This is brilliant, Sarah. Startup companies, by their nature, have already established characteristics such as a heightened appetite for lower bottom-line costs and heightened tolerance for risks.
Co-working spaces are getting bigger in St. Louis, as they afford small startups some of the luxuries of bigger companies (receptionist, board room, communal water cooler, etc.) while maintaining the benefits of staying small, independent, and flexible.
The attractiveness of such an opportunity should get supercharged by including the government amenities mentioned above. In addition to affordable office space, amenities such as affordable housing should be readily available to government and highly attractive to grassroots entrepreneurs.
Be careful, however, as entrepreneurs are also characteristically independent, and might actively seek to reject a government-funded project for the sake of accomplishing their work truly on their own.
Several commenters below have left suggestions about the focus of such a venture, questioning whether the members of the incubator space should be working directly on the city problem. I disagree. Being mindful of the task at hand (specifically, the word "vibrant"), I think it's vitally important to afford these startups the opportunity to progress in any direction they want. The diversity of ideas should lend itself well to the objective of "vibrancy," and I suspect that young entrepreneurs will nevertheless be mindful of and caring towards their home city.