Centene's odyssey: Michael Neidorff turns back on Clayton, entertains offers from city, county, 4 other
by Lisa R. Brown
Centene Corp. Chief Executive Michael Neidorff and his team are considering a dozen proposals from five states for the company's new headquarters from among 60 they received from across the country in the past month.
Proposals from Missouri, Illinois and Colorado are in the running, said Robert Wislow, chairman of Chicago-based U.S. Equities Realty. "We're in the process of narrowing it down."
In August 2006, Centene selected U.S. Equities and St. Louis-based Clayco to develop a new $210 million headquarters in Clayton to replace the building it owns at 7711 Carondelet Ave. in Clayton.
Centene issued a request for proposals on June 20 on the heels of the Missouri Supreme Court's June 12 ruling that three properties Centene sought to acquire in Clayton and to build its headquarters were not blighted and could not be condemned.
"We've got to have room to expand," said Centene spokesman Bob Schenk. "There is an understood need to move this process quickly, given the time necessary to undertake the construction of a project of this magnitude."
One certainty Schenk stresses is that the new building that will house 800-plus employees will not be in Clayton. "We will maintain the existing offices in Clayton, but they will not be the corporate headquarters," he said. "We're at the point where we will not be investing any more time in the Clayton efforts. We have been inundated (with offers), to put it mildly, from a wide variety of states."
Not all of the affected property owners are convinced Centene has abandoned its efforts in Clayton. David Danforth, one of the property owners who fought the eminent domain proceedings, said in a statement July 11 that he hoped negotiations with Centene could continue. "There is an opportunity for Centene and the property owners to reach an agreement on moving forward. I look forward to continuing the conversation with Centene outside of the media."
City, county officials scramble
Meanwhile, city and county officials are working in overdrive to make sure the region doesn't lose one of its largest companies. Centene Corp., which provides managed care programs and related services to individuals under Medicaid, is the 23rd-largest St. Louis-based public company, based on 2005 revenue. Centene's revenue in 2006 was $2.28 billion, up from $1.5 billion in 2005.
St. Louis County Executive Charlie Dooley's office submitted a list of 12 suitable sites, with some parcels totaling 80 acres, to Centene on June 28, said Denny Coleman, president and chief executive of the St. Louis County Economic Council. All of the sites on the county's list are privately owned. "We're obviously taking this very seriously and putting out every effort to keep Centene," Coleman said.
Centene's RFP only asked for land sites, and did not request incentive information, Coleman said. "We've worked successfully (to retain) a lot of major corporations in St. Louis, including Express Scripts and Pfizer," Coleman said. "We are prepared to sit down with Centene and be very aggressive at the appropriate time."
City of St. Louis officials said they have responded to Centene's RFP but also would not disclose the sites offered. Respondents to Centene's RFP were obligated to sign a confidentiality clause until the process is completed. St. Louis Mayor Francis Slay contacted Neidorff personally and sent a list of possible locations and background information on city sites, said Slay's chief of staff, Jeff Rainford.
"The mayor did call Michael Neidorff and told him that it is important that Centene remain in the region, and if we can help accomplish that, we will," Rainford said.
Neidorff plans to meet with U.S. Equities officials at the end of next week to begin the site selection process. At that time, Wislow said he will present Neidorff with 12 proposals that could be suitable to meet Centene's needs.
Plans call for the new headquarters building to have between 400,000 and 600,000 square feet of space, with room for additional expansion. Wislow said the new design will likely be much different than that proposed for Clayton. "We're looking at sites that could be more of a campus setting rather than a high-rise," he said.
Schenk said Centene's estimate of the number of new employees the new facility will accommodate will likely be higher than the previously thought 800 employees. "It's fair to say the scope of the project and the number of new employees could be greater than that," he said.
HOK did the original design and Schenk said the design team "will be intact unless some conflict of interest develops because of the community we choose."
Wislow, of U.S. Equity Realty, said he is disappointed that HOK's plan for the Clayton site will not be built. U.S. Equities' portfolio includes serving as development manager of Millennium Park in Chicago and the Compuware headquarters in Detroit. "It's not often in a developer's career where you have the ability to have the kind of impact this project could have had on Clayton," he said. "The timing was perfect, with demand from retailers, the public plaza that was to be built and the fact that there were multiple high-end tenants looking at the project."
As originally structured, Centene would own half of Centene Plaza, with U.S. Equities having a 40 percent ownership stake and Clayco having a 10 percent ownership stake.
Centene announced July 6 that it was ending its two-year-long effort to build its new headquarters in Clayton after extending new offers to three property owners -- Danforth, Daniel Sheehan and Debbie Pyzyk -- who fought Clayton's efforts to acquire their properties through eminent domain. Centene sought to purchase the three properties after Clayton's Board of Aldermen passed ordinances declaring the block of Forsyth blighted in December 2005.
According to sources close to the negotiations, Centene most recently offered Pyzyk, president of property management and development firm Kohner Properties Inc., $9.2 million for her property, and Danforth more than $3 million for his property. Danforth, who had his property on the market in the fall of 2005 for $2,275,000, told the Business Journal recently that he refused Centene's offers because he disapproved of the use of eminent domain to acquire his property.