Dateline St. Paul: The "Scattered TIF"

(Ed.note. This article is appearing today in the Midway Como Monitor, and I wish to thank my brother, Denis, for allowing me to publish it. Two TIF's, different locations, one losing money and the other profitable. They are called "Scattered."
As a personal note, I used to run along this corridor each morning on the way to the bus stop to college. Enjoy. )


Lexington Park’s final two pieces falling into place



By JANE MCCLURE
Lexington Park’s final two pieces are falling into place, with housing
likely on most if not all of the southern part of the property at the
southwest corner of Lexington Parkway and University Avenue. The St. Paul
City Council took two actions related to the project July 26.
A preliminary development agreement was approved for Lexington Park and for
another Wellington Management project, 2700 University Av. A final agreement
will be brought back to the City Council, acting as the Housing and
Redevelopment Authority (HRA), at a later date.

Wellington would like the city to put the two properties in what is called a
“scattered site” tax increment financing (TIF) district. “It’s a complicated
project,” said St. Paul Planning and Economic Development (PED) Director
Cecile Bedor.
The proposed TIF district would be a factor in the completion of
Wellington’s two University Avenue projects, Emerald Gardens near University
and Highway 280, and Lexington Park at Lexington and University. It could
mean a total commitment of TIF and gap financing dollars of $3.5 million for
the two projects.

The Lexington Park site wouldn’t generate sufficient TIF revenues to defray
its redevelopment expenses. Creating the scattered-site TIF district would
allow 2700 University to contribute $541,000 in tax increment to Lexington
Park. But that would still leave a gap of about $475,000.
PED staff will seek a Metropolitan Council Livable Communities grant of
$503,000, which would be used to fund an east-west street and sidewalks
through Lexington Park’s south end. If the grant doesn’t come through the
city would have to pay for that part of the project.

Although City Council members agreed to allow PED staff to negotiate the
agreement and bring it back for final approval at a later date, some
questioned conditions of the proposed agreement. Council members raised
questions about everything from allowing the PED Director to approve which
grocery store goes in at Emerald Gardens to what kind of pre-commitment is
being made at Lexington Park.

Others wonder about the use of TIF, which allows a developer to capture
increased property taxes realized through development and apply those values
to specific development-related expenses.
“I’m continuing to grow very uncomfortable with our TIF strategy," said Ward
Five Council Member Lee Helgen. He believes the city is being too
speculative with some projects.

Three Council Member Pat Harris said he has a problem with directing TIF
money from one site to another, and not having it available to other
projects.

But PED staff noted that the study of housing at Lexington Park will
determine whether that phase of the project should go forward. “It may be
determined that housing at Lexington Park doesn’t make sense,” said Bob
Geurs.
Tony Schertler reminded the HRA Board that when the Lexington Park
development process began a few years ago, Wellington wanted to put the
entire concern in a TIF district. Staff felt the proposed city subsidy was
too high, and most of the project site was developed piece by piece, without
TIF help.
Wellington recently demolished the Colonial Building at 2700 University Av.
to make way for an 85-unit condominium building with 128,000 square feet of
commercial space as well as structured parking. Despite earlier rumors that
popular specialty grocer Trader Joe’s was eyeing that location, Riverside
Market has been identified as the grocery store for the site. The
condominiums will be market-rate, with a price range of $65,000 to $325,000.
If initial sales go well, another 12 condominium units would be added.
Wellington is seeking $1.5 million in tax increment financing assistance for
the structured parking and building demolition expenses at 2700 University
Av. That is if the grocery store is part of the project. If not, the TIF
amount is $1.2 million.

At Lexington and University, community members are pressing for market-rate
housing to be built at the southeast corner of the development site.
Wellington has agreed to spend $200,000 for a feasibility study to determine
whether the condos should be built.
Tentatively proposed is a two-phase project, with 40 units of condos,
underground parking and 7,000 square feet of street-level commercial space.
Units would sell for $140,000 to $198,000. TIF and gap financing assistance
needed is estimated at $2 million.
The second phase at Lexington Park would be 39 condos with underground
parking. HRA staff recommend not proceeding with this phase of the project
until the first phase is completed. The financing gap for this part of then
project is estimated at $2.12 million.

Wellington Management head Steve Wellington has indicated that market-rate
housing may not be feasible at Lexington Park, but that his company is
interested and is willing to explore the idea. During the years of debate
over redevelopment at Lexington and University, many community groups have
pushed for housing to be built there, citing its proximity to the proposed
Central Corridor transit project.

At recent meetings of the Lexington Park Design Advisory group,
representatives of area district councils and community groups have pushed
very hard for market-rate housing. But a softening housing market could be
factor in what is ultimately built there.
Much less controversial was the City Council’s decision July 26 to rezone
property at the southwest corner of Lexington Park for the Episcopal Homes
project. The property will be rezoned from general business to multi-family
residential to allow the construction of a 50-unit low-income senior housing
building, Carty Homes. The St. Paul Planning Commission and
Lexington-Hamline Community Council recommended approval of the rezoning
request. Construction of the building will start in the fall.