Lost Right-Of-Way Fee Found at Ford

Ford Site Sunset

The current Ford Site at it’s most scenic.

In August 2016, the city of Saint Paul lost a court case in the Minnesota Supreme Court.  It was about right-of-way fees, a primary funding source for the city’s roads.  To make a long story short, the court found that the fee was not a fee but a tax, meaning that every non-profit and government property in Saint Paul no longer had to pay.  There are a lot of nonprofits in Saint Paul: Saint Thomas to Regions Hospital, First Baptist Church to Planned Parenthood, the State and County governments, and everything in between.  A huge chunk of funding, over $30 million per year, was lost and the city won’t just let the roads sit unplowed and full of potholes.  The question is: Where will the money come from now?

On the western edge of Saint Paul sits the former site of a Ford Plant that used to build Ranger pickup trucks.  It’s a massive tract of land, one of the biggest development sites in any city in the country.  The current plan for development is a great combination of mixed-use properties and a lot of green space. The buildings furthest from the river may be as tall as ten stories, and an expected 7,000 new residents are expected by the mid to late 2020’s.

It’s an ambitious plan as far as Saint Paul development goes, and the project has been unsurprisingly met with fervent anti-development parking-and-traffic-based reactionary opposition that is pushing the city to shrink the scale of the development.  Which of course makes the next sentence seem like a radical idea:

The Ford Site in Highland Park should be more densely developed.

740 Mississippi

740 Mississippi River Boulevard.

Now that your pitchforks are out, let me sell it. The strategy is two-pronged. A more densely developed Ford Site will produce a much more robust tax base for the city to pull resources from. Beyond that, dense developments encourage transport other than cars, which are far and away the biggest strain on our transportation system and our newly gap-toothed transportation budget.  

As far as the money goes it’s pretty straight forward.  7,000 happy taxpayers are well and good for the city coffers, but what happens if you increase those 10-story buildings up to 15? A long shadow might fall across the scenic Lunds and Byerleys parking lot, but the new sleek buildings will still sit below the altitude of their northern neighbor, 740 Mississippi River Boulevard, and match par with southern neighbor Cleveland Hi-Rise. And again, we’d have 10,000 new neighbors writing checks.  

And these would be new neighbors who are sitting on top of a hotbed of commercial potential, neighbors who are a minute’s walk from the A-line and a handful of other high frequency bus routes, neighbors that are a 5 minute cab from the airport.  They’d be neighbors who are going to have access to the bike facilities on the River Boulevard, Ford and Cleveland, neighbors who won’t need to have a car for every adult in the home, which stretches out that transportation maintenance budget for the rest of us who do use a car.

There is of course no silver bullet for the new hole in our budget, and a dense Ford Site wouldn’t solve any of our immediate woes, but as Saint Paul enters the next decade, we can plan and grow in a way that will ease the burdens of mistakes made in this decade.  

Like trying to disguise a tax as a fee.

25 thoughts on “Lost Right-Of-Way Fee Found at Ford

    1. Justin Doescher

      Especially since they’d all be moving into a previously unpopulated area. It’s not like they’re adding 10,000 people to the existing housing stock or putting up a bunch of new high rises in the existing neighborhoods.

  1. cobo Rodreges

    Are other cities impacted by this state supreme course or is it just st paul? Seems like court decision could encourage other cities to discourage non profit development within their boarders.

    1. Tom BasgenTom Basgen Post author

      It was a pretty narrow ruling about how the fee was applied through City Hall’s Civil Authority and not the City’s Policing Authority so it probably doesn’t directly undo other city’s ROW fees (If they have them), but it certainly gives a strong precedent to start from.

  2. David MarkleDavid Markle

    On the one hand, it’s possible to feel some sympathy for St. Paul’s street maintenance budgetary woes, considering St. Paul’s acreage owned by charities.

    On the other hand, it’s hard to sympathize with St. Paul and its budgetary woes, considering how St. Paul continues to overuse (I’d say, abuse) tax increment financing..

  3. Tim Nelson

    I think the MSP flight restrictions limit building heights pretty drastically on the vast majority of the Ford site. 740 is just outside the restricted area and why it can be so tall.

    1. Tom BasgenTom Basgen Post author

      While it is within the airport’s land use zone, if you use the FAA’s rules on thumb on building height restrictions my wild speculation plays out pretty safely, but caveat it’s all napkin math.

  4. howard miller

    And what a surprise it will be to those anticipating tax relief from the new Ford Development. They will need to wait until 2045 for it. TIF to the tune of $275 million has been approved for (and thus WILL be used unless the City can find a developer willing to leave that amount on the table!) this development. That means that the ‘increment’ (taxes paid in excess of current rates for the site, i.e. $1 million) will be used to pay developers,and pay for other improvements for the length of the agreement (25 years) NOT be used to lighten the load of taxpayers.

    In the interim payment for increased education and infrastructure repairs will fall on the taxpayers of St. Paul, probably in the form of increased right-of-way fees. Imagine what the Ford Parkway and Cretin Ave. will look (and feel) like after construction traffic is done with it. For those who don’t understand TIF, here is a resource (http://www.lincolninst.edu/publications/articles/tax-increment-financing) but there are many more online . For those who don’t understand how construction affects traffic, please spend a little time watching construction of the Finn at Cleveland and Highland Pkwy.

    1. Tom BasgenTom Basgen Post author

      Traffic moves smoothly along that stretch, I’ve never endured more than one light cycle per pass in at least 100 trips through there since the construction began.

      I’d be interested to see where you sourced your numbers regarding the approved TIF. The establishment of the zone was a close vote and the city is by no means mandated to use the TIF. Furthermore, IF TIF were used, the taxable money would still be used to the benefit of Saint Paul taxpayers, specifically those within the project area.

      A densely developed site wouldn’t solve any immediate tax problems as I stated in the article but it’s one of the strongest tools we have at our disposal right now to combat rising taxes in the future.

      1. howard miller

        Traffic moves smoothly when trucks aren’t off-loading. I was talking about the deterioration of the street surfaces; just as heavy garbage trucks destroy alleys, large 40-50 gondolas carrying building materials or pulling heavy equipment destroy the streets very quickly.

        My number sources are the minutes of the City Council and a tape of same from KSTP. If you’re unfamiliar with the long-term effects of TIF, i.e. tying up increments (new taxes above the original rate), so Ford now pays $1 million and that’s what they or the new owner will pay until the 25 year TIF agreement is completed. All of the new taxes ($21 million per the city’s estimate) will go to development and will NOT be used to pay for enlarging schools, replacing the newly decimated roads, putting in traffic calming devices and signals. These costs will fall upon the same people it has always fallen on thus exacerbating immediate tax problems and extending them into, well, the rest of my future anyway.

  5. GlowBoy

    I wouldn’t necessarily argue against more density on the Ford site, but I disagree that raising building heights beyond 10 stories is a good way to do it. Beyond 6-10 stories you don’t increase the quality and vibrancy of a neighborhood; you reduce it.

    Our cities are full of high-rise developments where no one walks around on street level. Mid rise is the sweet spot. You can throw a few high rises in here and there, but you don’t want them to be the dominant architecture.

    1. Alex CecchiniAlex Cecchini

      I think we’d need some sources to show that primarily residential neighborhoods with high-rises induce less net new foot traffic, are less vibrant, etc. Obviously you can have “better” or “worse” design for buildings taller than 6 stories, but the same can be said for detached home, 4-plexes, and mid-rise buildings as well. The places in M/SP with high rises that struggle with sidewalk vibrancy is a mix of many factors, including skyways, a lack of 24/7 population (which drives 24/7 commercial uses), and others. I don’t know that any of those would be true on the Ford Site. I’d say the St Anthony district of Minneapolis, with its many high-rises (more coming!) mixed into its commercial district, is at least as “vibrant” as Uptown, if not moreso.

      I’m not saying the right policy here is to push for high-rises as a day-one buildout strategy, but I’m also not saying it’s the wrong one.

      1. GlowBoy

        Our country is full of high-rise “urban renewal” projects that are devoid of street life. In Portland, where I recently moved from, the Auditorium District at the south edge of downtown was one of those 60s/70s era projects. A bunch of low and mid rise buidings were razed to build high rises. These are middle income apartments today, and almost everyone comes and goes by car. Nothing going on at the street level, just a couple of retail businesses like a mini mart and a dry cleaner, and few pedestrians despite lots of nice pedestrian paths.

        Same thing with South Waterfront, a more recent multibillion dollar effort to redevelop a former industrial site. Lots of shiny new 30+ story buildings, beautiful walkways along the river, plus a streetcar, the new Orange Line light rail AND the aerial tram connecting the neighborhood, but not that much going on on the street. Most residents still come and go via their cars parked in underground garages. Contrast this with the Pearl District, another recent project (former railyard) nearly Ford-site in size and scope, which is super lively and fun – and dominated by mid-rise, with only a couple of high rises.

        Again, I’m not saying don’t have high rises. I’m just saying don’t let them be the dominant type.

        1. howard miller

          It doesn’t hurt to have a flagship (Deschutes) brew pub a block away with multiple window and door openings to the street. A wide variety of street level merchants is an absolute prerequisite for a vibrant street life.

  6. howard miller

    If this discussion is about compensating the city for its ROW losses with increased taxes from the new Ford development it’s really important that you all understand TIF. Here’s a link (https://www.youtube.com/watch?v=9Ftoyy7s3ms) that should get you up to speed. Before you say, “but hey, this is about Chicago!” please be aware that TIF statutes vary very little from state to state. There’s another video on You Tube in which the state auditor’s office explains MN TIF if you want to determine if this is the case. Enjoy.

    Bottom line: any additional monies from new Ford site taxes will be tied up until 2045! and thus will provide precious little tax relief. In fact it will cost local tax payers much more as our taxes will increase to offset the new taxes going to the St. Paul Port Authority and other TIF districts.

  7. karen

    Cities with a good mix of densities can throw off a ton more property tax and have much more sustainable infrastructure costs per resident/worker than single-family lots and car oriented development.

    Many older cities in America that were mostly built before cars, can often have residents getting into cars almost as frequently as a modern suburban town but can have less traffic and need far small areas for roads simply because even when people take a trip in the car, they go far shorter distances.

    St. Paul isn’t only city struggling to pay for infrastructure costs that aren’t sustainable – some suburban towns are going to gravel roads because the costs to maintain and re-do roads every 40-50 years is just too expensive for the spread out residents.

    We now know building cities for car traffic and spread out made the cities less appealing, economically vulnerable to high infrastructure costs.

    Look at the property taxes that come from more mixed development, denser development compared to single-family areas or areas with a huge chunk of land area dedicated to roads and look how popular walkable, mixed use neighborhoods.

    A few taller builders with proper street front design, setbacks and surrounded by medium to lower heights are perfectly viable. If all the tall buildings are just offices and every building is same tall height – no, but if there is a mixed of offices, residences and retail and mix of heights and density, the people the tall buildings bring also bring more amenities, more attractions, safer streets.

    1. howard miller

      Since no other city has ROW funds as St. Paul does (most towns and cities hit affected residents with surcharges not the entire citizenry) the question must be asked, why did the city take this unusual step in the first place? Were St. Paul’s tax revenues tied up in TIF districts for extraordinary lengths of time? Were the projects (think Galtier Plaza) abysmal failures which lost money for the city which then had to be recovered by other means?

      Are we overbuilding multi-use, high-density complexes at this very moment which might very well go belly up? Who’s going to live in all the new developments in Lowertown, downtown Mpls, Southdale and Galleria, Linden Hills, Prospect Park? Cities are not evolving organically when growth is motivated by a need for new revenues or winning an election. See the Villager cartoon today.

      1. Adam MillerAdam Miller

        “Are we overbuilding multi-use, high-density complexes at this very moment which might very well go belly up?”

        No. And as long as they are privately funded (yes, I see your point about TIF, but that’s mostly not what’s going on today), who cares if they go belly up?

        “Who’s going to live in all the new developments in Lowertown, downtown Mpls, Southdale and Galleria, Linden Hills, Prospect Park?”

        The Minneapolis ones are filling up really fast, so doesn’t seem like a problem. Don’t pay as much attention to St. Paul, but it doesn’t seem like Lowertown is having difficulty attracting residents either.

        1. howard miller

          Not to be contentious, Adam, but intense efforts to determine both the number of new commercial units in new developments and occupancy rates has proven to be almost impossible. If you ask City planners and reps, rental offices and others with vested interests in development you’ll get answers remarkably like yours (“OMG, they’re all full and fighting off waves of new potential renters”). Look at the objective or even business press and the picture is quite different:

          (New apartment construction) “an 813.4% year-over-year spike, placed Minneapolis/St. Paul at #9 (nationally) in the multifamily permit standings. For the year, the market authorized 6,211 units, a near-30% increase over the prior year. Those numbers supplement 7,341 in-progress units – nearly 5,000 of which are scheduled to complete within a year.” Realpage Lindsey Allen 3/16/2017

          Who is going to occupy all of these units, Adam. The State demographer says our population is going down except for immigrants who are unlikely renters for market value units. Please don’t say that retiring baby boomers will occupy all of these up-market units with rents like $3,000/month for 2 BR, 2 bath because, and this is no secret, they DON’T have that kind of money!

          All of this explains why a Star Tribune article (1/1/2017) reported that the “Rental market will ease in ’17. The rental market is softening and developers are expected to shift attention to suburbs.” Again from the Star Tribune, “US commercial real estate shows signs of overheating…Federal Reserve officials are watching rising apartment towers as the next potential asset-price bubble” (2/10/2017).

          So that’s local business press, local major press and the Federal reserve. Could you please roll out your sources establishing that all of these new developments will be full. And, BTW, most of the new development is TIF funded so we ARE on the hook! Let me know when you are able to identify a single source to verify your statements.

            1. howard miller

              Source? Here’s mine (St. Paul Pioneer Press):”Currently, much of downtown St. Paul is divided into multiple TIF districts. The city’s largest TIF district is the MN Events TIF, which covers roughly 20 square blocks of downtown near the Xcel Energy Center, most of it west of Robert Street.

              The district collected $4.6 million in tax increment in 2014 and $32.7 million since its inception in 2008. The district replaced a pre-existing downtown TIF district, which was created in 1978.

              In other words, the district’s TIF obligations accounted for 40 percent of the $11.1 million in downtown property taxes that would otherwise have gone to local taxing authorities such as the school district.”

              Sure there are small developments like fast food joints and private homes that are privately funded. But when you’re talking Ford Development, Stadiums, Macy’s downtown, new Snelling Ave. developments, and on and on ad nauseum, you’re talking TIF. Could you please indicate one legitimate source in your response?

              1. Adam MillerAdam Miller

                The last major TIF project in Minneapolis was the Midtown Global Market development in 2004. (Strib, 8/17/15)

                I can’t find anything that says that anything other than affordable housing that’s been built in Minneapolis since — a lot of stuff, including The Nic, 4Marq, Xcel, Lat45, LPM, 222 Hennepin, The Maverick, ongoing Thresher Square and Ritz Residence, and whatever else I’m not thinking of off the top of my head — is TIF funded. That would be consistent with the stated city policy of reducing TIF (Finance & Commerce, 1/15/15)

                The State Auditor does an annual report on TIF districts (http://www.osa.state.mn.us/list.aspx?type=rpt&div=tif), which have been falling off over that last decade or so. Unfortunately it doesn’t break things down by city.

                Maybe St. Paul is still behind the times in handing out these subsidies, but they’ve been falling out of favor pretty much everywhere else.

  8. karen

    Here is a nice looking street front on the increasingly vibrant Payne Ave, pleasant to walk on, busy retail servicing the neighborhood – all this is not destroyed by nearby tall building which is my count is 14 stories high and serves a bunch of residents

    Looking south on Payne Avenue at Jenks Avenue – see front of Tongue in Cheek restaurant in fore


    Looking west on Jenks, at Payne (see side of Tongue in Cheek on left (south side)

    Tall buildings can be done in way that works with neighborhood, yields a vibrant and financially sound neighborhood and brings amenities to nearby residents.

    No, a vast swath of tall buildings of single purpose (all residential, all offices would not be good) but a few tall buidlings in the right setting can be an asset in keeping area affordable, bringing businesses and amenities and other attractions to the area, providing walkable zones and streets alive with pedestrians, not empty and scary.

    When cities are allowed to evolve organically, incrementally, in steps from short to tall buildings, they thrive.

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