Should the City of St. Paul act as a property developer?

“The St. Paul City Council, acting as the Housing and Redevelopment Authority Board, voted 4-3 on December 22 to support a complex financing package for the Penfield housing and retail development on the former Public Safety Building block at 10th and Minnesota streets.” [The Highland Villager, Jan. 11-24, 2012, p.1]

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[The Penfield as viewed from 10th and Robert streets, image from BKV Group]

The City of St. Paul will be acting as a developer for a new six-story building that will include over 250 market-rate condos and a Lunds grocery store. The approved financing package includes a $40 million federal HUD loan and $17 million in grants and loans from other governmental sources. According to the Highland Villager, the rents in the Penfield will range “from $1,055 for a studio apartment to $1,890 for a three-bedroom unit.”

While St. Paul’s mayor Chris Coleman called the project “catalytic” and claim the project isn’t viable without the help of the City. Opponents have argued it puts taxpayers at risk if the development fails, sets a bad precedent and that the money should have been used for other projects throughout the City. Other concerns have been that, if the City is to use public funds, some housing should be made affordable to low-income residents.

What are your thoughts? Should the City of St. Paul act as a property developer?


  • Should the City of St. Paul act as a developer? And if so, should it be in the business of developing market-rate housing?
  • Does this set a bad precedence? Will private developers struggle to compete?
  • Is the importance of a downtown grocery store worth some financial risk to the taxpayer?

– Cross-posted @ Thoughts on the Urban Environment

6 thoughts on “Should the City of St. Paul act as a property developer?

  1. Alex BaumanAlex

    In this case, yes, absolutely. The market has failed to provide grocery stores in inner city locations, so the government has a responsibility to step in and make it happen. In most cases, affordable apartments would be better, but I buy Dave Thune's argument that the area has enough affordable already and needs some more income diversity.

    [WORDPRESS HASHCASH] The poster sent us '0 which is not a hashcash value.

    1. Nathaniel M Hood

      Very, very true. Of all the recently proposed subsidized projects – this is by far the best one. Hopefully the grocery store will act as a catalyst for downtown development / increased residential populations.

  2. Nathaniel M Hood

    For those who haven't read it; here's Council Member Dave Thune's argument in favor of the project:

    Here are the drawings of the original proposal:

    Also- this isn't the first time St. Paul has jumped in as a developer. A similar action was taken with the Farmer's Market development. I don't think there is a right answer on this question … at least not now. Arguments on both sides are convincing and only time will tell if this was a good decision. If it succeeds, you'll have heroes. If it fails, you'll have angry taxpayers.

  3. Pingback: Is downtown development possible without subsidies? |

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