Eager to jump-start development of nearly 450 stalled market-rate housing units and a series of commercial buildings at Highland Bridge, the St. Paul City Council earlier this week amended a longstanding tax incentive district, delaying construction of some internal sidewalks and roughly 20 blocks of landscaping for up to five years.

The amendments — the sixth to the former Ford Motor Co. manufacturing plant site’s $275 million tax increment financing district since 2016 — and a series of related development agreements do not alter the total spending planned within the TIF district. But they do alter payment schedules.

A new “minimum assessments agreement” saves the master developer, the Ryan Cos., some costs upfront as the taxable values of more than a dozen land parcels are lowered.

Boosted by state water infrastructure grants, the agreements shift some TIF payments from interest to principal, helping to free up $24 million in TIF loans for Ryan and its long-awaited commercial and residential structures along Ford Parkway, dubbed “Block 2” in planning documents.

“This does not impact the city budget or the general fund,” said Council Member Saura Jost, addressing the city council on Wednesday. “This reduces the holding cost to the developer, enabling it to move forward as foreseen in the master plan. … We’re not changing the public investment at the site.”

Joint effort

Getting county assessors to agree to drop land values for 15 of Highland Bridge’s 44 parcels took a joint effort from both the city and Ryan Cos. St. Paul Mayor Melvin Carter applauded the council decision — a 5-2 vote — on Thursday, calling redevelopment of the 135-acre former Ford site “key to all of our housing, economic and sustainability goals.”

At Highland Bridge, Weidner Apartment Homes now plan construction of two market-rate apartment buildings spanning 350 housing units in the near future.

Nearby, Ryan Cos. had once planned to have started work on the series of commercial or mixed-use buildings on “Block 2” back in 2021, when the site was new, with no indication they would need TIF dollars.

Neither project has moved forward in recent years, with both developers blaming the city’s rent control policies for adding to an already-complicated financing landscape weighed down by high interest rates, rising construction costs and other barriers.

3,100 units instead of 3,800

The Ryan Cos. have since redrawn their plans, lowering heights for four single-story commercial buildings, which will be situated in front of a four-story, mixed-use residential building consisting of 97 market-rate rental units attached to ground-floor commercial space, a rooftop deck, streetscape improvements and a public promenade. Also planned is a 190-stall structured parking facility.

“You would see immediate development at this site,” said Maureen Michalski, a regional senior vice president of development with the Ryan Cos., urging the council to vote in favor of the amended TIF agreement.

So far, the developer has secured a letter of intent for a daycare to operate in one of the stand-alone commercial buildings.

Council Members HwaJeong Kim and Nelsie Yang both voted against the new TIF arrangement and the related agreements on Wednesday. They noted the developers had already received concessions on everything from tax increment financing to rent control, as well as reduced height and density on the commercial structures along Ford Parkway.

The overall number of residential units planned for Highland Bridge has been redrawn at 3,150 units, down from an earlier projection of 3,800 units, according to city staff. Both numbers fall within the range of 2,400 to 4,000 units laid out in the site’s master plan.

“At every turn, it feels like it’s a little bit less off of what our community members supported and the vision they had for this site,” Kim said. “There’s all these things we’re offering you to make this plan work, and (you) come back with more asks and more asks.”

Affordable housing

While 20% of Highland Bridge is set up for affordable housing through a master plan, Yang expressed concern there was little clarity about the specific rents planned in the new residential buildings.

Rents at an existing market-rate development — The Collection at Highland Bridge — average about $2,000 per unit, according to a spokesperson for Weidner Apartment Homes, who said he expected the new construction to proceed along the same grounds.

“Is this truly the biggest win that we can get for the city of St. Paul at the negotiation table?” said Yang, noting that Ramsey County had delayed a vote this week on the new minimum assessments agreement. “I don’t know what an alternative agreement could have looked like. … Also, where is the county on this, too? This is something that is going to be impacting them.”

With Weidner refusing to move forward until the company was released from rent control obligations, the council voted last week to relieve all buildings citywide built after 2004 from the 3% cap on annual rent increases.

A lack of communication

Council Member Cheniqua Johnson, who chairs the city’s Housing and Redevelopment Authority, said Wednesday she was excited to see new housing move forward, though she was disappointed with Weidner’s lack of communication with her office.

“I want to add you to that discussion,” said Johnson, addressing Weidner development director Nick Nowotarski, who promised better days ahead. “That was the first time I had ever met you.”

Added Council President Rebecca Noecker, “I have been on this council for 10 years, and I’ve never had any contact with Weidner. … It matters to have you show up, and it matters to have this communication.”

The Ryan Cos. now hope to build the single-story, stand-alone commercial structures and the taller mixed-use building on Block 2 using both a public business subsidy and some $24 million in additional loan principal, supported by tax increment financing through a pay-as-you-go note. “TIF” tax incentives allow private developers to complete public-facing aspects of their developments using money that would ordinarily pay off city, county and school district tax obligations.

The city’s Housing and Redevelopment Authority hired the tax firm Baker Tilly as a fiscal consultant to evaluate project costs, financing and operations and confirm the need for TIF to move the Ryan Cos.’ Block 2 project forward.

The two developers have agreed not to apply for additional city or Housing and Redevelopment Authority funds on land they own for any future “vertical development” at Highland Bridge. The Ryan Cos. would absorb the costs of future public infrastructure outside of Block 2.

Presbyterian Homes and affordable housing developer Project for Pride in Living wrote letters of support for the new agreements, noting that through a pooled TIF arrangement, the affordable units being developed at Highland Bridge are financially dependent on the market-rate units moving forward.

New lower land values

A fresh agreement involves lowering new tax values for 15 of 44 parcels of buildable land.

The original “minimum assessments agreement … places a tax burden on the properties without an offsetting income source,” reads the city staff report. “Both the city and the developer have incurred debt to advance the infrastructure and have carefully evaluated adjustments to the minimum values to entice the stalled development to proceed.”

“We have worked with the assessor, who is supportive of adjustments to certain lots,” the report states. “The resulting … amendment will reduce values for the certain lots in the short term.” The lot values are expected to exceed the original values in 2041 and continue to increase through the year 2047, the final year of the TIF district.

Separately, the Weidner agreement will require the construction of two buildings resulting in approximately 350 housing units over the next few years, as well as pre-payment to the city of all $2.8 million of their “Green Infrastructure” assessments. Copuncil member Jost noted that form of binding development agreement was not in place previously.

“Highland Bridge is important to Ward 3,” Jost told the council Wednesday. “It’s important to the whole city. … Our city will see one of its vacant spaces replaced with something of purpose. … We’re expanding the housing options available to our residents in Highland.”