switzerland .9978 .9951 s a s s -0.06% DOW Trans. 10625.08 10507.87 10605.79 +97.91 +0.93% $20 DATE CLOSE CHG NEW YORK NYSE NASD $80 t s s -4.91% $70 $2,500 $60 DOW Util.

688.18 680.65 687.88 +9.26 +1.36% Crude oil Jun 18 71.36 +.22 18 PreciousMetals 2,199 Vol. (in mil.) 3,311 NYSE Comp. 12748.57 12653.81 12731.65 +99.16 +0.78% 70 s s s -0.60% 60 Gas blend Jun 18 2.1890 +.0217 2,226 Pvs. Volume 3,856 2,000 7414.15 7353.63 7404.97 +65.07 +0.89% s s s +7.27% NASDAQ CHG NEW YORK 40 CLOSE 16 60 50 Advanced 2061 1763 S&P 500 2726.11 2704.54 2723.07 +25.28 +0.94% s s s +1.85% Heating oil Jun 18 222.28 +.48 Gold 1320.80 +9.50 14 Declined 805 1079 50 s s s +1.96% 1942.83 1927.95 1937.91 +14.02 +0.73% 1,500 20 Natural gas 40 Jun 18 F M A S&P 400 M F M A M F M 2.814 +.077 A M F M A M F M A M Silver 16.68 +.22 New Highs 136 174 Wilshire 5000 28355.57 28145.20 28309.83 +231.21 +0.82% s s s +1.86% 52-week range 52-week range 52-week range 52-week range 52-week range New Lows 26 35 Russell 2000 1609.45 1596.54 1603.71 +7.66 +0.48% s s s +4.44% Platinum 925.10 +8.50 Chicago BOT is in cents. $50.80 $80.37 $48.56 $69.28 $2,228.99 $1,630.56 $25.10 $57.19 $13.16 $27.61 24,800

0.9%)

L Brands

Mkt. Cap: $8.8 b

CenturyLink

CTL

Close: $19.40 2,760 1.36 or 7.5% Dow Jones industrials The communications company postClose: 24,739.53 ed a larger quarterly 2,660profit than anaChange: 196.99 (0.8%) lysts expected.

2,560 10 DAYS $20

StocksRecap

PE: 11.0 Vol.: 27.9m (2.4x avg.)

Mkt. Cap: $20.9 b Yield: 11.1%

Vol.: 4.9m (1.6x avg.)

PE: 44.7 Stocks of Local Interest Mkt. Cap: $17.2 b Yield: ...

Vol.: 1.1m (2.4x avg.)

Mkt. Cap: $100.4 b

PE: 10.2 Yield: 3.4%

Vol.: 12.1m (1.0x avg.)

PE: ...

Interestrates Mkt. Cap: $81.5 b Yield: 4.5%

Interestrates

Qualcomm QCOM 52-WK YTD% 1YR% 52-WK YTD% 1YR% Armo BioSciences ARMO Cardinal Health CAH Booking Holdings BKNG NAME TKR LO HI CLOSE CHG %CHG CHG RTN P/E DIV NAME TKR LO HI CLOSE CHG %CHG CHG RTN P/E DIV Close: $54.97 1.80 or 3.4% Close: $49.80 19.98 or 67.0% Close: $54.74 1.98 or 3.8% AT&T Inc 31.17 39.80 31.88 2.00f reported General Motors GM 31.92 46.76 37.16 company +.89 +2.5 -9.3 +10.3 1.52 drug developer agreed The telecommunications Thedd cancer The -18.0 -12.7 Wall Street12 Journal Close: $2,080.02T -103.57 or -4.7% +.48 +1.5 said it will buy back $10 billion in to be bought

by Eli Lilly for $50 a that experts think adminThe owner of Priceline and BookAegion Corp AEGN 19.11 28.19 24.87 +.49 +2.0 -2.2 +21.9 22 the Trump ... Home Depot HD 144.25 207.61 187.16 +.80 +0.4 -1.3 +20.5 26 4.12f stock. share, or $1.52 billion. istration’s plan to reduce drug prices ing.com’s second-quarter forecast Amdocs DOX 60.82 71.72 68.12 +.21 +0.3 +4.0 +11.3 4.82 7.75 6.15 +.03 +0.5 -7.5 -11.3 dd ... won’t have a big19 1.00 effect onHuttig Building Prod HBP costs.

Bond prices disappointed Wall Street. $70 1.75 2.75 2.30 $605 ... $80 -4.5 +7.0 20 1.83 Lee Ent climbed. The Ameren Corp AEE 51.89 64.89 56.34 +.12 +0.2 LEE ... ... -2.1 +2.2

70 -6.7 +5.2 5 1.60 Lowes ARII 34.29 42.52 38.86 +.19 +0.5 60-14.5 -14.2 24 3.19e Mallinckrodt plc ABInBev BUD 94.57 126.50 95.40 -2.53 -2.6 2,000 50 Arch Coal ARCH 60.13 102.61 76.52 -.52 -0.7 -17.9 7 1.60 MasterCard F +9.2 M A M 52-week Avadel Pharma AVDL 6.17 11.93 6.65 +.13 +2.0 -18.9 -32.9 10 range ... McDonald’s 1,500 $50.80 $80.37 F M A M Bank of America BAC 22.07 33.05 30.89 +.17 +0.6 +4.6 +29.9 18 0.48 Monsanto Co Vol.: 4.9m (1.6x avg.)

PE: 10.2 52-week range BDC 57.29 87.15 55.94 -2.37 -4.1 Belden Inc Olin 3.4% Mkt. -27.5 -20.9 Cap: $17.210 b 0.20 Yield: $2,228.99 $1,630.56 Boeing BA 175.47 371.60 344.07 +1.28 +0.4 +16.7 +87.5 36 6.84 Peabody Energy Qualcomm QCOM Vol.: 1.1m (2.4x avg.)

PE: 44.7 Build-A-Bear Wkshp BBW 7.25 11.90 8.80 -.05 -0.6 -4.3 -17.7 18 ... Peak Resorts Mkt. Cap: $100.4 b Yield: ...

Close: $54.97 1.80 or 3.4% Caleres Inc. Perficient CAL 22.39 36.00 33.88 -.26 -0.8 +1.2 +22.5 17 0.28 company The telecommunications said it+5.4 will buy back $10 billion in CASS 53.23 65.00 61.37 -.35 -0.6 +5.3 30 1.04f Cass Info. Systems Post Holdings Cardinal Health CAH stock.

Centene Corp.

72.14 117.86 113.06 +.23 +0.2 +12.1 +49.0 18 ... ReinsGrp Close: $54.74 CNC 1.98 or 3.8% American Railcar $2,500

The Wall Street Journal reported $70-18.8 -17.0 89 CHTR 250.10 408.83 272.83 +2.70 +1.0 Charter

... Reliv

that experts think the Trump admin60 -2.5 +21.6 13 1.28 Spire Inc C 59.10 80.70 72.57 +.62 +0.9 istration’s plan to reduce drug prices 50+17.2 +24.3 20 0.94f Stifel Financial Commerce Banc. +.15 +0.2 won’t have a bigCBSH effect49.43 65.69 65.45 on costs.

40-27.3 -41.6 11 ... Target Corp.

EPC 39.50 78.04 43.17 +.05 +0.1 Edgewell $80 F M A M Citigroup

52-week rangeUPS B EMR 57.36 74.45 71.97 +.53 +0.7 +3.3 +25.5 28 1.94 $48.56 $69.28 Energizer Holdings ENR 40.64 64.00 55.44 +.29 +0.5 +15.5 +4.1 19 1.16 US Bancorp 60 Vol.: 12.1m (1.0x avg.)

PE: ...

Enterprise Financial EFSC 36.65 53.00 53.05 +.40 +0.8 +17.5 +24.0 19 0.44 US Steel Mkt. Cap: $81.5 b Yield: 4.5% 50 F M A M Esco Technologies ESE 50.30 66.80 56.15 -1.45 -2.5 -6.8 +0.6 19 0.32 Verizon 52-week range Armo BioSciences ARMO Express Scripts ESRX 55.80 85.07 70.96 +2.33 +3.4 -4.9 +10.6 9 ... WalMart Emerson 70

$50.80 $80.37 Close: $49.80 19.98 or 67.0% Foresight Energy FELP 3.28 5.49 3.47 -.08 -2.3 -20.6 -29.9 dd 0.13 Walgreen Boots The cancer drug developer agreed Vol.: 4.9m (1.6x avg.)

PE: 10.2 FutureFuel FF 11.32 16.22 11.48 -.34 -2.9 to be-18.5 -26.2 bought by14 0.24a Eli Lilly forWells Fargo $50 a Mkt. Cap: $17.2 b Yield: 3.4% share, or $1.52 billion.

yield on the 60 70.76 108.98 85.07 +.65 +0.8 -8.5 +0.2 20 1.64 LOW 40 10-year Treasury 50 MNK 11.65 49.12 14.50 +.78 +5.7 -35.7 -69.2 ... note fell to 2.96 40 115.55 191.68 193.05 +2.42 +1.3 +27.5 +64.6 20 Thursday MA 45 1.00 F M A M F Mpercent A M 52-week range +.83 +0.5 -4.1 +16.5 25 4.04 52-week from 3 percent a range MCD 145.43 178.70 165.07 $48.56 $69.28 $25.10 $57.19 day earlier.

MON 114.19 126.80 124.89 +.20 +0.2 +6.9 +9.3 21 2.16 Vol.: 12.1m (1.0x avg.)

PE: ...

Vol.: 5.3m (21.3x avg.)

PE: ...

OLN 27.79 38.84 33.04 -.30 -0.9 -7.1 +15.7 10 Cap: 0.80$1.5 b Mkt. Cap: $81.5 b Yield: 4.5% Mkt. Yield: ...

BTU 22.58 41.98 38.06 +.44 +1.2 -3.3 +51.2 0.60 AP SOURCE: FIS Armo BioSciences ARMO PRIME FED SKIS 4.00 5.84 4.70 ... ... -13.0 -11.1 dd 0.28 Close: $49.80 19.98 or 67.0% RATE FUNDS PRFT 16.29 25.00 24.65 +2.7 +29.3 +41.0 47 ...

The cancer drug developer +.64 agreed 1.63 4.75 YEST to be bought by Eli Lilly for $50 a POST 70.66 88.93 76.81 +.42 +0.5 -3.1 -2.2 47 ...

1.13 6 MO AGO 4.25 share, or $1.52 billion.

RGA 121.93 165.12 150.55 -.05 ... -3.5 +22.5 13 2.00f .88 1 YR AGO 4.00 $60 3.72 13.77 4.76 +.17 +3.7 -0.2 -25.6 dd ...

RELV

SR 60.09 82.85 70.95 +1.05 +1.5 -5.6 +4.9 20 2.25 40 SF 41.93 68.76 60.37 +.14 +0.2 +1.4 +26.3 19 0.40 20 48.56 78.70 70.24 +.31 +0.4 +7.6 +24.6 13 2.48 TGT F M A M 52-week range +2.59 +2.3 -4.3 +7.8 19 3.64f UPS 101.45 135.53 113.99 $25.10 $57.19 USB 49.03 58.50 51.17 +.34 +0.7 -4.5 +0.8 14 1.20 Vol.: 5.3m (21.3x avg.)

PE: ...

X 18.55 47.64 35.90 +.94 +69.1 21 0.20 Mkt. Cap: $1.5 b Yield:+2.7 +2.0 ...

VZ 42.80 54.77 47.20 +.82 +1.8 -10.8 +5.0 6 2.36 AP SOURCE: FIS WMT 73.13 109.98 82.69 +.15 +0.2 -16.3 +10.9 18 2.08f WBA 61.56 86.42 63.81 +.87 +1.4 -12.1 -25.0 14 1.60 WFC 49.27 66.31 54.65 +.89 +1.7 -9.9 +1.2 12 1.56

Dividend Footnotes: a - Extra dividends were paid, but are not included. b - Annual rate plus stock. c - Liquidating dividend. e - Amount declared or paid in last 12 months. f - Current annual rate, which was increased by most recent dividend announcement. i - Sum of dividends paid after stock split, no regular rate. j - Sum of dividends paid this year. Most recent dividend was omitted or deferred. k - Declared or paid this year, a cumulative issue with dividends Qualcomm QCOM $60 in arrears. m - Current annual rate, which was decreased by most recent dividend announcement. p - Initial dividend, annual rate not known, yield not shown. r - Declared or paid in preceding 12 months plus stock dividend. t - Paid $54.97 1.80 or 3.4% date. PE Footnotes: q - Stock is a closed-end fund - no P/E ratio shown. cc - P/E exceeds 99. dd - Loss in last 12 months. in Close: stock, approximate cash value on ex-distribution

The telecommunications company said it will buy back $10 billion in stock. $70

BUSINESS DIGEST 60 50

Biotech startup raises $5.5 million • 40 St. Louis-based biotechnology F M A startup M Kypha has raised $5.5range million, according 52-week to $48.56 a filing with the Securities$69.28 and Exchange Commission.

Vol.: 12.1m (1.0x avg.)

PE: ...

Kypha is $81.5 located Cortex4.5% Mkt. Cap: b in theYield: innovation district and is developing BioSciences a Armo diagnostic tool that analyzesARMO inflammation. is or seeking Close: $49.80 Kypha 19.98 67.0%to have the tests useddrug to detect lupus, stroke, The cancer developer agreed to be bought byinjury, Eli Lillypreeclampsia, for $50 a traumatic brain share, orkidney $1.52 billion. infection, disease and transplant rejection. $60 The money raised was part of a larger $7.940 million equity offering, the filing showed.

Kypha 20 executives did not respond to F comment.

M requests for TheAfirm isMled

by CEO Chad52-week Stiening,range who moved the $25.10 $57.19 company from Louisville, Ky., several Vol.: 5.3m (21.3x avg.)

PE: ... years ago. Previous investors in the Mkt. Cap: $1.5 b ... startup include the Missouri Yield: Technology Corporation, AP SOURCE: FISBiogenerator, and Arsenal Capital Management.

Ameren’s profit rises • After posting a loss in its last fiscal quarter, Ameren Corporation reported a profit of $151 million for its most recent quarter on revenue of $1.59 billion.

Both profit and sales were up when compared to the prior year period, when the utility posted a $102 million profit on sales of $1.52 billion.

The increase in earnings reflected higher Ameren Missouri electrical service rates that went into effect April 2017 and higher Ameren Missouri electric retail sales that stemmed from a colder winter.

Wells Fargo eyes expense reductions • Wells Fargo & Co. on Thursday said it expects efficiency efforts to cut expenses by $2 billion annually in 2018 and 2019, and that the aftertax impact on net income of a regulatory cap on its assets will be less than $100 million in 2018.

Wells Fargo gave the figures in an investor presentation posted on the San Francisco bank’s website. It said it expects net interest income to be “relatively stable” in 2018 as projected higher interest rates will be offset by lower earning assets and increases in deposit costs. The Wells Fargo Advisors investment unit is based in St. Louis.

For 2018, the bank said it expects that total noninterest expenses will be between $53.5 billion and $54.5 billion, and between $52 billion and $53 billion for 2019. Both ranges include typical operating losses and exclude litigation and remediation items, the bank said.

Investors said this week they were looking for updates on how long the

40 20

$25.10

F

M A 52-week range

Vol.: 5.3m (21.3x avg.)

Mkt. Cap: $1.5 b

AP SOURCE: FIS 3-month T-bill 1.86 +0.01 .89 6-month T-bill 2.03 -0.01 1.03 52-wk T-bill 2.25 +0.01 1.12 2-year T-note 2.53 ... 1.36 5-year T-note 2.83 -0.01 1.93 7-year T-note 2.94 -0.02 2.22 10-year T-note 2.96 -0.04 2.41 30-year T-bond 3.11 -0.05 3.04

NET 1YR BONDS LAST CHG AGO Barclays Glob Agg Bd Barclays USAggregate Barclays US High Yield Moodys AAA Corp Idx Barclays US Corp 10-Yr. TIPS

2.00 +0.02 3.35 +0.02 6.31 +0.01 4.04 +0.02 4.00 +0.01 .80 -0.02

1.64 2.63 5.66 3.94 3.33 .54

GlobalMarkets INDEX LAST CHG CHG YTD S&P 500 2723.07 +25.28 +0.94% +1.85% Frankfurt DAX 13022.87 +79.81 +0.62% +0.81% London FTSE 100 7700.97 +38.45 +0.50% +0.17% Hong Kong Hang Seng 30809.22 +273.08 +0.89% +2.97% Paris CAC-40 5545.95 +11.33 +0.20% +4.39% Mexico City Bolsa 46551.55 +257.12 +0.56% -5.68% Tokyo Nikkei 225 22497.18 +88.30 +0.39% -1.18% Sao Paolo Bovespa 85861.21 +1595.70 +1.89% +12.38% Toronto 15959.50 +48.69 +0.31% -1.54% 8984.10 +39.20 +0.44% -4.24% Zurich

M $57.19 PE: ...

Yield: ...

SOURCE: FIS stay in the regulatory AP bank would

doghouse, and would be looking for details about costs as questions remained about the lender’s ability to grow its balance sheet.

A series of scandals over sales and lending practices at the San Franciscobased Wells Fargo has cast a dark cloud over the bank, which previously was known for its ability to consistently grow revenue and earnings in the post-crisis era.

It is now under orders by the Federal Reserve to keep assets below $1.95 trillion until governance and controls improve, which has complicated matters as the bank tries to improve its closely watched efficiency ratio measuring costs per dollar of revenue.

Last month, Wells Fargo agreed to pay $1 billion to settle with U.S. regulators who said it wrongly layered insurance on hundreds of thousands of drivers and hit homebuyers with excessive fees. It also has paid millions of dollars in fines after admitting it opened sham accounts for customers.

Wells Fargo has revamped its leadership since the scandal erupted in 2016 and got a boost on April 24 when directors including Chief Executive Tim Sloan and Chair Elizabeth Duke handily won shareholder support.

Key mortgage rate steady at 4.55 percent • The key long-term U.S. mortgage rate held steady this week, providing a lure for potential homebuyers as the spring buying season goes forward.

Mortgage buyer Freddie Mac said Thursday the average rate on 30-year, fixed-rate mortgages was 4.55 percent, unchanged from last week. The benchmark rate rose steadily for most of April, reaching its highest level in more than four years. By contrast, the rate averaged 4.05 percent a year ago.

The average rate on 15-year, fixed-rate loans declined slightly to 4.01 percent from 4.03 percent last week.

Despite higher borrowing costs and home prices, demand for home purchases has grown in the spring buying season as the economic outlook has continued to improve and bolstered consumer confidence.

Homes sold at a solid annual pace of 5.6 million in March, the National Association of Realtors reported last week, even though the number of houses for sale has plunged. As a result, average home prices are rising at more than twice the pace of wages.

From staff and wire reports

Vol.: 5.3m (21.3x avg.)

PE: ...

NET 1YR Mkt. Cap: $1.5 b Yield: ...

TREASURIES LAST CHG AGO

Thursday, May 10, 2018

Business Bank of St. Louis sold to Stifel, adding to its portfolio FROM STAFF REPORTS

Stifel Financial is expanding its banking portfolio with the acquisition of Business Bancshares, the parent company of the Business Bank of St. Louis.

Financial terms of the deal, expected to close in the fourth quarter, were not disclosed.

Founded in 2002, the Business Bank operates from a single branch in Clayton and had about $620 million in total assets

as of March 31, $516 million of loans and $536 million of total deposits.

“This acquisition represents another step in the build-out of our banking services in our Global Wealth Management business,” Stifel’s chairman and CEO Ron Kruszewski said in a statement.

Stifel Bank & Trust, a unit of Stifel, has grown to over $15.2 billion in assets, led by CEO Chris Reichert.

The Business Bank of St. Louis will operate as a

separate subsidiary bank to support the business banking needs of Stifel’s Global Wealth Management clients as well as clients of its Institutional Group.

“Combining with Stifel will benefit our existing clients as we expand our lending capacity with additional liquidity and capital,” Larry Kirby, CEO and president of Business Bancshares and the Business Bank of St. Louis, said in the statement.

Tech and health care firms drive more gains for U.S. stock market

BY ALEX VEIGA AP Business Writer

A broad rally drove U.S. stocks solidly higher Thursday for the second day in a row, extending the market’s gains for the week.

Technology companies, which have led the market this year, contributed the most to the rally. Health care stocks and banks also accounted for a big slice of the market’s gains as investors sized up the latest company earnings and economic news. Crude oil prices rebounded after an early slide.

The S&P 500 index rose 25.28 points, or 0.9 percent, to 2,723.07. The Dow Jones industrial average climbed 196.99 points, or 0.8 percent, to 24,739.53. The gain turned the Dow back to positive for the year.

The Nasdaq added 65.07 points, or 0.9 percent, to 7,404.97.

Smaller-company stocks continued to post solid gains. The Russell 2000 index of smaller-com-

pany stocks picked up 7.66 points, or 0.5 percent, to 1,603.71. That’s the highest close for the index since January.

“They’ve had a good couple of months,” said Tom Martin, senior portfolio manager with Globalt Investments. “The dollar really strengthened here up until the last couple of days, and that is benefiting those smaller-cap companies.”

The Labor Department said that U.S. consumer prices rose a modest 0.2 percent in April, a sign that broader inflation pressure remains muted. Excluding the volatile food and energy categories, core prices ticked up just 0.1 percent last month and 2.1 percent from April last year.

Slower growth in core prices may mean that the Federal Reserve will be less inclined to accelerate interest rate hikes. The Fed has signaled they will lift rates twice more this year, following an increase in March.

Some expect that an uptick

in inflation or economic growth might spur the Fed to add a third hike.

“It tells us that rates are going to continue to go higher, but maybe it starts to call into question: Are we really going to have four?

Maybe three is enough,” said Bob Doll, chief equity strategist at Nuveen Asset Management.

Bond investors appeared to interpret the consumer prices data as a sign that the Fed is not likely to speed up the pace of its planned rate hikes. Bond prices rose, pulling the yield on the 10year Treasury note down to 2.96 percent from 3 percent late Wednesday.

Technology stocks extended their gains. The sector is up 11.1 percent this year, ahead of all others.

On Thursday, Qualcomm led the sector, climbing 3.4 percent to $54.97 after the company’s board approved a $10 billion share buyback.

Benchmark U.S. crude oil rose 22 cents to settle at $71.36 a barrel in New York.

BUSINESS

B4 • ST. LOUIS POST-DISPATCH

M 1 • Friday • 05.11.2018

Trump drug-pricing speech adds dose of uncertainty Sector expects volatility, but what he’ll say is unknown

BY LEWIS KRAUSKOPF Reuters

Investors are bracing for widespread volatility in health care stocks on Friday, when U.S. President Donald Trump is expected to give a highly anticipated speech about controlling prescription drug prices.

The S&P 500 health care sector has declined about 1 percent in 2018, underperforming the broader S&P 500 by more than 2 percentage points. Investors say concerns about drug pricing regulations have contributed to pressure on the group.

Trump’s speech, delayed

from earlier in the year, has injected added anxiety.

He has addressed the issue of lowering prices in the past, saying as president-elect in January 2017, for example, that drugmakers were “getting away with murder” in what they charge the government for medicines.

“Investors don’t like uncertainty and this speech has created a fair amount of uncertainty,” said Les Funtleyder, health care portfolio manager at E Squared Capital Management.

“We don’t really know what is necessarily priced in, what level of detriment to all these industries is priced in.”

Health care policy speeches by senior government officials in recent weeks also may have changed the thinking of investors.

“The sense is that the proposals could go a little further than what we have seen in the budget and other places,” said Ipsita Smolinski, managing director at health care research and consulting firm Capitol Street.

The speech could affect a broad group of stocks in the health care sector, which makes up 13.6 percent of the S&P 500.

“The president never shies away from fiery rhetoric, and we expect that in his speech he will finger manufacturers, pharmacy benefit managers, insurers, hospitals, and foreign countries as responsible for high drug costs,” Height Capital Markets analyst Andrea Harris said in a note.

Harris said she expects “material headline risk” to the stocks but that the administration “will not implement

the most material policies that Trump will suggest in the speech in the next two years, if ever.”

The health care sector rallied on Thursday, up 1 percent against a 0.9 percent gain by the S&P 500. Shares of companies potentially in the cross-hairs of Trump’s speech closed higher Thursday, including pharmaceutical wholesaler Cardinal Health Inc. and drug-benefit manager Express Scripts Holding Co. Some analysts said on Thursday that investors could be becoming less worried about the speech while others said it was hard to predict what Trump might say.

Overall, shares of large pharmaceutical and biotech companies have struggled this year.

While companies have endured

product or other disappointments, analysts have pointed to concerns about pressures on drug-pricing as a cloud over the stocks.

In contrast, health care sectors seen as immune to such pricing concerns — makers of medical devices and research tools — have outperformed.

Friday’s speech may provide some clarity for investors, but the prospect of health care and drug pricing being a hot topic heading into the midterm U.S. congressional elections in November may lead worries about the sector to persist.

“Even if we didn’t have a speech, people would be thinking about November and what may or may not happen and wouldn’t be investing with the same gusto that they otherwise would,” Funtleyder said.

State flagged transaction, refused to issue credits MCKEE • FROM B1

for the transaction.

But once the state Department of Economic Development, in early 2013, flagged the transaction and refused to issue credits for the interest payments, Osher stopped paying rent and McKee stopped paying interest. The Department of Economic Development eventually recouped the credits for the sale by reducing the amount of credits McKee would have received on other transactions.

Yet for two years, despite no rent or principal payments, neither side moved to trigger default. McKee’s NorthSide Regeneration continued as the owner, and Osher continued leasing.

It was only in 2015, when the National Geospatial-Intelligence Agency was looking to move to a new campus and the city needed to acquire the building as part of assembling a site for the federal agency, that the deal was “unwound,” Carmody said, and the property deeded back to Osher.

Since then, Osher has battled the city in court over the value of the building, which the city used eminent domain to acquire. His litigation challenging the city’s value, paid via eminent domain, for his Buster Brown building has shed new light on how a state program many saw as written for one man — McKee — may have been abused.

The trial is really over the value of the Buster Brown building — which the city took in July 2016 and ultimately paid a little over $800,000 for. Osher argues its value is closer to $5.5 million and has taken the action all the way to a jury trial.

Still, details of Osher’s transactions with McKee have been a key part of evidence and witness testimony. Emails, contracts and other documents obtained via discovery from McKee affiliates and attorneys and those held by Osher shed light on not just the Buster Brown transaction, but other interactions between Osher and McKee. In late 2011, Osher had a letter of intent to sell three buildings to McKee’s company — Buster Brown, another on Magazine Street and another nearby building for about $6.4 million. Two of the buildings Osher had recently bought for $65,000. Osher bought Buster Brown in the 1990s for $200,000.

But then, two of the properties were left off of the transaction and only Buster Brown was included. While the original letter of intent Osher signed agreed to sell the Buster Brown building for $3.16 million, the sale price increased to $3.75 million after the two other buildings were left off the final sale.

Were the other two buildings left off the final sale, Carmody asked Osher on

the stand, because “the numbers you were talking about would draw scrutiny from the Department of Economic Development?”

Osher said he couldn’t recall.

Carmody then pointed to an email from Russell Caplin, a longtime McKee associate who worked in finance for the developer’s former McEagle Properties, about the final sale including only Buster Brown.

“Obviously it’s not as attractive to either party as the previous discussion, but I think it has a higher likelihood of a good outcome,” Caplin wrote.

That good outcome is Department of Economic Development approval, right?

Carmody asked. “I assume so,” Osher said.

McKee lawyer Lynn Carey at Stone Leyton Gershman said in an emailed response to questions that there was nothing “nefarious” about the timing of the purchase.

“In light of the difficult and time consuming negotiation with Osher, NorthSide decided to concentrate on the property most significant to its development activities (Buster Brown), rather than trying to focus on negotiating terms for multiple properties at once,” Carey wrote.

An email from an Osher lawyer sent during negotiations asked to include a way to unwind the deal if the state didn’t issue tax credits for the deal “since everything is contingent on obtaining tax credits,” she wrote.

McKee’s NorthSide Regeneration project has been controversial since it was discovered the developer was buying up land in beleaguered north St. Louis neighborhoods. The Distressed Area Land Assemblage tax credits to offset land purchases — created by legislation McKee lawyer Steve Stone helped write — helped him amass 1,500 acres north of downtown.

McKee eventually won the blessing of the city, which designated him developer of the area and promised future development subsidies if projects started happening. Yet his relationship has soured with City Hall over the years as complaints mounted about the lack of development and deteriorating buildings he owned. One of his construction projects has recently started along Tucker Boulevard north of downtown.

McKee argues the NGA wouldn’t have decided to relocate to north St. Louis had he not started assembling land and made the initial pitch to the federal government. But the city was ultimately forced to buy back land it had sold to him within the future footprint of the NGA site.

Jacob Barker • 314-340-8291 @jacobbarker on Twitter jbarker@post-dispatch.com

JACOB BARKER • jbarker@post-dispatch.com

The Metropolitan St. Louis Sewer District bought out dozens of houses that frequently flooded near Northern Missionary Baptist Church in St. Louis. It demolished them and is building a large basin to absorb the surrounding area’s stormwater.

MSD meetings deal with flooding fixes WATER • FROM B1

property’s amount of impervious surfaces — meaning areas that do not absorb water — and would eventually need to be approved by a public vote.

MSD says the list of unfunded stormwater issues in its service area would cost an estimated $562 million to address over a 30-year time span. If phased in, the tiered pricing system for impervious surfaces would cost an average residential customer $2.25 per month, or $27 annually.

The utility’s CEO, Brian Hoelscher, said public surveys helped identify that strategy as “the fairest way to distribute the costs of this program,” and that surfacerelated charges are used broadly in other parts of the country.

Proposed uses for the revenue would include buying out flood-prone properties built in hard-hit flood plains.

“What we’re recommending is we buy the homes out proactively, as a service,” said Hoelscher, explaining that MSD would start with properties “that are the most critical,” including some in twoand five-year flood plains.

The utility says creeks and streams would remain privately owned and responsibility for flood plain management would remain in the hands of local municipalities.

Some attendees expressed skepticism or outright disapproval of the proposed charge, questioning why, for instance, the utility’s customer base should bear the costs of problematic flood plain development.

Others, though, were supportive of the effort. They say something has to be done to address regional flood issues but want to ensure that money generated through the program is well spent and that it hap-

pens alongside broader changes that shift local flood policies away from repeating past mistakes.

“I’m very supportive on one condition: They have to hold municipalities accountable for what they’re doing,” said Michael Carmody, an attendee who is also involved with Save Sugar Creek, a citizens group in Kirkwood that has paid attention to local flood issues. “Why hand out a free pass if they’re going to abuse it?”

Carmody says current development and zoning policies in Kirkwood, for example, are guided by outdated flood plain maps that don’t reflect current levels of risk.

“Stop right now, get it fixed and then start issuing permits,” he said. “Their attitude is sell and repent. ... Sell it and we’ll repent and fix it later.”

Tuesday’s meeting was the first of several public hearings MSD has scheduled throughout the area in the next few weeks.

Other meetings at 6 p.m. are scheduled for May 15 in Bridgeton, May 17 in Manchester, May 22 in Maryland Heights and June 6 in St. Louis. The utility will also hold a meeting streamed online at 1 p.m. on May 30. A full list of the sessions can be found online at stlmsd.com/ratecommission.

After the series of meetings, MSD’s rate commission aims to make a recommendation to its board of trustees by August about whether to pursue the new stormwater charge. The matter would still need to go to a public vote for approval — a step not expected until April 2019, at the earliest. If passed, the charges would start to kick in in 2020.

Bryce Gray • 314-340-8307 @_BryceGray on Twitter bgray@post-dispatch.com

BUSINESS

05.11.2018 • Friday • M 1

ST. LOUIS POST-DISPATCH • B5

Interest rates on federal student loans jump for a second year Annual rates, tied to the market, will rise more than 0.5 percent

BY DANIELLE DOUGLAS-GABRIEL Washington Post

PHOTOS BY LAURIE SKRIVAN • lskrivan@post-dispatch.com

An automated valve dispenses individual servings of batter onto a waffle iron on Tuesday at Start Right’s production facility in Ballwin.

Dough from incubators powers wafflers NICK • FROM B1

founders initially making the product on three home-kitchen-size waffle irons.

By late 2016, with the business growing and its original home, an STL Venture Works incubator in midtown St. Louis, about to close, Matthews and Rood leased an office-warehouse space in Ballwin and began figuring out how to scale up.

A grant from Biogenerator helped them buy a custom waffle-making machine and develop a couple of new products: breakfast sliders, with an egg and beef or turkey sausage between two waffles, and an aerosol syrup dispenser.

A food company isn’t a typical project for Biogenerator, which usually helps medical or agricultural startups, but Start Right did have a health focus, and Broderick liked the founders. “They’re aggressive and hardworking, and they are dedicated,” he said. “It was worth $25,000 to help them.”

Recently, the co-founders have been working 12-hour days, along with two fulltime and two part-time employees, to fill a big order from Midwest grocery giant Hy-Vee. Matthews, who has a commercial driver’s license, and Rood plan to deliver the order themselves to Hy-Vee warehouses in Iowa and Wisconsin.

Matthews enjoys hands-on tasks such as flipping waffles and driving a truck, but he knows he’ll eventually have to leave them to other people.

“We want to be back here,” he said this week while stuffing waffles into boxes, “but we also need to be doing other stuff.

Our challenge is to take the next steps to build the business.”

Food innovation scientist Vivian Hor prepares to transfer a mixer full of protein-rich waffle batter to the waffle irons Tuesday at the Start Right facility in Ballwin.

That means making more sales calls and possibly raising capital to buy additional equipment, such as a machine to automate the packaging process. It also includes finalizing a licensing agreement for a national company to market the patented aerosol syrup can.

The crew can make about 1,000 boxes of waffles a day, but that soon won’t be enough. Start Right products are in about 300 stores now, including Dierbergs and Lucky’s supermarkets and some Schnucks locations in the St. Louis area, but Matthews says he expects to be in 500 stores by

Self-storage properties are growing

BRIAN FELDT • bfeldt@post-dispatch.com

Typical CubeSmart developments have around 700 storage cubes that can be rented on a month-to-month basis. This location is near Interstate 70 in St. Charles.

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summer.

The eventual goal is to make Start Right a national brand for healthy, convenient breakfast foods. The name, of course, alludes to eating properly at the start of the day, but it could also apply to the kind of help Rood and Matthews got from Arch Grants and Biogenerator. They may not have started the business they originally envisioned, but they believe they’ve started the right one.

David Nicklaus • 314-340-8213 @dnickbiz on Twitter dnicklaus@post-dispatch.com

STORAGE • FROM B1

ments nationwide that total approximately 34 million square feet of rentable storage space.

Under terms of the joint venture agreement, CBL is contributing land as its share of equity in the project, with CubeSmart funding the rest through its relationship with Hickory Capital Group out of Nashville. The property, according to St. Charles County records, has a market value of just more than $1 million.

Typical CubeSmart developments have around 700 storage cubes that can be rented on a monthto-month basis. The Mid Rivers Mall location, a 92,400-square-foot climate-controlled facility, will be located on an undeveloped lot directly south of a Planet Fitness gym.

Project costs weren’t disclosed, though the Cincinnati development, which is essentially the

College students will pay more to borrow money from the federal government this fall as student loan interest rates are set to rise for the second year in a row.

Interest rates on federal student loans will climb by more than half a percentage point as a result of the Treasury Department’s auction of 10-year notes Wednesday. The federal government resets rates on student loans every year based on the spring rate of the note, plus a fixed margin. New rates will take effect July 1.

Undergraduate students can expect to pay 5.04 percent in interest on new Stafford loans instead of the current 4.45 percent. Graduate students will see the interest rate on new Direct loans climb from 6 percent to 6.59 percent. And parents who take on federal debt to help their children pursue a degree can expect to pay 7.59 percent instead of 7 percent.

“We are in a rising rate environment, with the Federal Reserve increasing the federal funds rate. ... So [an increase] is not unexpected,” said Mark Kantrowitz, publisher of PrivateStudentLoans.guru, a student lending website. “Possibly contributing to the increase in 10-year Treasury note rates were fears of a trade war and inflation fears due to the U.S. backing out of the Iran nuclear deal.”

The new rates are good only for loans taken out to pay for the 20182019 academic year. But because many families have to borrow money every year to cover the cost of college, annual increases in interest rates could become costly in the long run.

Until last year, families had benefited from historically low student loan interest rates. The Congressional Budget Office projected two years ago that rates would start to climb by 2018, with undergraduate rates topping 6 percent, graduate loans hovering around 7.5 percent and the rates on parent loans hitting 8.5 percent.

To keep rates on education loans from skyrocketing, Congress has set a ceiling. Interest rates on undergraduate loans can never go higher than 8.25 percent. Graduate loans are capped at 9.5 percent, while the limit on parent loans is 10.5 percent. Lawmakers decided several years ago to tie federal student loan rates to the market, rather than setting them.

same size, is being built for around $10 million, according to the Cincinnati Enquirer.

Self storage has turned into a fast-growing segment of the real estate industry, both here in St. Louis and across the country. More than 11 million square feet of self storage exists on the market today. Approximately 1 million square feet of that has been added over the last three years, according to research from real estate firm Marcus and Millichap.

St. Peters City Administrator Russ Batzel said the development is a way for CBL to utilize underserved areas of the mall that haven’t yet been claimed by restaurants or some other use.

In a similar move, CBL sold the three-acre site where Planet Fitness now operates to Agree Realty Corporation for $4.6 million in October.

CBL CEO Stephen Lebovitz said during an investor call that the company is targeting more outparcel and nonretail uses at its properties, “which allow us to limit our investment by utilizing joint ventures, ground leases or pad sales.”

T h e re fo re , s i m i l a r deals could pop up at CBL’s other St. Louis area malls, which include West County Center, South County Center and St. Clair Square.

As malls continue to struggle — CBL’s local portfolio reported $67 million in revenue last year, down more than 20 percent from 2013 — Lebovitz said 2018 will be another difficult year for CBL. The 2013 figure includes Chesterfield Mall, which was foreclosed on and is no longer under CBL ownership.

That said, he said he was encouraged by signs of a recovery in the general retail landscape and its portfolio.

CBL officials said sales per square foot at Mid Rivers Mall, which dropped from $301 in 2016 to $294 last year, are up singledigits during the first quarter, though specific numbers weren’t provided.

A new 21,000-squarefoot H&M store at the mall is under construction and is expected to open later this fall. “We have been doing a lot of H&Ms the last few years,” Lebovitz said during the investor call.

And positive demand for a pop-up shop at the mall — an initiative to offer boutique retailers cheap rent for a short period of time — has led CBL to expand the concept by adding a pop-up “Marketplace” — a three-retail merchandise unit configuration is located on the lower level near Macy’s.

St. Louis’ stock of regional shopping malls is under intense pressure to evolve as brick and mortar properties compete with various market factors such as e-commerce and changing consumer shopping habits.

More than half of St. Louis’ traditional mall properties are in some stage of redevelopment.

Many of them are destined for futures drastically different from their apparelfocused past.

In the case of malls that will maintain a retail presence, having unique offerings such as restaurants or entertainment tenants to drive foot traffic will be vital for developers to sustain success, analysts say.

Brian Feldt • 314-340-8528 @bfeldt on Twitter bfeldt@post-dispatch.com​