As a longtime St. Paul resident, I’m excited for the new City Council, the youngest and most racially diverse in city history. A historic moment, of course, but also an opportunity for the incoming council to continue the progressive actions of the previous council while working with the mayor to shift the city’s focus to our highest priority: a tax base that works for all of us.
St. Paul needs a vibrant tax base to secure its success in the 21st century. We are not a wealthy city, and it will take a citywide effort committed to change. More housing and more businesses create more tax revenue and spreads the burden of taxes. More money allows the city to cover its basic needs and to wisely allocate funds for important improvements.
In the face of our budget constraints, credit goes to the mayor and current council for remaining progressive. Receiving nearly as much American Recovery Plan money as the city’s general fund receives from property taxes in a year, St. Paul allocated $37.5 million for affordable housing. Public safety has $42.4 million for new programs. City officials, after years of rattling the tin cup, received $8 million of insufficient — but not insignificant — Local Government Aid from the state.
The progressive list of St. Paul accomplishments continues with zoning changes allowing multi-family housing on any lot in the city, a good and responsible police force, $15 minimum wage, an effective homelessness policy, and renter protections.
Now the new council can address the city’s tax base by addressing ordinances and rules to make St. Paul a favorite city of developers, companies and businesses. The council can start with the elephant in the room: St. Paul’s rent stabilization ordinance. The new council may revise it, and doing so will set the tone for future development that will impact the tax base. It could be an early defining moment of the council’s legacy.
The original ordinance — unfortunately supported by some returning council members — was pure rent control. It had strict 3% maximum increases; no vacancy decontrol that would have allowed landlords to raise rents after a tenant departs; no exemption for new construction — and little connection to reality. It was sold to voters as helping renters without harming the housing supply. Instead, it hurt development. Permits for new apartment construction declined 80% in the first quarter of 2022, as Bill Lindeke of MinnPost reported at the time. This was a particularly discouraging trend because until rent control passed, we had been building housing to avoid the huge rent increases of other cities nationwide.
If you visit Highland Bridge, site of the former Ford plant, you’ll walk around a big empty area that looks like a native prairie restoration project. Development of half the site remains on hold because of the rent control ordinance’s 20-year exemption on new construction. The developer had asked for a 30-year exemption. Would 30 years harm renters? Two thousand fewer units of housing will hurt more.
The new council could change the exemption. With higher interest rates and building costs, there is no guarantee that the exemption change alone would attract investors. But it would at least be a goodwill effort to show that St. Paul is open for development. And St. Paul needs advantages, not disadvantages as it competes for investment dollars with other cities.
St. Paul has other notable empty spaces. The promise of an Allianz Field surrounded by mixed use housing, office and retail has been distilled into a park and sculpture. Everything else awaits investors, apparently.
Six years ago, a potential $800 million development with four gleaming buildings along the St. Paul downtown waterfront was floated as a major addition to the city. It appears to have sunk.
The former Sears site, once the subject of aspirational illustrations of gleaming buildings (they always gleam) has been purchased by a non-profit with downscaled eclectic ideas for reusing the existing building.
The Heights, tucked into the northeastern corner of the city, is the one big empty spot with the most hope right now.
St. Paul needs to create advantages. When Thomson Reuters announced it was moving from its Eagan headquarters, did anyone think for a moment that it would consider downtown St. Paul?
Downtown Minneapolis, despite much public angst, is poised to wake up from its pandemic slumber and hoover up any and all development opportunities. The suburbs have the money and space to experiment with density and still let people drive to pickleball. What can St. Paul do to differentiate itself?
Voters wisely accepted the 1% sales tax to improve our roads and parks because they realized that St. Paul has an underwhelming tax base. It’s an opportunity for the new City Council to be inclusive and promote policies that invite more visitors from other cities to share our tax burden.
3M recently announced the name of its Fortune 500 spin-off. Solventum by any other name is an opportunity for St. Paul. The ask from the company could be prohibitive, something the council will have to consider. But it’s the tax base, after all. A decision by the company to locate in the capital city would bring recognition and acknowledgement that St. Paul means business.
