Three Ways of Looking at the Lexington and University Development Debate

At one level, all you need to know about the proposed development on Lexington Parkway, just south of University Avenue, is that it meets every rule in the St. Paul Zoning Code. That’s the point I was trying to make during the intense Planning Commission meeting ten days ago. The vote was part of a longer conversation that’s been taking place in St. Paul about a development near University Avenue. Looked at differently, not using the city’s legal standards, the issue becomes more complicated and shows the difficulty of housing policy in cities struggling with growth, inequality, and a long legacy of racism.

Source: Alatus
Source: Alatus

Here are the very basics:

  • 288 apartments and 3,000 square feet of commercial space
  • 155 units at or below 60% area median income (AMI) (the metro-wide AMI is $100,000 a year per household, and 60% of that is $62,000 for a family of four)
  • including 15 more affordable “shared kitchen” units
  • 254 parking spaces, 2 blocks from a light-rail stop
  • vacant lot zoned T4 (highest density non-downtown zoning)
  • no variances or Conditional Use Permits

It’s also important to know that the land has been owned by the Wilder Foundation, located next door, an old St. Paul nonprofit focusing on alleviating poverty in the city.

I’d been thinking about this one a lot, even before it came again to the Planning Commission Zoning Committee. There, I read the latest site plan, public comments, and staff report, and spent about an hour discussing those things with my colleagues. It turned out that most of that work pondering housing policy was for naught because, at the legal level, there was little to debate about this case.  This was not a rezoning, Conditional Use Permit application, or variance request, all of which have room to make more subjective decisions.  Instead, it was a site plan review, with the strictest findings that can come before the City. The legal findings of a site plan concern things like underlying soil contamination, traffic impacts, stormwater runoff, and the like.

I even cracked open my copy of “The Complete Guide to Zoning,” which a lawyer friend once gave me, to see what it says about site plans. Here goes:  

“The purpose of site plan review usually is to determine the plan’s compliance with the zoning ordinance. If your project complies, the government is duty-bound to approve your site plan and let you go forward to get your building permit and develop the property.”

Even when the case got to the Planning Commission and the site plan was denied on an 8-7 vote, most of the discussion seemed to have no legal basis. The commission proposed denying the application because it did not meet the “equity, sustainability, and affordability” goals in the Comprehensive Plan (aka Finding #1). However, as the St. Paul city attorney explained, that plan is not a legal document that can be used for regulation. (A cursory search of legal articles online support this.) I’d also recently reported on that distinction when dealing with Minneapolis’ efforts to implement its 2040 CP into code a few months ago.

As I said in my statement at the Planning Commission, St. Paul zoned this land T4. Anyone can buy it and build anything that meets those standards, which this application clearly does. At one level, it’s that simple.

Currently, the applicant is appealing the site plan decision to City Council, and if the Council does not overturn the denial, I believe they will have a straightforward lawsuit. 

Lexington Ballpark c. 1930. Source: Minnesota Historical Society
People crossing I-94 at Lexington Parkway, c. 2018. Source: author

A Deeper Look

Focusing on the legality of the site plan based the city’s zoning code, as I did and as a lawyer would do, is dodging a larger conversation. This place in St. Paul has a long history, and thinking about its future opens a critical discussion about racism and housing. It’s that discussion, not the zoning specifics, that fueled the intense community advocacy in opposition to this development at this site. I believe many of my Planning Commission colleagues were also looking at this project through this larger lens. 

The site sits at the intersection of B3,C3, C6, and D4. Source: Mapping Inequality redlining map collection

Having just finished a book on the history of Saint Paul, and having taught for years about displacement and racism in housing, I can cite a lot of facts about this specific place. A short list:

  • This specific property sits at the intersection of a bunch of different neighborhoods with distinct identities.
  • Lexington Avenue was designed as a “parkway” in the first place as an effort to drive up property values.
  • Since it stopped being the western border of the city, Lexington was a color line street, a dividing line of where BIPOC people could live or own property: to the east, in the older city, was the Rondo neighborhood; to the west, neighborhoods were off limits to people of color.
  • From 1897 to 1956, this property lay just past the center field wall of the Lexington Ballpark, home of the St. Paul Saints. The parcel was a nightclub and event center connected to the stadium. Home runs must have landed here, and much of the other stadium periphery was used for car parking for much of the early 20th century.
  • Every property east of Lexington was “redlined” by the federal government’s urban planners and housing inspectors in the 1930s, cutting off all the people living in this part of the neighborhood from federal housing insurance, and making it almost impossible to sell their homes or get banks to lend money to improve them.
  • The state highway department’s decision to build the freeway through the Rondo neighborhood, three blocks away, deeply damaged St. Paul’s black community, demolishing hundreds of homes and businesses and causing ongoing harm to an entire neighborhood that destroyed the wealth of many of the city’s black people.
  • The specific site has been vacant since the 1960s, after Lexington Ballpark was demolished.
  • Over the decades since I-94 was built, the neighborhood in all directions has changed dramatically as the freeway became a new dividing line and affected the community.

Other people would tell these stories in a different way, and there are many valid perspectives about what this place means.

To be sure, looking at 1950s city plans or reading about freeway construction or the experience of people living in Rondo is quite different from having those stories as part of your own community. For many people in this part of St. Paul, and I think for many of my Planning Commission colleagues, focusing on the zoning specifics is to erase all of this history. And as a white guy, this history has benefited people like me, while other groups of people have been deeply hurt by these events.

1954 Saint Paul. Source: Minnesota Historical Society/author

For example, look at this email I received from a community member (Note: I got this email after the final vote took place).

$1000 for a 480 sq ft micro unit is exorbitant, unsustainable, and unethical. To build 278 apartments and have only 12 units be “affordable” housing is outrageous. We have a housing crisis in the Twin Cities. Building luxury housing in a low income area is fatuous and unprincipled. 1 in 13 children in the USA do not have a secure place to sleep every night – this impacts their ability to do their homework, participate in school, and graduate with skills necessary to navigate the adult world. Lexington Parkway is an ethnically diverse neighbourhood, with the majority of population being Black, Hispanic, Hmong, Somalian, Thai, Vietnamese, Cambodian, and Laotian, among other nationalities, many of whom are working poor. That St Paul City Council is seriously considering giving permission to Alatus to build luxury housing is an insult to our neighbourhood attempts to support ourselves and our families. It is racist and classist, and divisive in its effect. I strongly urge St Paul City Council to refuse permission to Alatus.

I agree with a lot of things in this letter, and I disagree with other things that it says. Regardless, it’s clear this application has become a flashpoint for larger issues about housing affordability in St. Paul. People see this project and think about the ongoing housing crisis and its impacts on BIPOC people and those who are the most vulnerable to rising prices. For them, focusing only on site plan findings is to perform a historical erasure.

During the meeting, one of my Planning Commission colleagues called this seemingly neutral legal perspective “whiteness in planning”, and I think that’s as good a term as any. As an academic geographer, I would probably come up with language like “the spatialization of the private property regime” or “the racial hegemony of the planning perspective”, which are surely worse. The truth is that city planning has almost always been synonymous with erasing racial difference, reinscribing white privilege, suffocating meanings attached to place, and reinforcing land claims for private profit.

For example, American zoning was invented in the first place in early 20th century New York City because of fears that non-white people (mostly Chinese- and Jewish-Americans) were moving too close to the fancy shops along 5th Avenue. Once it was deemed legal by the US Supreme Court, US Zoning swept the country as a tool, among other things, to keep the poor and people of color out of developments intended for white people. Until very recently, much city planning was predicated on increasing property values and, sometimes implicitly and sometimes explicitly, keeping immigrants and people of color from having access to housing and jobs.

Even deeper than that, settler colonialism in pursuit of profit is fundamental to the United States. The founding fathers revolted against England as much because they wanted to steal land in Ohio as anything else, and used tools like land surveys, real estate plats, and abstract geographic concepts in the service of those genocidal projects. Almost every “plan” for hundreds of years pretty much revolved around the central idea of using regulation to support real estate profit to the almost exclusive benefit of white people. 

Heck, Amherst Wilder himself made his fortune by way of dishonest land schemes after passage of the Homestead Act. As peerless historian Mary Letherd Wingerd describes, he was known as a “shadowy prince of the prairies”, and used “covert agents” to acquire lucrative land claims. The very fortune that became the Wilder Foundation would not exist if not for dispossession and real estate speculation, and the only reason Wilder donated his riches to a foundation was that they only had one kid and it turns out that she cared about the poor.

Then, years later in 1917, by commissioning a report on housing in St. Paul, the Wilder Foundation itself laid the groundwork for the demolition of St. Paul’s working-class communities and communities of color by calling for the destruction of the city’s poorest neighborhoods. For example, I doubt that the West Side Flats would have been completely razed to the ground if the Wilder Foundation had never been created.

I’m sure the foundation has done a great deal of good over the years, and honestly, I don’t know much about them at all! But how ironic is it today that, 125 years after he died, Amherst Wilder’s foundation is at the heart of a land development deal that has incited a heated debate over social justice and real estate in St. Paul?

What is Another Way?

So how should we look at this project proposal? If we focus through the first lens of the zoning code and think of nothing else, we lose sight of the history of inequality.

Yet unless you spark a housing revolution, using the lens of historic racism to evaluate a zoning application does not change anything. Because the legal system sees the world through the eyes of private property law, ignoring the zoning on the ground only gets the city sued, screwing people out of some municipal service or another. And I’m too much of a skeptic to think that the federal government will soon declare “housing is a human right” and fund sweeping new legislation that makes the housing crisis disappear. Nor is there much help coming from state government for people struggling with housing costs in Frogtown or Rondo, at least not in the next two years. 

The difficulty begins when we take seriously both viewpoints at the same time — existing real estate laws and the ongoing legacy of historical injustice — which means coming up with a bunch of messy policies.

And it gets worse, because the big reason that housing politics is so difficult is that obstruction does not work either. Stopping change and keeping this particular lot vacant has the perverse effect of making the affordability crisis in St. Paul even worse than it was before. 

Ramsey County Estimated Market Value, in thousands of dollars, of all the homes on a block in Frogtown (left) and Rondo (right), 2015-2020. Source: author

The real estate market is quietly changing the city all the time, and often in dramatic fashion. I’ve lived in a lot of poor neighborhoods in St. Paul, but I have never owned a house until my wife and I moved to Frogtown 18 months ago. Since then, home value has increased by 10%! 

I took the liberty of crunching some numbers, diving into Ramsey County property value records going back five years, and looked up housing prices for my block (including my house) and four other blocks in the area.

Increases based on Ramsey County Estimated Market Values, 2015-2020. Source: Google Maps/author

Home prices are spiking across the board, across the whole range of diverse housing. Five years is a tiny amount of time in real estate, but housing prices have almost doubled. Meanwhile the availability of homes under $150K has almost disappeared, let alone homes selling at half that amount. This rapid change is exactly what people are worried about.

Meanwhile, according to the latest report on rents, even though there are more affordable apartments available in St. Paul than a year ago, there remain zero (!) apartments for people renting at 30% AMI anywhere in the city (see chart below).

None of this is happening because of new market-rate development in the area, because there hasn’t been any multi-family market-rate housing built in the central University Avenue corridor — from downtown to St. Anthony Park — in a half century. The projects currently going up at Snelling Avenue will be the first.

Source: author

Displacement without Development

What’s happening in the neighborhood today is displacement without development. Skyrocketing home values price people out of the neighborhood, never to come back. At the same time, vacant lots sit empty – big parcels near the light rail or other key spots. To me, that’s pretty much the worst-case scenario. 

This housing dilemma requires difficult policy decisions, and there are no easy answers. It’s not easy to say, for example, how this proposed project will affect home values and rents in a neighborhood. As I wrote about over a year ago, studies on this question are very complicated. A great deal depends on which level of affordability you are talking about, how many blocks away the property might be, and what time frame you use. There are studies and counter studies diving into topics like “buffering” and “filtering” and the difficulty of predicting exactly what will happen, which is why my Minnpost piece has 46 (!) comments on it

I come back to the thought that, if it had been approved a year ago when it was first proposed, this plot of land could be providing homes for hundreds of people next to a light rail stop during a pandemic. Over half of the units in the building would be between 50 and 60% AMI, which is a significant amount of affordable housing. As a glance at the St. Paul rental housing market will reveal, getting those kinds of homes built in St. Paul is not a meaningless gesture.

Source: HousingLink

Instead, it’s been empty. The only people helped by this place remaining vacant are folks who want to park and bus to the State Fair (which didn’t even happen) or city snow plow drivers looking for a spot to dump a pile. 

If the Wilder Foundation is determined to develop this property as market-rate housing, they have the legal right to do it. Eventually, it’ll happen. How much longer should it sit empty in the meantime? 

The Minneapolis Housing Approach 

Housing policy is notorious because, since the beginning, there’s been a huge gap between the ideal world and the crappy reality on the ground. That unjust landscape means policy makers are often faced with nothing but compromised choices. I think the only solution is to come at the housing problem from many different angles at the same time. It seems to me that Minneapolis is doing this pretty well, and St. Paul should follow suit.

They have:

  • Funded affordable housing in widespread and targeted ways.
  • Given more power to renters in law.
  • Are working on a rent stabilization ordinance.
  • Deregulated the zoning code to allow more equitable housing alternatives.
  • Built a lot (!) of market-rate housing; Minneapolis approved over 7,000 new homes last year alone.
  • Used inclusionary zoning to require some market-rate development to build affordable units.
  • Probably done other things too.

None of these are silver bullets that solve the problem. But if we don’t adopt a both/and housing approach, you end up like California, a horror show of high costs that profoundly harms economically vulnerable people.

I doubt most people watching Friday’s Planning Commission meeting stuck around for the conversation that took place at the end of the meeting, 45 minutes after the controversial vote. If they had, they would have heard the commission come together around the need for St. Paul to immediately complete its study on inclusionary zoning (it was abandoned in 2020 because of the pandemic). Every commissioner who spoke, on both sides of the vote, agreed this was critically important.

Inclusionary zoning is not a magic solution to the housing crisis, but it is the kind of policy that, along with some others, gives people legal tools to affect the supply of affordable housing in St. Paul. Minneapolis passed their inclusionary zoning ordinance in 2019, and the first development to fall under its guidelines is just being approved by a City Council committee. Thanks to that ordinance, as part of a large market-rate project downtown, rare 30% AMI homes will be built on Washington Avenue.   

It’s not a game-changer, but every home matters. The Planning Commission will likely be moving forward to ask St. Paul to complete the work on inclusionary zoning that it began in 2019. Doing so would give people in St. Paul a measure to evaluate market-rate development. Without it, people will expect levels of affordability in development that sits far outside of what is possible given the high cost of housing construction. If we had affordable housing expectations written into code, it would give developers and advocates alike a sense of what to expect.

As I said in my testimony during the meeting:

If we pretend we can vote yes or no on developments in St. Paul because of affordability concerns, we will be misleading people, because we can’t. We should not give the impression to activists working for equity and social justice that we have that kind of power over development in St. Paul when the zoning code does not do that.

The tragedy of not having better affordability policies in place is that development proposals will increasingly become divisive and politicized. That is a dangerous road that can lead into a vicious cycle of obstruction, paralysis, and increasing inequality.

This month, a straightforward site plan case became the most divisive project I’ve seen in nine years at the Planning Commission, and that includes the Ford Site. If St. Paul doesn’t act to change its code, I fear it will only get worse.

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63 thoughts on “Three Ways of Looking at the Lexington and University Development Debate

  1. Dan MarshallDan Marshall

    The flip side of this case is the ease with which wealthier neighborhoods in Saint Paul quash multifamily housing. Exclusionary zoning stops market rate developments in wealthy neighborhoods and pushes them into poorer neighborhoods like Frogtown and the Midway. The East Grand Avenue Overlay District, the city’s most egregious example, limits building heights on Grand to just 3 stories just half a mile south of this site. Already two multifamily developments have been stopped in their tracks because of it and several vacant storefronts sit empty.

    In fact, St Paul invented exclusionary zoning in Minnesota, with Summit Avenue prohibiting multifamily housing in 1915, as described in glowing terms in Sandeen’s “Saint Paul’s Historic Summit Avenue”.

    To end housing inequity, we need to end exclusionary zoning in Saint Paul.

  2. Kevin Gallatin

    Very well written, Bill. You are so thoughtful and open about the complexity of this issue. Saint Paul has been lucky to have you on the planning commission.

  3. Alex SchieferdeckerAlex Schieferdecker

    Good piece Bill.

    I listened to a podcast recently with the activists fighting this project. I think that more than anything, a big issue has come from a failure to reach out to some members of the community and have a dialogue. It starts things off on a bad foot when something just appears to come out of left field. I know you can’t reach everyone, and that it’s hard to find the right time to approach people, but I think there was a missed opportunity here and it led to a lack of trust.

    Overall, this is another case of fighting symptoms and not the disease. The reason Alatus wants to build at this site is because they can do math. They see home prices rising in this area, and they see a market for new housing as a result. It’s not the other way around. If Alatus walks away from this project, it won’t prevent prices from rising, it’ll only lead them to rise slightly faster. St. Paul has failed to build adequate housing for a long time, and this is the result of that.

    I think two other points are worth being mentioned. The first is that St. Paul is an extremely poor city. It has 75% of the population of Minneapolis and a city budget that is something like 40% of the size. You’ve written before about parking lots and institutions which are bleeding the city’s tax base dry. Here’s a chance to take a vacant parcel and turn it into revenue that the city can use to provide services. That’s a positive, and St. Paul needs as much of that as it can get.

    The second point is segregation. I understand why some people from the community want to see this building have lower rents. At the same time, I get really uncomfortable with the idea that cities should be locating all of their affordable housing in the poorest communities. That’s a one-way ticket to deepening segregation. I think for the city planning commission to insist on that outcome can’t be justified. Deeply affordable housing needs to be built in St. Paul, and it needs to be built above all in Highland Park.

    Anyway, I expect the City Council will not want to lose precious tax revenue on another losing lawsuit, and I think they will approve this.

    1. Monica Millsap RasmussenMonica Rasmussen

      I would agree this project will get approved by the city council. As for reaching out to members of the community- the very first meeting on this project had neighbors who were opposed, but not necessarily because it wasn’t affordable. That evolved over time and I think, as is the case in every neighborhood, lack of affordability became the talking point for opposition.

      It would be great if energy could be spent developing neighborhoods from within, helping small business owners stay, making sure that neighborhoods have access to meaningful retail, and developingall neighborhoodsas mixed income. This project, to me, seemed better than most as it was developing a vacant lot and seemed to have an anchoring retail tenant.

      Most neighborhood residents are afraid of change. Outsiders telling people who have lived in an area for a long time that the change will improve their lives isn’t helpful. But, being able to hear the real concerns and act on those concerns would be helpful. There are few people who can listen like that and even fewer people who have any power/leadership to actually make a difference.

      However, I suspect if we leave the affordability question aside and talk to neighbors about what else bothers them about this development, there would be some obvious solutions.

      1. Bill LindekeBill Lindeke Post author

        In an effort to keep this from becoming a Russian novel, I left out another piece of the history. This project had received a $1.2M grant from the Met Council to help do things like create a street grid connection and make other public realm improvements.

        The money was basically rejected by St. Paul and sent back to the Met Council for use elsewhere, because of community opposition to market-rate development on the site and what level of affordability was possible or desired. The Met Council money would have paid for “$450,000 Public Infrastructure: New Public Sidewalks/Trails; New Streets; $600,000 Renewable Energy: Geothermal Systems; $200,000 Stormwater Management: Infiltration/Storage Swales or Tanks.”


        1. Sheldon Gitis

          So who’s going to pay for the streets, sidewalks, storm water management, utilities etc. now? Wilder? Alatus?

          1. Bill LindekeBill Lindeke Post author

            I think so. I am sure they will pass some costs along to the new occupants, and cut back on some other amenities, such as the extension of Fuller Avenue through the site that as in the first site plan submitted.

            1. Sheldon Gitis

              What makes you think so? I think infrastructure costs are generally a public responsibility, and to assume future tax revenue will automatically cover those costs is more wishful thinking than informed opinion.

  4. Sheldon Gitis

    How can anyone engage in evaluating the impact of a $60 million apartment building project, without taking a deep dive into the financing of the project? This latest Bill Lindeke piece of work doesn’t even take a shallow wade.

    Rather than rambling about some 3 muddled ways of looking at the $60 million project, maybe Mr. Lindeke should try following the money. Who pays for the $60 million project and who gets paid? How much is Alatus paying Wilder for the property? Does the Alatus Corporation or its “Team” of Lilly-white executives pay any significant amount of corporate or individual income taxes, or is all the take from the $60 million project written off through depreciation or some other tax loophole or rolled over into the next $60 million project. How much is Alatus making in development fees and investment transactions? How much will the developers, investors, construction contractors, property managers and financiers walk away with before the City of St. Paul sees a penny of property tax return?

    The notion that this project has anything to do with satisfying a need for housing, affordable or otherwise, is ridiculous. Apparently, Alatus plans to market the apartments to students and perhaps other young transients, like the temp out-of-town construction workers it will need to employ to shlep the plywood and Sheetrock in order to complete the $60M project as quickly and inexpensively as possible. It’s hard to imagine who else is going to rent the micro apartments and apartments with shared kitchens. Before any government bailout of student loan debt, there should be a ban on any more student loan money stuffing the pockets of developers of $60 million apartment buildings.

    Low-income workers, whose $15/hour job, if full-time, yields an annual income of about $30K, need affordable homes, not $60M acquisition, development, and construction (ADC) Ponzi scams, where developers, construction contractors, and investors pad there already substantial wealth with tax write-offs, service fees and dividends. With friends like the Wilder Foundation and their Alatus partners, poor people don’t need any enemies.

      1. Sheldon Gitis

        The term “red flag” is a knee-jerk term in my book. It’s a remarkably obvious ploy to avoid addressing the question. How can anyone engage in evaluating the impact of a $60 million apartment building project, without taking a deep dive into the financing of the project?

        1. Bill LindekeBill Lindeke Post author

          Financing details are not public information, nor is financing mentioned in the zoning code. The only time anything like that appears is under the “hardship” definition, where it is stated that economic considerations cannot be a recognized as a hardship in a variance case.

              1. Sheldon Gitis

                Not knowing about something, or refusing to acknowledge it, doesn’t mean it doesn’t exist. Read, or view William K. Black. I’d post a couple links but it appears there’s something screwy going on with the comments system.

                  1. Sheldon Gitis

                    I think when a private company engages in business dealings with a government agency, the details of those dealings should be public. In fact, I think they are. If some person or group, including the St. Paul Planning Commission and its members, wanted to do a data request for copies of all emails and other correspondence between City of St. Paul staff and the Alatus Corporation, for example, I believe they could. If the agreements are not public, how does the public know they’re legitimate, and not in some way misrepresentations of facts, aka fraud?

                    1. Sheldon Gtis

                      Me too. When is the Planning Commission or any of its members going to make such a request? I would make one myself, but what I’ve found from past experience, is that mine are too easy ignore.

                1. Adam MillerAdam Miller

                  If you try to post too many links, it will automatically get sent to moderation, to prevent comments spamming (a long standing issue in blog comments).

                  Otherwise, you seem awfully angry at the idea that developers might make money building things. Why?

                  1. Sheldon Gitis

                    I don’t think developer profits are necessarily the best gauge for deciding what gets built and what doesn’t. Developers have profited enormously, for example, from an unending expansion of unsustainable highways. Should we keep paving more highway lanes so developers can plop more $60 million apartment building monstrosities beside them?

                    Forever expanding highways and the monstrous apartment buildings that have sprouted along side them confound my serenity – call it anger if you like.

    1. Alex SchieferdeckerAlex Schieferdecker

      You asked: “Who pays for the $60 million project?”

      The answer is: Equity investors and then banks initially, and ultimately by tenants after a period of many years.

      You asked: “Who gets paid?”

      The answer is: Architects, construction workers, and salaried staff at Alatus initially, and banks and then equity investors after a period of many years.

      Hope that helps.

      1. Bruce Brunner

        A very smart guy who ran a non profit development org who retired a year ago told me that the only difference between a “non profit” developer and a “for profit” developer was the tax structure they are set up under and how they got their financing. I’m curious why someone thinks they should be privy to a private companies strategies and financials like that is something the general public is owed. To have a project w/o public financing providing 50% of their units within the affordable parameter is HUGE. I doubt non profit subsidized projects could ever get close to that. If they can, why don’t they?

        1. Sheldon Gitis

          Who said anything about the “nonprofit” developers? Not me. I think you’re right, they’re doing essentially the same thing the for profit developers are doing – profiting off real estate development and property management fees paid to wealthy executives and their employees, and parking investor money in tax-exempt bonds used to pay wealthy construction contractors and their employees.

          And what project are you talking about? What project “w/o public financing” has “50% of their units” affordable for someone making $15/hour?

      2. Sheldon Gitis

        Thanks Alex, that is sort of explanatory. So it sounds like some bank sells some tax-exempt government development bonds to some investors and pockets the fees for performing the transaction. If that’s the case, then the bank is paying nothing, just collecting fees. The investors, also pay nothing. They’re just parking their money in some tax-exempt development bonds. The 288-unit building gets milked for 10 years or however long it takes to pay off the bonds, and then who cares – the bank and the investors and the construction contractors and architects and temp workers shlepping the plywood and Sheetrock have all gotten paid, and the $60 million monstrosity is ready for liquidation. What’s not to like?

  5. Jake

    One topic that is sometimes overlooked in housing is that Both St. Paul and Minneapolis have very limited land area or just over 50 square miles each because Minnesota handles land annexation or growing city limits at the State level instead of local level like most states. The reason’s for that fact are probably complex, and unlike other states, Minnesota’s government systems were largely built on top of the Minnesota Territory system which managed twice the land area the State manages now including most of North and South Dakota up to the Missouri river boundary. Minnesota has larger county size wise and smaller city limits than average states. If a city buys a farm field in other states, the land instantly becomes part of that city. In Minnesota, the state researches land a city wants to annex and includes local residents in the decision making process. The city of St. Paul actually spun off neighborhoods into the independent communities of Lauderdale and Falcon Heights, so it used to have about the same land as Minneapolis and approved of losing some. Minneapolis was also the result of many different townships and community neighborhoods that actually came together over the years. Even though we have a different state setup, and from what I’ve seen from visiting other states, I think overall we have the better system because our smaller cities have a feeling of community that is stronger than other cities that have far larger land areas. The state just needs to find creative ways to offer more affordable housing in our smaller land area communities and it seems like that should be easy enough to figure out if leaders can agree on how to make it work which will require compromise from all sides to be sure.
    I would encourage St. Paul to help developers build larger complexes because of the cities limited land area. It is also important to note that the limited land in both Minneapolis and St. Paul requires a solution that includes more areas than the two core cities. Also, remember that there were past plans to add more housing in St. Paul. The Pennington development in downtown St. Paul was first proposed to be built much taller and larger and the developer wasn’t able to make the project work, but luckily the city moved ahead and built the project on a smaller scale anyway and luckily they did because our current housing situation would be even worse than it is now. The only mistake they may have made is not building the complex to have the ability to add the remainder of floors. I’m guessing it wasn’t built with the ability to add the rest of the complex, because if it was, I’m guessing the remainder of the building would have already been already under construction by now. I would encourage the city to remove height limitations and maximum size limits as much as possible because even though Minneapolis has been larger for a century doesn’t mean it has to always be that way. Normally the largest city in an area or state gets the most name recognition.
    Many had suggested calling the area Minneapolis instead of Minneapolis-St. Paul, and many of you probably wonder what would happen if St. Paul suddenly became more populated than Minneapolis as it used to be! Would the conversation then switch to making St. Paul the dominant name? The most inclusive housing solution possible for St. Paul would be to remove size restrictions because developers would be able to help by get funding for the most affordable units built into the financing they have to work with. The more housing units and ground floor businesses created, the better the city’s budget would look to spend even more on additional affordable housing and other needs. So my opinion on the current situation is that we are being too restrictive of new development. If St. Paul had a larger budget, the city could probably talk the developer into making that complex larger with more affordable housing by adding extra funds to the project. The complex could be made larger to include the breakdown of units the city desired, or closer to the city’s goal. Each development doesn’t actually need to have a perfect mix to make a big difference but the city could set aggressive goals and see how close they could get each development to the city’s goal. The city would be in the best position if it had too many housing units available instead of not enough because by being short on the number of housing units in demand, people that would like to live in St. Paul are being turned away and being forced to live somewhere else and that’s not a good situation or plan and isn’t the outcome we should want in our community. The best option is to welcome more people, not turn them away and the only way to welcome more people is to have housing options that allow as many people to live in the city as possible. We also need to remember that having expensive housing units in the city isn’t a bad thing in that they allow higher wealth people to shop for local services and provide all of us with less income the opportunity to serve their needs with a morning cup of coffee, a home improvement project, their support of the arts in the community and a higher tax base overall. In an Ideal world, we would want them to work inside the community as well because they would be more likely to go out to eat and support as many local businesses as possible. The key to making everything work together is having units available at every level and maximizing the city’s ability to have enough impact to help provide that. The worst outcome for the Lexington site and many other empty lots around the city is to have nothing built and have a lack of housing available for all income levels which is unfortunately the situation we find the city at now and lacking enough funding available to make a difference because empty lots aren’t bringing in the tax base that is needed to run a growing city successfully.

  6. James

    The commission’s decision to reject this site plan was outrageous pandering to those who lack understanding of the effects of development in a neighborhood. It is often the least capable people who make the most noise, and it’s unfortunate that the majority of the commission either shares in this attribute of low-understanding, or is willing to sacrifice integrity to please a mob. I’m sure Alatus has spent many thousands of dollars thus far in the process, but if I were them, I would be tempted to pack up and let this site sit vacant for the next 20 years while rents continue to rise due to lack of supply. I would be sure to inform area residents of those who have compromised themselves to a faulty “feel-good” “logic”. Why would any business/development want to come to St. Paul when after jumping through all the hoops, they get shut down by arbitrary “feelz”?

    1. Adam MillerAdam Miller

      I think Bill did a great job of pointing out very real and worthwhile concerns that are poorly addressed by our zoning and approval process.

      I also hope that Alatus has a better understanding of sunk costs than you.

      1. James

        I’m not suggesting that they give up, but that I sure would feel betrayed in this process and have suspicions that the relationship going forward with the city might be like living with someone diagnosed with BPD, where you need to be walking on eggshells and never know what chaos awaits you each day.

    2. Sheldon Gitis

      I wouldn’t be surprised if the Alatus “Team” doesn’t have a dime in this project. The Alatus “Team” doesn’t make money spending their money, they make money in “disposition asset management, and the organization and management of investment programs” and “debt and equity placement and execution.”

    3. Bruce Brunner

      You may already know but they are in for several $100,000’s at this point. It’s not impossible to walk away from any project as they could sell their entitlements once the site plan is approved but it makes more sense to keep moving forward. I’ve pointed this out in other forums but the bigger issue will be getting other developers to take St Paul serious as a place to add more housing which as several people have pointed out relieves pressures on several fronts like the shortage of housing, tax base, affordable housing additions which allows section 8 participants to find housing and more. If you make it so difficult or make it uncertain whether you can get a project, especially by right, through to completion, many will just take a pass on the possibility of building in St. Paul. I can say for myself and numerous friends of mine, we currently avoid projects in St Paul due to the uncertainty, lack of firm structure/process, and crazy decisions like this but if they begin to take a professional approach, they can win people back. Arbitrary and uncertainty are difficult to incorporate into construction.

      1. Adam MillerAdam Miller

        Alatus has obviously already spent significant funds to get this far (I do not have the expertise to estimate how much, and obviously it’s way less than the construction cots).

        And no, they are not going up all over. Notably, they are not going up in St. Paul.

        1. Sheldon Gitis

          What funds? Whose funds? If the financing is some deep, dark secret, who knows where it’s coming from or where it’s going?

          I don’t know about St. Paul, but in my neck of the woods in Roseville, bordering St.Paul, a half-dozen or more have sprung up within a mile radius in just the last few years. There’s no shortage of apartments in the Twin Cities metro area.

            1. Sheldon Gitis

              I don’t know where you’re finding your “vacancy rate”, or what you’re calling “low”, but there’s plenty of apartments for rent in Roseville and all the other highway-oriented suburbs, and plenty more on the way. I’m sure a ban on student loan money stuffing the pockets of developers of $60 million rectangular boxes stacked on top of underground parking would boost the vacancy rate considerably.

                    1. Sheldon Gitis

                      I just glanced at the article, but a couple points jump out immediately. First, it appears to be talking about vacant houses, not apartments. Secondly, the article is from November 6, 2013, so it’s irrelevant to current vacancies, regardless of whether they’re houses or apartments.

                      If you take the current apartment vacancies in Roseville, a city of a little more than 30,0000, and multiply that number by 70, I think you arrive at a pretty good “back of the envelope” estimate of the number of apartment vacancies in the Twin Cities metro area with a population of more than 2 million. Regardless of any vacancy rate, real or alleged, there is a very large number of vacant apartments in the metro area.

                    2. Bill LindekeBill Lindeke Post author

                      Wait, so which numbers are made up and which ones are real? Just to confirm: the ones on your envelope are correct, and the ones from the housing policy nonprofit are wrong?

                    3. Sheldon Gitis

                      The notion that there is a shortage of vacant apartments is bullshit. All you need to do is count.

      2. Sheldon Gitis

        How do you know that, if, as Bill Lindeke states, “Financing details are not public information”? Who’s “in for several $100,000’s at this point?”

        As far as your “shortage of housing, tax base, affordable housing additions which allows section 8 participants to find housing and more” is concerned, the planned 288-unit building does nothing to address any of those concerns. There’s no shortage of massive apartment buildings sprouting up all over the place. Anyone who’s got the money to do so can rent a unit in some such big box building, and anyone who pays property tax, including every renter as well as every homeowner, knows, the expanded tax base isn’t lowering anyone’s taxes.

  7. Tim BrackettModerator  

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  8. Bill LindekeBill Lindeke Post author

    Just discovered this new housing policy lit review from UCLA about the key question: how does market-rate housing affect rents and affordability?

    It goes over a bunch of different studies.

    Key takeaway from the authors:

    Taking advantage of improved data sources and methods, researchers in the past two years have released six working papers on the impact of new market-rate development on neighborhood rents. Five find that market-rate housing makes nearby housing more affordable across the income distribution of rental units, and one finds mixed results.

    These findings point to local benefits from market-rate development, but they should not be interpreted as an endorsement of market-rate development regardless of the project or neighborhood context. Housing production should still be prioritized in higher-resource communities where the risk of displacement and other potential harms is lower, and complementary policies such as tenant protections and direct public investments remain essential. Nonetheless, the neighborhood-level benefits of market-rate development are promising and indicate an important role for both market and non-market solutions to the housing crisis.

  9. James

    Affordability should also take into account other costs of living in a given location. This complex’s placement greatly reduces its residents’ reliance on cars for day-to-day living. Groceries, shopping, restaurants, and both downtowns are easily accessible via bus or light rail, or even by bike or on foot. Many people are willing to pay more in housing to reduce their transportation costs.

    I’m curious what the goal is for opponents to this project. Surely they don’t believe that an annual ginormous pile of dirty snow is better than market-rate housing. Are they hoping that the developer will sweeten the pot with a greater number of affordable units? That would be nice, though the developer may be wary of setting a precedent of being strong-armed by the advocates’ creative interpretation of zoning laws.

    1. Sheldon Gitis

      “This complex’s placement greatly reduces its residents’ reliance on cars for day-to-day living. Groceries, shopping, restaurants, and both downtowns are easily accessible via bus or light rail, or even by bike or on foot. Many people are willing to pay more in housing to reduce their transportation costs.”

      You make it sound like someplace you’d love to live. I’m curious, James, will you be a prospective tenant of one of the 288 units if it gets built?

      1. James

        My wife and I already own a house that is also within close proximity to all those things, allowing us to share 1 car (and the requisite 4 bikes, lol). But sure, if we were younger and not yet ready to purchase a house, these would be tempting.

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